IEC Hydropower Rehabilitation

Location:

Armenia

Project number:

44040

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Target board date:

26 Nov 2012

Status:

Repaying

PSD disclosed:

13 Sep 2012

 

Translated version of this PSD: Armenian

Project Description

The EBRD is considering providing financing to JSC International Energy Corporation (IEC) to rehabilitate its existing hydropower plants (the Project). The Project would upgrade outdated equipment and improve the capacity, reliability and efficiency of the 7 hydropower plants which comprise the Sevan Hrazdan cascade, thus increasing the generation of sustainable energy in the Republic of Armenia.

Transition Impact

The proposed project will significantly improve the Company’s technical standards and bring them in line with best international practices. The loan will provide essential support for the rehabilitation program of the Company, which, is expected to result in a significant increase in reliability and power production; while at the same time improving overall generation efficiency and lowering carbon emissions. In addition, IEC's environmental and social policies will be reviewed by the EBRD subject to an Environmental and Social Action Plan (ESAP) which will ensure the adoption of best international environmental and technical standards.

The Client

IEC was incorporated in the Republic of Armenia in 2003 and its sole business activity is the ownership and operation of the Sevan Hrazdan Cascade of hydropower plants, with a nominal capacity of 561 MW. It is majority owned by the Russian hydropower company RusHydro.

RusHydro is a company incorporated in Russia and is 60% owned by the Russian state. It is the second largest hydropower company in the world with over 35 GW of installed capacity.

EBRD Finance

A long-term loan of USD 25 million to IEC.

Project Cost

USD 50 million.

Environmental Impact

The Project has been categorised as B under the EBRD’s Environmental and Social Policy 2008 and environmental and social due diligence conformed that potential impacts are readily understood and mitigated. An independent international consultant was engaged to assist the Bank in conducting environmental and social due diligence and to evaluate environmental and social risks currently existing at seven HPPs and along the cascade system, and those that could arise from the Project.

The Project will be carried out within the existing footprint of the Sevan - Hrazdan Cascade infrastructure and will not increase the nominal capacity of the system of seven hydropower plants. Therefore it does not require a formal environmental impact assessment under Armenian or EU legislation. The upgrade works will have net positive environmental and social effects by decreasing community health and safety risks downstream and by introducing modern technology that will limit emissions to the environment. In addition, the Project will allow more electricity to be generated with the same renewable resource.

Although the Project is located in the vicinity of Sevan National Park, established to protect Lake Sevan and the surrounding areas, the on-going operations of the cascade are managed adequately to protect biodiversity and water resources in Lake Sevan and the planned Project works will have no impact on the protected area.

The main environmental risks requiring improved controls are associated with IEC's existing operations, such as reservoir management, management of oils and lubricants for turbines, transformers and support infrastructure, management of lead/acid batteries, material and waste management. The environmental impacts related to Project implementation mainly arise from the planned dredging of the Yerevan 1 reservoir and are related to impact on water quality downstream during dredging and the disposal of dredged material.

Due diligence has identified some gaps in relation to the safety of communities in the vicinity of diversion channels and downstream from the HPPs. The project will be carried out within the existing footprint of the facilities and therefore there is no requirement for land acquisition. Socio-economic impacts, mostly related to transportation of equipment and materials, are expected to be localized and short-term. The Project will also support the process of formalisation of already existing water connections used for irrigation by local farmers along diversion channels.

An Environmental and Social Action Plan (ESAP) has been developed and agreed with IEC to address the impacts and risks presented by existing operations and the proposed Project. ESAP requirements include development and implementation of an overarching environmental and social management system within IEC, which will enable a systematic approach to the preparation and implementation of pollution prevention plans, an oil management plan, a waste management plan, the construction of adequate oils storage facilities and appropriate decommissioning of dysfunctional oil storage areas, development and implementation of occupational health and safety plan, assessment of work space safety, development of an employee grievance procedure and establishment of an EHS monitoring and reporting system. Under ESAP it was also agreed that impacts of the Yerevan 1 dredging program will be assessed and disclosed and international best practice in dredging and disposal operations will be applied. In addition the ESAP addresses requirements to upgrade the existing emergency response system and ensure adequate community safety measures are implemented. A Stakeholder Engagement Plan for the project was prepared and is being implemented by IEC to facilitate obtaining community feedback on, and concerns regarding, the Project and mitigation measures. This includes appropriate consultation with government offices, the Sevan-Hrazdan irrigation company and heads of local municipalities.

Technical Cooperation

None.

Company Contact

Hasmik Avetisyan
JSC International Energy Corporation
10B Adonts street
0012 Yerevan
Armenia
Тel. + (374 10) 24 50 99, + (374 10) 23 08 12 ext: 204
email: hasmik.avetisyan@mek.am

 

Business opportunities

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