Project Description
A loan of up to PLN 500 million to the Polish electricity utility Polska Grupa Energetyczna S.A. ("PGE", or the "Company"). The debt financing will support an investment programme of the Company's distribution business (the "Project") , PGE Dystrybucja S.A. ("PGE DSO"), in the period 2016-2019. The EBRD financing will support PGE to implement grid investments that are critical to connect new renewable energy capacity and to cope with the intermittent nature of their production.
Project Objectives
The EBRD financing will focus on electricity grid extension and modernisation investments which are aimed at (i) increasing the connection capacity of new renewable energy sources, (ii) improving the grid assets and management systems related to the necessity to control dispersed generation and (iii) reduce energy losses.
Transition Impact
The extensive investment programme to upgrade PGE's distribution network will allow for an improvement of grid parameters by improving the grid reliability and reducing energy losses.
In addition the Project is expected to have a positive effect on the expansion of the renewable energy market by increasing grid connection capacity. In total, in the years 2016-2019, PGE is expected to connect more than 500 MW of renewable energy sources (mainly wind farms). This is intended to have a positive effect on the expansion of the renewable energy market by increasing grid connection capacity.
Client Information
PGE POLSKA GRUPA ENERGETYCZNA SA
Polska Grupa Energetyczna SA is the largest vertically integrated Polish power utility, with operations concentrated in eastern and central Poland. The Company remains majority (58%) state owned and is listed on the Warsaw Stock Exchange.
EBRD Finance Summary
PLN 500,000,000.00
PLN 500,000,000.00 senior unsecured long-term corporate loan to PGE, to finance the investment programme of PGE DSO.
Total Project Cost
PLN 1,730,000,000.00
EBRD financing will be used to co-finance selected investments identified within the PGE investment programme in the distribution segment in the years 2016-2019.
Environmental and Social Summary
The Project will mainly have environmental benefits through increasing the grid capacity for integrating renewable energy supply into the system and reducing energy losses in the distribution. Adverse environmental and social impacts associated with the Project have been assessed to be limited and these can readily be addressed through the implementation of appropriate mitigation and management measures included in the Environmental and Social Action Plans ("ESAPs") agreed with both PGE SA and PGE DSO.
An independent consultant undertook environmental and social due diligence ("ESDD") of both the Project and the distribution Company (PGE DSO) as well as a corporate review of PGE SA, the holding Company. This included site visits and meetings with the relevant staff and management of the Companies to review current operations, management systems and investment program. The ESDD confirmed that the Project is structured to comply with the Bank's Performance Requirements (PRs) and PGE SA has the capacity to fully implement the Bank's PRs.
The corporate review of PGE SA showed that it maintains a robust EHS and CSR management and reporting system and is among the leaders in EHS management in Poland. PGE DSO is still integrating into the PGE SA corporate structure and the ESDD identified additional work needed to implement best practice. The ESDD included a review of social and labour related issues, and no material issues were identified. Expropriation is not used by PGE DSO when developing new investments and no labour disputes have been reported.
An initial screening of the planned investment program of PGE DSO indicated that these will not impact sensitive areas or receptors such as Natura 2000 sites. An environmental impact assessment ("EIA") has been carried out in accordance with Polish legal requirements for one of the investment projects that has a potential to impact on a Natura 2000 site and it has also been subject to Habitat Directive screening procedure. The EIA investigations and Habitat Directive screening showed that the project will have no significant impacts, including on Natura 2000 sites). The EIA was subject to a consultation process as part of approval process and the project has been approved by the Competent Authorities.
The ESAPs has been developed on the basis of the ESDD and require the Companies to implement corporate requirements and EBRD PRs. Specifically, the ESAPs require that the Companies will develop and implement all investment projects in compliance with the Bank's PRs and that new investments will be subject to appropriate screening and assessment of impacts including those on Natura 2000 areas and other sensitive receptors as part of corporate review and agreements with Competent Authorities. On the basis of the screenings and assessments, biodiversity mitigation measures will be developed and implemented for all sites, and for other natural (non-protected) areas, as needed. This will include a list of mitigation measures to be utilised on a case by case basis by contractors undertaking works. Specific requirements include confirmation that projects have undergone Habitat Directive screening procedure and, where needed, an appropriate assessment and have received the approval of the Competent Authorities. The Company will carry out public disclosure and consultations on each investment that is subject to an EIA in accordance with National law and EU EIA Directive. A corporate level SEP will be developed to address both corporate environmental and social issues as well as the Project specific issues. The ESAP for PGE SA also commits it to continue to develop and publish non-financial information, such as annual CSR reports.
The Company CSR report is available on the intranet (http://www.gkpge.pl/media/pdf/PGE_CSR_report.pdf) and a Non Technical Summary (NTS) is available for the Project in Polish and English (attached as PDF). The Bank will monitor the implementation of the ESAP and the Project through annual reports provided by the Companies and monitoring visits.
Technical Cooperation and Grant Financing
No TC directly linked to the Project.
Company Contact Information
Jakub Frejlich
Jakub.Frejlich@gkpge.pl
48 22 340 10 32
Implementation summary
The EBRD financing focused on electricity grid extension and modernisation investments aimed at (i) increasing the connection capacity of new renewable energy sources, (ii) improving the grid assets and management systems related to the necessity to control dispersed generation and (iii) reduction of energy losses.
The anticipated grid capacity increases for integrating renewable energy supply into the system were completed as originally envisaged, with visible reduction of energy losses in the distribution network.
The client remained in full compliance with the ESAP agreed with the Bank as part of the operation. Furthermore, the Bank's involvement in the sector (including through financing, promotion of private investments, policy dialogue and technical cooperation) acted as a positive force in the development of the Polish RE sector.
PSD last updated
20 Dec 2022
Understanding Transition
Further information regarding the EBRD’s approach to measuring transition impact is available here.
Business opportunities
For business opportunities or procurement, contact the client company.
For business opportunities with EBRD (not related to procurement) contact:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com
For state-sector projects, visit EBRD Procurement:
Tel: +44 20 7338 6794
Email: procurement@ebrd.com
General enquiries
Specific enquiries can be made using the EBRD Enquiries form.
Environmental and Social Policy (ESP)
The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.
More information on the EBRD’s practices in this regard is set out in the ESP.
Integrity and Compliance
The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.
OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.
Access to Information Policy (AIP)
The AIP 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 following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.
Specific requests for information can be made using the EBRD Enquiries form.
Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.
Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.
