Khaw Pumping Station Project

Location:

Jordan

Project number:

44489

Business sector:

Municipal and environmental infrastructure

Notice type:

Private

Environmental category:

B

Target board date:

12 Mar 2013

Status:

Cancelled

PSD disclosed:

09 Oct 2012

 

Translated version of this PSD: Arabic

Project Description

The EBRD is considering providing financing of up to EUR 3.2 million, to be provided in two tranches of up to EUR 1.2 million (“Tranche 1”) committed and up to EUR 2.0 million uncommitted (“Tranche 2”), to be committed within the next two years, to a newly established energy service company (“ESCO”) to support the Water Authority of Jordan (“WAJ”), under an energy performance contract (“EnPC”), in financing energy saving projects, including improvement of design, retrofit, operation and management of the Khaw pumping station, located in Zarqa Governorate in Jordan.

The project will include innovative technologies and private sector investment within an energy performance contracting model. Specifically, in order to reduce energy consumption at the Khaw pumping station, the ESCO will design, install, and commission energy saving measures including all the system components and auxiliary machinery needed for proper operation of the facilities.
The objective of investment is to reduce WAJ’s energy costs for the pumping station by implementing energy saving measures within the contract period of 9 years. WAJ is the largest electricity consumer in Jordan. The project implementation will allow WAJ to decrease electricity costs, which are a substantial part of operational costs, and the carbon footprint of the Jordanian water sector. Other objectives of the project include improving the operation of the pumping station, reducing CO2 emissions, and therefore securing the efficiency of WAJ operations.

The ESCO will be jointly owned by Engicon, a Jordanian engineering consulting firm, through its subsidiary Engicon O&M, an energy savings services company, and by Studio Galli Ingegneria (SGI), an Italian consulting firm specialising in water, environment, and energy (jointly “the Sponsors”).

The following physical indicators will be monitored during the implementation project:

  • Energy savings year. Energy savings calculated on the basis of kWh/year required to pump 1,000 m3 of clean water multiplied by total annual volume (m3). Measured before and after project implementation.
  • CO2 emissions reduction as a result of energy savings after project implementation. Calculated indirectly from energy consumption required for pumping clean water before and after project implementation.

Transition Impact

The transition impact is expected to derive from:

Demonstration effects - new financing activities. The development of the ESCO market has been held back by limited access to financing particularly for small/medium sized ESCOs and by a lack of examples of commercial ESCO structures, such as EnPC. Currently, the competitive environment for ESCO projects in Jordan is limited. Adequate policy and market frameworks for energy efficiency measures are virtually non-existent; the ESCO concept is a new model that needs to be proven in Jordan. The Project will demonstrate that it is possible to generate adequate returns in ESCO projects in Jordan thereby developing a new market for the private sector.

Demonstration effect – new replicable services and works. The Project should over time act as a catalyst for the widespread implementation of energy efficiency services in Jordan in general and the EnPC concept in particular. The contract will be based on the level of energy savings achieved and will genuinely transfer performance risk to the private ESCO. It will also facilitate the identification of barriers to market development for EnPC in the public sector and provide technical assistance to local authorities to prepare, tender and implement an energy saving programme based on EnPC contracts.

The Client

The Client for the Khaw Pumping Station Sub-Project is an ESCO which will be a contractor for the Khaw Pumping Station. Up to EUR 3.2 million senior loan to the Company to be provided in two tranches of up to EUR 1.2 million, Tranche 1, committed and up to EUR 2.0 million uncommitted, Tranche 2, to be committed within the next two years.

EBRD Finance

Up to EUR 3.2 million senior loan to the Company to be provided in two tranches of up to EUR 1.2 million, Tranche 1, committed and up to EUR 2.0 million uncommitted, Tranche 2, to be committed within the next two years.

Project Cost

The total operation amount for the project to be financed with the proceeds of Tranche 1 is up to EUR 1.9 million.

The total operation amount for the project to be financed with the proceeds of Tranche 2 will depend on future investments.

Environmental Impact

The project has been Categorised B in accordance with the EBRD’s Environmental and Social (“E&S”) Policy and Environmental and Social Due Diligence (“E&SDD”) has been undertaken in combination with the technical assessment of the project. The E&SDD comprised a visit to the existing plant to undertake an E&S audit and an E&S analysis of the proposed project.

The successful delivery of the project will result in net environmental benefits through energy efficiency measures to be implemented and the resulting carbon savings. In addition, through the replacement of ageing and inefficient equipment the reliability of supply will be improved and expected useful life of the system extended.

Residual E&S risks identified during ESDD include a number of corporate E&S management issues and site specific practices to be addressed during both construction and operation of the new facility. Corrective actions for each of these issues have been detailed within an Environmental and Social Plan (“ESAP”) which is to be implemented throughout the life cycle of the project.

Project monitoring will be undertaken in accordance with the provisions in the ESAP and progress reports will be required to be prepared by the company on a regular basis. Additional monitoring will be undertaken by EBRD staff at key project milestones if considered necessary.

Technical Cooperation

Feasibility Study including technical, financial environmental and social due diligence. To be funded from the MEI budget.

Company Contact

Mr Tarek Zuriekat

P. O. Box 926963 - Amman 11190 Jordan
Tel. +962 6 4602120 (ext. 205)
Fax. +962 6 4602130

E-mail: tzuriekat@engicon.com
www.engicon.com

 

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