Karacaoren HEPPs

Location:

Turkey

Project number:

48279

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Target board date:

08 Jun 2016

Status:

Repaying

PSD disclosed:

19 Apr 2016

Translated version of this PSD: Turkish

Project Description

The EBRD is providing a senior secured loan of up to USD 44 million to Kremna Enerji ve Ticaret A.S. ('Kremna' or the 'SPV') fully owned by Gama Enerji A.S. ('GEAS' or the 'Company') for the acquisition of Karacaoren-1 and Karacaoren-2 hydroelectric power plants ('HEPPs') located in Burdur, Turkey from the Privatisation Administration ('PA').

GEAS was the winning bidder at the privatisation tender held on 9 November 2015 for the HEPPs which have been operational for the last 23 years. The privatisation is in the form of Transfer-of- Operating-Rights for 49 years.

The loan is part of a wider financing package alongside the International Finance Corporation ('IFC') and the Industrial Commercial Bank of China ('ICBC').

Project Objectives

  • support the ongoing liberalisation of the Turkish electricity generation market by backing one of the committed private energy players through financing the privatisation of the HEPPs;
     
  • support the low carbon transition through the modernisation of a renewable asset;
     
  • support a reliable baseload and flexible peaking plant that is required to accommodate the growth in intermittent renewables generation, in line with the strategy of the Turkish government of strengthening security of supply and enhancing use of local energy sources and diversifying away from expensive imported fuel sources.

Transition Impact

The project will contribute to increasing the share of privately-owned generation capacity in Turkey where 32 per cent of installed capacity remains state-owned. HEPPs will operate on a fully merchant basis, trading most of the output on the spot market. The project also has the potential for the development of operational and technical efficiencies of the HEPPs.

Client Information

GAMA ENERJI A.S.

Kremna is an SPV fully owned by GEAS and is established to take over the operating rights of the HEPPs.

GEAS is a private power and water company headquartered in Turkey with operational assets in Turkey and Jordan. GEAS owns and operates a portfolio of 260MW of power generation assets in Turkey and also owns 100 per cent of the Disi Water BOT supply project in Jordan with a conveyance capacity of 100m3/year. Furthermore GEAS has a 840MW natural gas-fired plant and a 43MW wind power plant under construction.

GEAS is owned 50.5 per cent by Gama Holding A.S., 30 per cent by Tenaga Nasional, 14.5 per cent by IFC and 5 per cent by AMC Global Infrastructure Fund.

EBRD Finance Summary

USD 44,000,000.00

Total Project Cost

USD 195,400,000.00

Environmental and Social Summary

Categorised B (ESP 2014).

An environmental and social due diligence (ESDD) of the Project was undertaken by an independent consultant, with a focus on the specific risks associated with the privatization and future operation of the two powerhouses of Karacaoren hydropower scheme. The ESDD confirmed that the Project is not associated with significant environmental or social (E&S) risks, and that the Client has the capacity to implement the Project in compliance with EBRD Performance Requirements. The dams and reservoirs that form the Karacaoren hydropower complex are not part of the privatization and will remain under their present ownership.

The ESDD was based on a site visit and included a review of Karacaoren 1 and 2 hydropower plants documentation. The E&S organization and capacity of the Client was also reviewed. The Project (i.e. the privatization process) does not require an environmental impact  assessment as per the Turkish legislation. Yet, the Client will have to renew or acquire a number of permits to operate the hydropower plants in future.

The two hydropower schemes were built more than 25 years ago and therefore influenced and changed the surrounding environmental and social baseline conditions. The Project will not result in any change of these conditions. The operational regime of the lower hydropower plant is likely to change in future in order to react to energy demand from the market rather than following preestablished production schedules. This change might translate in a change of the downstream risks pattern, and the Client has committed through the environmental and social action plan (ESAP) to address this issue through a specific downstream risks assessment covering such issues as public safety risks and irrigation needs.

The Client, who already owns and operates hydropower schemes in Turkey under an integrated ISO9001/ISO14001/OHSAS18001 management system that will be extended to the Project, has largely the capacity to implement the Project in compliance with EBRD Performance Requirements (PR).

Some specific issues that were identified and will need to be addressed through the ESAP include: (i) the need to check the presence of asbestos within the hydropower plants components, (ii) the need to engage with the surrounding population and with the present workers, in liaison with their present employer, as the Project is going to result in a number of social changes such as the change of ownership of the social infrastructure (i.e. schools, parks etc.) run by the previous owner.

All of these issues were included in the ESAP and the Project is structured to meet EBRD PRs.

The Project does not require a greenhouse gas assessment. The risks related to the associated facilities (dams and reservoirs) are outside the client's control and will remain under the present state company management.

Standard monitoring requirement will apply to the Project. The annual reporting template was agreed with the Client.

Non-technical summary: English | Turkish

Technical Cooperation

None.

Company Contact Information

Doruk Bilge Tuncer, EHS Manager
dtuncer@gamaenergy.com
+90 312 248 46 00
Gama Building Nergis sok. No:9 Sogutozu Ankara, Turkey

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