Lietuvos Energija Green Bond 2

Location:

Lithuania

Project number:

50268

Business sector:

Power and energy

Notice type:

Public

Target board date:

20 Jun 2018

Status:

Signed

PSD disclosed:

23 Oct 2018

Translated version of this PSD: Lithuanian

Project Description

Investment in EUR-denominated green bond in an amount of EUR 30 million as part of a total aggregate issuance of EUR 300 million by Lietuvos Energija UAB ("LE UAB"), the Lithuanian's national energy company and one of the largest state-owned energy groups in the Baltics.

This is the second issuance by LE UAB following the first issuance in July 2017 in which the EBRD also invested.

Project Objectives

The investment programme which the EBRD is supporting is critical to help LE UAB to upgrade its distribution network and expand its renewable energy capacity in order to strengthen the sustainability and security of Lithuania's energy supply and reduce its reliance on imported energy.

The issue will also enhance LE UAB capital structure by centralising indebtedness at the holding level.

Transition Impact

Good.

  • Green: the project will deliver climate mitigation benefits through energy efficiency. The green bond will support the investment plan of the company which includes new green investments in distribution network upgrades.
     
  • Resilient: The project will contribute to the development of the Lithuanian capital markets, through supporting the issuance of a EUR 300 million green bond in the Baltics.

Client Information

LIETUVOS ENERGIJA UAB

LE UAB is a Lithuanian state-owned energy company and one of the largest state-owned energy groups in the Baltic countries, who mainly operates in (i) distribution of electricity and gas, (ii) generation of electricity and heat, and (iii) trading and supply of electricity and gas.

EBRD Finance Summary

EUR 30,000,000.00

Total Project Cost

EUR 300,000,000.00

Environmental and Social Summary

Categorised B (2014 ESP). Environmental and Social Due Diligence ("ESDD") was undertaken by the Bank's environmental and social specialists building on the ESDD undertaken for the previous subscription of the green bond issued the Company in July 2017. In compliance with capital market transaction rules and regulations, the ESDD was undertaken by reviewing publicly available information and discussions with the Company's green bond team. The ESDD focussed on reviewing the Company's implementation of its green bond framework.

The ESDD re-confirmed that the Company green bond framework is structured to comply with Green Bond Principles (GBP), voluntary process guidelines that recommend transparency and disclosure and promote integrity in the approach for issuance of a green bond. The cornerstone of the GBP is the utilisation of the proceeds of the bond for eligible green projects, which provide clear environmental benefits that can be described and, where feasible, quantified and/or assessed. The Company's green bond has also obtained independent second opinion and, based on the overall assessment of the project types that will be financed by the Company's green bonds and governance and transparency considerations, has received a "Dark Green" shading, which is allocated to projects that corresponds to the long-term vision of a low-carbon and climate resilient future. Typically this will entail zero emission solutions and governance structures that integrate environmental concerns into all activities.

The ESDD showed that the Company has implemented its green bond framework to high standards, and their annual impact reporting has shown that the green projects have achieved their expected environmental benefits.

The proceeds of the bond will be used for financing of renewal and/or rehabilitation of existing electricity distribution lines. The planned distribution network investments include changing overhead lines to underground cables, renewal and/or rehabilitation of overhead lines, substations & transformers, as well as smart network solutions. These investments will result in significant loss reductions and energy efficiency and safety improvements, and particularly the smart solutions will also increase the system capacity to integrate renewable energy in the grid. Given the nature of improving the existing network infrastructure, no resettlement or biodiversity impacts are likely to occur. Therefore, these rehabilitation projects are not subject to Environmental Impact Assessment (EIA). Nevertheless, all projects will be required to obtain environmental approvals and permits, including Natura 2000 declarations.

An ESAP has been agreed under a previous framework agreement and this is being implemented by the Company. The Bank will monitor the project implementation.

Technical Cooperation

None.

Company Contact Information

Jonas Rimavicius
jonas.rimavicius@le.lt
+37062074043

 

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