Modus Biogas Portfolio Phase II

Location:

Belarus

Project number:

50393

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Target board date:

27 Feb 2019

Status:

Signed

PSD disclosed:

11 Jan 2019

Translated versions of this PSD: Belarusian | Russian

Project Description

The provision of a senior loan of up to US$ 18.4 million to four special purpose vehicles (the "Borrowers") established in the Republic of Belarus for the purpose of developing and operating a portfolio of 3 biogas power plants with 5 MW aggregated installed capacity in Belarus (the "Project").

The Borrowers will be 100per cent ultimately owned by UAB Modus Group (the "Sponsor"). The biogas power plants will generate electricity and sell their power to the regional subsidiaries of Belenergo, the Belarusian state-owned utility company.

Project Objectives

The Project will support the development of renewable power generation in Belarus. Renewable generation capacity in Belarus currently amounts to an estimated 266 MW, around 2.5 per cent of the total electricity generation capacity.

The Project will also lead to the increase in private ownership in the generation sector in Belarus, where state-owned Belenergo still accounts for 89 per cent of the 10GW of installed capacity. The Project will add 5MW to the privately owned capacity in Belarus.

Transition Impact

The Project will target the "Green" quality by supporting the Sponsor develop its portfolio of electricity generation assets through financing the construction and operation of a 5 MW biomass power plant in Belarus. Once fully operational, the Project will result in (i) CO2 emissions savings of approx. 15,200 tonnes annually and (ii) waste minimisation and further greenhouse emissions avoidance from methane fugitive emissions that would be the result of annual waste degradation.

Client Information

BG-17
The Borrowers will be special purpose vehicles incorporated in Belarus for the purpose of developing, constructing and operating the Project. The Borrowers will be 100 per cent controlled by UAB Modus Group. UAB Modus Group is a holding company based in Vilnius, Lithuania with four business segments: Automotive dealership, Real Estate, Services and Energy. The Sponsor's energy business has approximately 30 MW installed capacity of biogas power plants and solar photo voltaic power plants in operation in Lithuania, Latvia, Poland and Belarus.

EBRD Finance Summary

USD 18,400,000.00

A senior secured loan of up to US$ 18.4 million (up to € 16.1 million equivalent).

Total Project Cost

USD 26,300,000.00

The total project costs is approximately US$ 26.3 million (€ 23.0 million equivalent).

Environmental and Social Summary

Categorised B (ESP 2014). The Project's E&S impacts and risks related to construction and operations of three biogas power plants of 5MWe total capacity are readily identified, site-specific, and can be mitigated via maintaining existing E&S management systems and implementing the ESAP. The ESDD was undertaken in-house and included a site visit to locations of the future plants in Belarus, review of E&S Questionnaires, local EIA (OVOS) studies and technical due diligence report by the LTA. Based on the results of the ESDD the ESAP was developed and addresses such issues as corporate E&S management systems, implementation of Hazard Analysis and Critical Control Points system, contractors' E&S management, combustion air emissions abatement to achieve limits for SOx, NOx, dust in line with Medium Sized Combustion Plants (MCP) Directive and controls for methane leakages, management of solid waste, wastewater and hazardous materials, traffic management, fire and explosion safety measures, labour and OHS policies and procedures, and stakeholder engagement. The New Energy plant and access roads layout will be adjusted due to location near local cemetery. All three plants were subject to the local EIA procedure with information disclosure and public consultations, and are expected to obtain environmental and construction permits by March 2019. The ESAP is agreed with the Client and addresses identified risks to ensure the Project is structured to comply with the relevant Bank PRs and national legislation.

The Project fully meets the Bank's GET criteria and is in line with circular economy principles.

Additionally, it contributes to a more sustainable waste management. It is common practice in the country to use manure as a fertilizer, spreading directly on the fields. This is not the best practice, and has been stopped in EU as it can lead to adverse soil and water contamination and create odour nuisances to public among other impacts. The project will help utilise manure in a more sustainable way and in line with EU practices. After using the animal wastes for biogas production Modus will return digestate (a by-product of digestion in methane production) to the farms that can use it as fertiliser leading to reduced demand of manure and chemical soil enhancement and lower associated environmental and social impacts. The substrate has increased concentration of key nutrients of potassium, phosphorous and nitrogen and lower odour compared with manure.

The Bank will monitor the implementation of the Project and compliance with ESAP on regular basis.

Technical Cooperation

€ 60,000 technical cooperation funds will be placed for technical due diligence. The funds will be provided via the existing Green Economy Project Preparation and Implementation Framework financed by the Government of Japan.

Company Contact Information

Gediminas Norkunas
gediminas.norkunas@modus.group
+370 5 274 0440
+370 5 274 0444
http://www.modusenergy.ie/
J.Balcikonio st. 9 (8th floor) LT-08247, Vilnius

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