The proposed project comprises investments in district heating infrastructure to be implemented by the Krakow municipal heating company (MPEC Kraków). Project objectives are to improve energy efficiency of the system, reduce air pollution, and enhance project management skills of MPEC staff. MPEC will refurbish 99 km of main pipes and replace collective heat exchangers with individual ones. MPEC will also implement a technical co-operation project to support improved project management capacity. The project is expected to be the first district heating investment co-financed with the EU Cohesion Fund.
Through the Project, and the planned Bank TC for corporate development, the Company will strengthen its project management capacity to manage and coordinate large-scale complex and dispersed investments using international project management techniques and systems; this support will help the Company optimise the impact of investments on financial performance.
The project will include measures that encourage the City to ensure sound corporate governance in the Company, in particular with regard to proper relationships between the City as owner, the Supervisory Board and the Management Board, and proper commercial relationship between City-owned units and the Company.
- Participation of EBRD in the preparation process has helped EC and Polish officials to develop the first air pollution project to be co-financed by the EU Cohesion Fund in accession countries. It is expected that other district heating utilities from the Region will follow MPEC Kraków.
Miejskie Przedsiębiorstwo Energetyki Cieplnej S.A. (Kraków District Heating Company, MPEC) is a joint stock company fully owned by the City providing district heating services in Kraków.
The City of Kraków is Poland’s third largest city with a population of 740,000.
EBRD will provide a loan EUR 5-10 million.
EUR 76.0 million (or PLN equivalent).
Environmental classification and rationale
The project was screened B/1 requiring an environmental audit / environmental analysis. The project involves primarily replacement of old (30-40 years old) district heating pipes, with new energy efficient underground district heating pipes. No new networks will be constructed using the funding. The project will allow for substantial reduction of energy and water loss and indirectly result in lower emissions.
The Environmental Analysis / Audit is likely to be based on the findings of an environmental assessment which, although not strictly required by Polish regulations, is being undertaken to ensure that the project has been properly screened according to the EIA directive. .
Key Environmental issues and mitigation
The current operations are associated with energy and water loss as well as waste management issues. The company is currently undertaking significant investments in improving the operation and rehabilitation of the existing network. The project will include the replacement of nearly 132 km of network (out of a total of 900 km operated by MPEC) and will also include the modernization of some heating nodes and replacement of an overhead heating line with an underground line (7.8 km Skawina Krakow heating line). None of the proposed rehabilitation work is located within the historic city centre of Krakow.
As part of the investment programme, this will mainly involve replacement of existing pipes, and will result in potential short term nuisance issues associated with construction and disposal of construction debris. MPEC has provided information that the existing heating pipe network does not include asbestos containing materials, and this is being confirmed as part of the EIA being undertaken by MPEC’ independent consultants. Waste management will be organised in accordance with Polish regulations and good construction practices. The main focus will be managing contractors who will undertake the work in accordance to good construction practices. This is envisaged through implementation of the Company’s ISO 14001 Environmental Management System as well as contractual arrangement. These measures will ensure that the environmental issues will be sufficiently managed to prevent or minimise impacts on staff and local population as well as on the environment.
Summary of Environmental Action Plan
The company will be required to adhere to Polish and EU environmental regulations and standards. An Environmental Action Plan will be developed if required.
Disclosure of information and consultation
In the context of the EBRD’s participation in the project, MPEC will release locally a summary of relevant environmental issues associated with the project and summarise mitigation measures, action plans and other initiatives agreed.
Monitoring and reporting
The Company will monitor the environmental impact of its operations in accordance with Polish law and regulations. The Bank will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports prepared for the project covering:
- ongoing performance of project-specific environmental, health and safety, and
- the status of implementation of environmental mitigation and improvement measures.
The Bank’s representatives will also conduct periodic site supervision visits when deemed appropriate.
Envisaged for the strengthening of project management / corporate development; scope to be determined as project progresses.
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