Translated version of this PSD: Serbian
Establishment of Eko Toplane (the Company) a new majority privately owned district heating company that would build, own and operate a 49 MW biomass boiler plant for district heating in the City Of Banja Luka. The Company will also operate the existing district heating network and two smaller biomass boiler plants owned by the City. The Company is 51 per cent owned by IEE Banja Luka, a private sector sponsor, and the City holds the remaining shares.
1. Conversion from expensive and polluting heavy fuel oil to a cheaper and less polluting locally available wood biomass; 2. Introduction of private sector expertise and efficiency in district heating services and 3. Commercialisation of the financial operations through application of cost recovery tariffs.
The Banja Luka DH project promotes the transition objectives of the GrCF in the following ways:
Green: By preparation of new investments to be identified under the GCAP, and through reduction of air pollution and reduction of greenhouse gases emissions.
- Well-governed: By preparation of comprehensive GCAP, entering into PSC between the City and the Company, introduction of a new tariff system, cost reduction through conversion to cheaper fuel and introduction of private sector participation through majority ownership in the newly created Company.
CITY OF BANJA LUKA
The City is the, economic, financial, political and administrative centre of the Republika Sprska ("RS"), which is one of the two political entities that make up Bosnia and Herzegovina ("BiH"). The City has a population of 199,191 people (based on the results of the 2013 census).
EBRD Finance Summary
An unsecured loan to the City of EUR 8.347 million, which will be used to finance the City's equity stake in a newly created district heating Company and the initial purchase of biomass.
Total Project Cost
Capital expenditures of EUR 16.4 million (new biomass boiler plant and connection to the existing district heating network), Working Capital of EUR 1.8 million (initial purchase of wood biomass) and EUR 0.3 million for technical cooperation (preparation of the Green City Action Plan).
Environmental and Social Summary
Categorised B (2014 ESP). The project will result in long-term environmental and social benefits by replacing Heavy Fuel Oil with biomass, reducing heat losses and improving overall energy efficiency and reliability of the district heating system in Banja Luka. Any adverse impacts will be site-specific and addressed through mitigation measures. The project is consistent with the GET approach, based on the upgrading of the heat generation capacity to renewable sources, which will reduce CO2 emissions by 90% or 45,000 tonnes of CO2e annually. Reduction of concentrations of sulphur and nitrogen oxides in the air during the winter period in the City will also alleviate the negative effects on human health and enhance quality of life.
The E&S due diligence (ESDD) has been carried out as part of the Feasibility Study by external consultants, building on the results of the Rapid Assessment and Response Plan study by UNEP, and included an E&S audit and assessment and a review of climate change risks. ESDD determined that no impacts of a sensitive nature, protected areas or cultural heritage sites would occur. The new plant is being constructed on a state-owned land plot, and no expropriation or new land acquisition is required and no need for any resettlement or displacement. No significant affordability challenges from tariff increases have been identified during due diligence.
The Project permitting process was undertaken in compliance with the EU EIA Directive and the Project has obtained the necessary Environmental Permit, following an appropriate screening procedure that was undertaken by the competent local authorities, including public disclosure. The Company has already obtained the necessary Construction Permit for the Project, and construction is currently underway. The Company will adopt and implement a sustainable biomass fuel procurement policy, and the biomass material is planned to be procured locally from the FSC-certified supplier Public Enterprise 'Forests of RS' to ensure that only biomass fuel of legal and sustainable origin is used. The biomass fuel supplied will contain a significant proportion of wood chips from sawmills and biomass waste materials from wood processing industry. Some increase in traffic volume due to the passing of 15-20 heavy trucks carrying biomass material from the logistics centre to the biomass heating plant on a daily basis will need to be managed by adequate route planning and adoption of a traffic safety management plan, to ensure any inconvenience for the local communities is minimised.
ESDD concluded that the new biomass boilers will meet both national and EU requirements for air emissions, in line with MCP and IE Directives for the boilers. Potential impacts during the construction phase for the new biomass boilers will include increased dust and noise levels and disruptions in the district heating services, and these will be mitigated by adopting good construction practice.
The new Company Eko Toplane Banja Luka will need to further improve its EHSS management systems and capacity to implement the project in line with EBRD's PRs. Since there are associated redundancy plans for the old DH company's personnel, a Retrenchment Plan has been prepared and will need to be implemented by the Client in line with EBRD's guidance. A Stakeholder Engagement Plan, including a grievance mechanism, and an Environmental and Social Action Plan have been developed for the project to address any issues identified during ESDD to ensure that the project is structured to meet the Bank's PRs, and these will need to be implemented during the Project.
ESAP measures include implementation of the OHS Management Plan and Environmental Permit requirements during the construction and operation stages, developing and adopting a chance find procedure for construction works, developing a traffic management plan to ensure worker and community safety, updating HR procedures including worker grievance mechanism, finalising and implementing the Retrenchment Plan, implementation of a Waste Management Plan for the biomass heating plant.
The Green City Action Plan (GCAP) for the City is also expected to be prepared by the end of 2018, and the respective actions and further environmental investments to be implemented in accordance with the GCAP by end of 2021.
Preparation of GCAP to assess the City's environmental performance and prioritise actions and investments that support green city development. The estimated cost of this assignment is EUR 300,000and approval has been sought from the Government of Austria for funding from the Austrian Municipal TC Fund. If approval should not be granted funding will be sought from an alternative bilateral or multi-lateral donor or the SSF
Company Contact Information
00387 51 244 444
00387 51 212 526
Trg Srpskih Vladara 1 78000 Banja Luka Bosnia and Herzegovina
For business opportunities or procurement, contact the client company.
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Tel: +44 20 7338 7168
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