Mosenergo Post Restructuring Loan



Project number:


Business sector:

Power and energy

Notice type:


Environmental category:


Approval date:

13 Dec 2005



PSD disclosed:

25 Oct 2005

Project Description

Financing of Mosenergo’s urgent priority investments for the refurbishment of several combines heat and power plants (“CHPs”) to improve the efficiency of operations. Up to USD 50 million RUB equivalent will also be used to finance optimization of the balance sheet (refinancing of short-term debt).

Transition Impact

The transition impact of the loan derives from the following:

  • The Bank’s loan to a newly created generation company is a logical step in supporting the power sector restructuring and a follow-on expansion of the liberalised power market.
  • Investment in rehabilitation of the Company’s power plants should result in increased efficiency and reliability, reduced losses and improved environmental performance of the Mosenergo’s assets. This should improve the Company’s competitiveness in the liberalising power market.
  • Through a representative with an observer status at Mosenergo’s Board of Directors meetings the Bank will have an opportunity to monitor the Company’s corporate governance practices related to the Project.
  • Through the proposed Technical Assistance, the Bank will work with the Company on further development of heat law and/or methodology.

The Client

Mosenergo Open Joint Stock Company (Mosenergo or the Company), a generation company that serves Moscow and the Moscow region and is a post-restructuring successor to a vertically integrated Moscow regional power utility. Mosenergo holds a B- long-term corporate rating with stable outlook from Standard & Poor’s.

EBRD Finance

The Bank will underwrite up to USD 250 Million rouble equivalent (the Loan), consisting of:

a. Tranche A in the amount of USD 100 Million rouble equivalent for the Bank's own account; and

b. Tranche B to be syndicated in the amount of USD 150 million rouble equivalent.


Project Cost

Up to EUR 1.24 billion.

Environmental Impact

Environmental classification and rationale

The project was screened B/1, requiring an Environmental Audit and Environmental Analysis in line with the Bank's Environmental Policy and Public Information Policy. The modernization of existing power units focusing mainly on improvising energy efficiency and operational control is associated with a number of environmental issues, which can be readily identified, assessed and mitigated as part of an Environmental Analysis.

An Environmental Audit and Analysis was undertaken by an independent consultant.

Key environmental issues and mitigation
The key environmental issues are air emissions (i.e. NOx) from the mainly gas fired units (92% of used fuel is gas). As a result of ongoing investment programmes the Company has achieved significant NOx emission reductions with emission down from 151 kT in 1993 to 67 kT in 2004. The investment programme will further reduce emissions by 2010. It should be noted that the share of the power utilities is approximately 5% of all emission in the atmosphere of the Moscow area.

Overall emissions from the plant are not judged as a having a significant adverse impact due to the nature of fuel mix, a lot of environmental measures and sites location. The planned modernization will also upgrade existing boilers inclusive of the existing primary NOx control systems and the installation of low NOx burners.

The plants are subject to regulatory control and all plants have valid permits. Russian air quality standards, notably for SO2 and NOx are substantially more stringent than comparable European Union standards. The investment programme is aimed at ensuring compliance with Russian air quality standards and is structured to meet EU environmental standards. The Company will undertake a Best Available Techniques (BAT) assessment of operations in the future to further assess investment needs.

Greenhouse gas (GHG) emissions are currently around 50 mln t/yr. A GHG strategy will be developed in the future as part of the EMS to take account of the planned increase in the demand of electricity in the Moscow region.

Water use is a significant aspect of the plants operations. The planned investment programme aims to improve quality and reduce quantity of sewage from the plants.

The operations are not associated with significant waste disposal problems due to the nature of the fuel used. However, some hazardous and non hazardous waste needs to be located and utilized in licensed landfills. As part of developing a formalised environmental management system this will be addressed to reduce environmental and human risk.

Contaminated land control regularly take place according to the schedule by means of observations and analysis of groundwater from the net of piezometric stations at the CHPs.

Asbestos containing materials are not used at the plants now, but exist at some non-refurbished equipment and the investment programme will include the development of an asbestos management plan to address this issue.

Part of the investment programme is aimed at introduced a formalised environmental, health and safety management system and continuous monitoring at all 17 plants is to be undertaken by 2012. This will allow for further strengthening of the current environmental, health and safety management system at the Company in line with best international practice.

Environmental opportunities
The proposed project is expected to bring significant environmental benefits as the upgraded plant will have a higher overall efficiency and substantial improvement will be made to the environmental management and operation of the plant. Future investments may result in the potential for JI and CDM projects.

Summary of Environmental Action Plan

The company will be required to adhere to Russian environmental, health and safety regulations and EU environmental standards. All relevant permits will need to be obtained during the modernization period.

An Environmental Action Plan (EAP) has been developed and agreed with the Company based on the results of due diligence. The EAP will address, inter alia, air emission control; need for continuous air monitoring systems; asbestos management; house keeping, and the overall management of the environment, health and safety issues at the power plant and associated auxiliary operations. An environmental management system incorporating all operational units will be developed by 2012.

The following upgrades are planned:

  • Upgrade of boilers including installation of low NOx burners;
  • Upgrade of wastewater treatment facilities;
  • Noise reduction measures, and
  • Improvements in cooling tower operation in order to reduce vapour emissions.


Disclosure of information and consultation
In the context of the EBRD's participation in the project, the Company has released 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 continue to monitor the environmental impact of its operations in accordance with national 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. This will include:

(i) ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programmes, and

(ii) the status of implementation of environmental mitigation and improvement measures. The Bank's representatives will also conduct periodic site supervision visits when deemed appropriate.

If required, the Bank will carry out monitoring visits to the Company.

Technical Cooperation

Technical Assistance will be sought to facilitate development of heat law.

Company Contact

Dmitry V. Vasiliev
First Deputy General Director for Strategy and Corporate Policy
Mosenergo Open Joint Stock Company (AO Mosenergo)
8, Raulskaya Naberezhnaya St.
Moscow 115035


Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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