PATNOW II

Location:

Poland

Project number:

32170

Business sector:

Power and energy

Notice type:

Private

Environmental category:

B

Approval date:

25 Jan 2005

Status:

Completed

PSD disclosed:

11 Dec 2003

Project Description

The project is a refinancing of the original project signed in August 2001, which didn't disburse and was cancelled in May 2002 as conditions precedent to disbursement were not met.
The EBRD would provide funds to finance construction of a new single 464 MW unit at the ZE Patnow Adamow Konin S.A. (PAK), a group of three lignite-fired power plants. The project will use a supercritical boiler technology and is going to be implemented through a turn-key EPC contract. The capital investment is the first stage of PAK's overall programme of modernisation and environmental upgrades. Since PAK provides about 13 % of Polish electricity, the programme is expected to significantly reduce emissions and provide a long-term source of stable and cost-efficient energy to Polish industry and consumers.

Transition Impact

By supporting Patnow II, the Bank would address one of the key transition challenges in the Polish power sector, helping the Government to succeed in its goal to reform the industry and to create a competitive energy market owned and managed by the private sector. In addition, the project provides opportunities to contribute to the transparent implementation of Poland's evolving energy law, and to the eventual liberalisation of the Polish energy market through policy dialogue with the energy regulator and other sector participants.
While the resolution of the long-term PPA for the power sector is still uncertain and the company's PPA is still necessary to attract finance for this important investment in one of Poland's cheapest sources of energy, the transition impact would derive from the substantial demonstration effects through
(i) the Bank's support for a privately owned power generator, who, through its competitive cost structure, is expected to operate successfully in the liberalised market and
(ii)the environmental benefits.

The Client

Patnow II, a special purpose company, was established as a wholly owned subsidiary of PAK. PAK is a joint-stock company and is one of Poland's largest and lowest-cost electricity producers, with 2,378 MW of lignite-fired capacity. Since its privatisation in 1999, one of the first in the Polish power industry, PAK has been owned and controlled by Elektrim S.A., a large Polish company with interests in telecommunications and power.

EBRD Finance

The EBRD is expected to provide up to EUR 60 million senior debt facility as a 14 year parallel loan alongside a consortium of commercial banks and other International Financial Institutions.

Project Cost

€ 540 million

Environmental Impact

The project was screened B/1, requiring an environmental analysis and audit (combined). As the project was already subject to detailed due diligence (inclusive of an Environmental Impact Assessment), as required under Polish law, the information needed to meet the Bank's environmental requirements was readily available and confirmed by a site visit. The key environmental issue for PAK is air emissions. The new unit is a replacement for two old and inefficient mazut-fired units (200MW/ea) with a new lignite-fired unit using supercritical boiler technology and state-of-the-art pollution control technology inclusive of FGD. This new unit will meet the relevant EU emission standards for particulates, SO2 and NOx. With regard to CO2, the higher efficiency will result in lower pro rata emissions per unit of electricity generated.
Compliance
PAK is in compliance with Polish environmental and health and safety legislation which is largely based on EU Directives. The new unit is designed to comply with relevant current and future EU emission standards. It will be fitted with low NOx technology, full limestone/gypsum FGD and high-performance electrostatic precipitators.
Monitoring and reporting
The client will have to submit Annual Environmental Reports to the Bank, detailing environmental and occupational health and safety performance.
Environmental management
The Bank will encourage the sponsor to implement an environmental management system in compliance with international standards such as ISO 14000.
Specific Environmental Issues
Air emissions
The new unit will meet EU emission standards for new plant. The project will be a significant step towards reduction of SO2 and to a lesser extent dust and NOx from Patnow. Total annual SO2 emissions are expected to decrease by almost 50 per cent, to around 42,000 tonnes p.a. Total annual CO2 emissions of the entire power station will remain unchanged, but specific emissions (per unit sent out) will decrease markedly due to the higher efficiency of the new unit (approx. 42 per cent net), compared with approx. 35 per cent for the older units.
Solid waste
Solid waste consists largely of fly-ash and furnace bottom ash, amounting to approx. 950,000 tonnes (current operations), which will rise to approx. 1,200,000 tonnes once the new unit is operational (ash plus approx. 150,000 tonnes of FGD gypsum). Solid waste is currently used for backfilling an old open-cast mine and it is planned to continue this practice (pending approval of ash/gypsum co-disposal by the local/regional Environmental Regulator).
Thermal discharges
Patnow has an open cooling system which relies on a natural lake. Thermal discharges are subject to Polish discharge limits and a special permit for the station to allow for slightly higher discharges during summer periods. It is expected that the existing permit will be extended.
Waste water
Domestic waste water (and subsequently FGD waste water) will be treated prior to discharge into the ash disposal area. This is subject to a permit and monitoring by the regulator.

Technical Cooperation

None.

Company Contact

ZE Patnow Adamow Konin S.A. ("PAK")
Anna Strizyk, Email: strizyk.anna@zepak.com.pl
 

Business opportunities

For business opportunities or procurement, contact the client company.

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