Hydro Power Plant Rehabilitation Project

Location:

Ukraine

Project number:

40518

Business sector:

Power and energy

Notice type:

Public

Environmental category:

B

Target board date:

13 Sep 2011

Status:

Signed

PSD disclosed:

09 Apr 2010

Translated version of this PSD: Ukrainian

Project Description

EBRD is considering a sovereign guaranteed loan provided to the PJSC “Ukrhydroenergo” (UHE) for up to €180 million to replace the undisbursed portion of a €200m sovereign loan signed on 29 September 2011, which is available to Ukraine and benefits the UHE. At the same time €20 million loan remains available to UHE for the Project purposes in accordance with the sovereign loan agreement signed in 2011.

This financing will enable Ukrhydroenergo to complete the envisaged Project which is the upgrade of the hydro and electro-mechanical equipment of 7 hydro power plants owned by UHE, representing half of total large hydro generating capacities in Ukraine.

This Project is part of a larger rehabilitation program of all UHE’s 4,600MW generation assets, split in 10 hydro power plants most of which were commissioned in the 1960s. The rehabilitation program started in 1996 and is planned to be completed by 2024.

Project Objectives

The Project aims to increase UHE’s fast-responding peaking capacity in Ukraine’s power system by replacing the outdated hydraulic, electro-mechanical and hydro-mechanical equipment. Namely, the Project will allow UHE to:

  1. extend the lifetime of its units by 30 years;
  2. increase operational capacity and flexibility of hydropower plants, which play a key role in the national power sector stability and security;
  3. improve the environmental impact, reliability and operational costs of the power plants by installing new state-of-the-art generation and transmission equipment;
  4. optimise the use of the water resource by increasing the efficiency of the units;
  5. increase safety of the power plants and the dams by rehabilitation of the major gates and implementation of a dam safety system.

Transition Impact

The key sources of the Project’s transition impact are:

  • Expansion of Ukraine’s power market via greater supply of reliable and flexible reserve capacity. 
  • Improvement in operational standards which will bring Ukraine closer to meeting technical requirements for the Ukrainian power system’s integration into the European transmission system (ENTSO-E) and into the EU’s internal energy market.
  • Reduction in carbon footprint is expected to be reached via installation of modern and carbon neutral generation equipment that will increase the efficiency and capacity of the generation units.

Client Information

Ukrhydroenergo, a 100% State owned Joint Stock Company which owns and operates all big hydro generating facilities in Ukraine.

EBRD Finance Summary

€180 million loan guaranteed by Ukraine.

€20 million sovereign loan to Ukraine signed in 2011.

Total Project Cost

€ 614.6 million

Environmental and Social Summary

The E&S requirements that were agreed under the original project will apply to this transaction. Implementation of the ESAP agreed between the UHE, EBRD and EIB before approval of the initial Project, will continue.

Categorised B (2008). Potential negative environmental and social impacts associated with the project are site specific and can be readily identified and addressed through mitigation measures. The project comprises refurbishment and replacement of existing equipment and no changes to reservoir levels or additional land requirements are planned as part of the Project. Accordingly, the Project has been classified as Category B in accordance with the Bank’s Environmental and Social Policy (2008).

The Bank’s due diligence of the initial Project included an integrated corporate environmental, health and safety and social (EHSS) audit of UHE. The audit, which was carried out by an independent consultant, assessed the Company’s corporate EHSS policies and procedures, environmental management systems and overall capacity to implement the Bank’s Performance Requirements (PRs). The due diligence also included site specific audits at the Company’s Kremenchug, Dnieprovska I & II, and Kaniv HPPs and the Kyiv Pumped Storage plant (PSP).

Results of the audit identified weaknesses at the corporate and site level with regards to staff resources and capacity to manage key EHSS risks at its HPPs.

Potential impacts associated with the rehabilitation works are considered to be limited as no new facilities or assets are being added to the individual sites. Furthermore, no additional land take is required and the assessment of the Project has not identified any adverse environmental or social impacts which could be considered to be permanent, significant or irreversible. Temporary impacts will result from the construction and civil works which will be required during the upgrade of the facilities. These temporary impacts will include traffic movements, the transport of potentially hazardous materials, noise and dust impacts and the generation of wastes. To address these impacts, a time bound Environmental and Social Action Plan (ESAP) has been prepared to control and monitor such impacts throughout the life of the Project.

It is important to note that many of the permanent effect resulting from the Project shall be positive in nature, including but not limited to:

  • Extending the life-time of the current hydro-stations and therefore reducing requirements for alternative power sources such as those burning fossil fuel;
     
  • Potentially installing fish ladders which will promote migration of fish to spawning grounds upstream;
     
  • Improving the integrity and safety of the dam installations by replacing the gates and installing centralised safety monitoring systems; and
     
  • Removal of PCB containing oils in transformer and switching gear.

The Project has received approval from the Ministry of Environmental Protection, who issued a conclusion for Phase III of the project in 2004.

Technical Cooperation

TC funding is being used to finance the Project Implementation Unit Consultant and Lender’s Engineer services. TC funds were used to carry out environmental and social due diligence under the project.

 

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.