EPS Hydropower Plants

Translated version of this PSD: Serbian

Project Description

The EBRD is providing financing to EPS to rehabilitate 15 existing small hydro power plants across Serbia, and to add electricity generation capability to another seven existing dams, which will continue to be used for other water management purposes. The project is intended to extend the lifetime of the existing small hydro power plants, and will increase generation from renewable energy through increases in the capacity of the existing plants and the addition of further generation capacity to the other dams.

Transition Impact

The project, when approved by the EBRD’s Board of Directors, will have the following transition impact:

• Setting standards for corporate governance and business conduct – reduction in carbon intensity: apart from large hydropower plants, which account for 30 per cent of Serbia’s overall electricity output, Serbia is still producing only very small amounts of energy from renewable sources. The project will increase the use of renewable energy and thus reduce carbon emissions by approximate 61 thousand tonnes of CO2-equivalent per year compared with current electricity generation in Serb
• Setting standards for corporate governance and business conduct - the intention of EPS to set up a separate subsidiary to manage and develop renewable energy generation will improve both the efficiency of the management of existing renewable energy generation by EPS and improve the climate for the development of new renewable energy resources in the future
• Demonstration of replicable products and processes: the Project is expected to provide a demonstration effect for other hydro power developers in Serbia and the wider region in terms of the technical and economic viability of the investments.
• Transfer of skills: the project will involve the transfer of technical skills from international consultants to local consultants and design engineers. In addition local contractors will benefit from the experience of building the plants. This transfer of skills and capacity building will assist the development of the market for SHPPs in Serbia

The Client

Elektroprivreda Srbije, (EPS), the electricity company of Serbia, owned 100% by the Government of the Republic of Serbia.

EBRD Finance

The EBRD is providing €45 million sovereign guaranteed loan to EPS.

Project Cost

€54 million.

Environmental Impact

The project has been categorized B under EBRD’s 2008 Environmental and Social Policy. The project involves rehabilitation of 15 existing small hydropower plants SHPPs) and creation of seven new SHPPs by adding hydropower generation capacity to seven existing dams. All but one of the twenty-two dams have been in place for decades; one new dam, which is not owned by EPS, was completed only in 2010 and the reservoir has not yet been filled.

An independent consultant assisted the Bank in completing environmental and social due diligence, which confirmed there is limited potential for significant environmental or social impacts. EPS has agreed to implement a Stakeholder Engagement Plan to guide their communications with local and other stakeholders. This will include providing notice to local stakeholders concerning major activities at each project site. The Plan also establishes a grievance mechanism that can be used by stakeholders to register complaints or concerns with the individual projects or the Project as a whole.

For all sites, an Environmental and Social Action Plan (ESAP) requires EPS to implement best practices during construction to reduce erosion, and where necessary to schedule construction so as to avoid affecting recreational use of roads and swimming areas. EPS also will upgrade its corporate systems for managing environmental, health and safety, and social issues. In addition, EPS will work with dam owners to assess dam safety and the need for downstream monitoring and/or warning systems, and also to ensure that emergency response plans are updated or developed for all project sites. The ESAP requires a number of specific actions to be taken to control or mitigate potential impacts at individual project locations, including, for example, assessing the adequacy of a fish pass (Moravica SHPP), coordinating activities with the water supply company (Raška and Celije SHPPs), and monitoring slope stability (Bovan SHPP).

One of the sites --- Selova SHPP -- involves the addition of hydropower generation to a dam that has been constructed, but where the reservoir has not yet been filled. This dam is not owned by EPS and is not part of the Project per se. However, it is within the Area of Influence, as defined in the 2008 Environmental and Social Policy. The addition of hydropower generation capability and then generation itself will not themselves result in significant adverse impacts, but the owner’s closing of the dam and then clearing and filing the reservoir could have potentially significant impacts in three areas: resettlement and land acquisition for the areas needed for the reservoir and roads, dam safety and associated risks to the downstream community, and biodiversity impacts from clearing forest and flooding a total of 382 hectares. EPS is required to work with the dam owner to assess dam safety, to undertake studies of aquatic and terrestrial ecosystems, and to develop a program for resettlement and land acquisition consistent. These measures will be implemented in consultation with relevant authorities and will ensure that implementation of the Selova SHPP project will meet the Bank’s Performance Requirements 4 (community safety), 5 (resettlement and compensation), and 6 (biodiversity).

Technical Cooperation

The following technical co-operation (“TC”) funds are envisaged as part of this project:

• Feasibility Study (€370,000), financed by the EBRD Shareholder Special Fund.
• Project Implementation Support. International consultants to assist the Company with engineering design, procurement, preparation and evaluation of tenders, contract award, administration, financial control, project management and reporting (€400,000 ), to be financed by an international donor.
• Corporate Development, Stakeholder Participation and City Support Programme. To support operational and financial improvements, to secure sustainability of the Company operations, implement a Stakeholder Participation Programme in the City of Khujand, and develop and introduce a Public Service Contract between the Company and the City (€350,000), to be financed by an international donor.

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