Renova StroyGroup-Academicheskiy

Location:

Russia

Project number:

38605

Business sector:

Municipal and environmental infrastructure

Notice type:

Private

Environmental category:

B

Status:

Cancelled

PSD disclosed:

22 Jun 2011

Translated version of this PSD: Russian

Project Description

The EBRD is considering providing a RUB 3 billion (€75 million) facility to participate alongside Sberbank of Russia on a risk sharing basis in loans extended (or to be extended by 2015) to ZAO “Teplosetevaya Compania”, ZAO “Vodosnabzhauschaya Compania”, and ZAO “Electrosetevya Compania”, wholly owned subsidiaries of Renova StroyGroup. The loans will be used for essential utility (water, wastewater, district heating and electricity distribution) infrastructure development within the framework of the Academicheskiy affordable housing project. Phase 1 of the project entails the development of 2.2 million square metres of affordable housing with related social infrastructure and will accommodate up to 70,000 people by 2017 in the vicinity of the city of Ekaterinburg in the Urals federal district of the Russian Federation.

Transition Impact

Transition impact potential comes from:

  • Improved competition and expanded supply of good quality affordable housing which should reduce housing prices improving housing affordability for all residential buyers across social categories. The operation will also stimulate more efficient pricing of secondary housing markets through improved liquidity, which will also have a positive impact on affordability of housing units.
  • Energy efficiency: the project will promote new energy efficient solutions to residential housing and large urban development projects employing the best available technology.
  • Demonstration of new replicable behaviour: will come through introduction of new financial products expanding the access to capital for private investors engaged in infrastructure development and the provision of high quality community services along with building of affordable residential housing.
  • Transfer and dispersion of skills: Academicheskiy is the first integrated housing project in Russia of such magnitude and complexity. It brings in international expertise in integrated development along with new innovative financing instruments, and energy efficient technologies establishing a new level of residential housing development in Russia.

The Client

Renova StroyGroup acting through 3 wholly owned limited liability companies: OOO “Teplosetevaya Compania” (district heating utility); OOO “Vodosnabzhauschaya Compania” (water and wastewater utility); and OOO “Electrosnabzhauschaya Compania” (electricity distribution utility).
Sberbank of Russia is the main external creditor to finance the investment activities of the client through provision of medium and long term loan facilities.

EBRD Finance

EBRD facility to participate on a 50 per cent risk sharing basis in the Sberbank loans extended to the 3 borrowers for a maximum amount of RUB 3 billion (€75 milllion).

Project Cost

Up to RUB 7.5 billion (€187.5 million)

Environmental Impact

Categorised B. The independent environmental and social due diligence assessed the Project impacts within its Area of Influence: the Academicheskiy development. Some of the benefits include introducing energy efficient buildings that reduce the consumption of energy by about 30 per cent; installing heat substations at each building level and thermostats in each flat that will enable households regulating consumption of heat.
The Client has developed and introduced a corporate Green Standard on environmental audit and voluntary environmental certification of the design, construction, refurbishment and operation of real estate, which sets procedures for monitoring and assessing environmental protection and rational use of resources. However, Renova StroyGroup Academicheskiy and Renova StroyGroup Engineering Infrastructure subsidiaries do not have any environmental, health and safety management systems in place. While management of Renova StroyGroup Engineering Infrastructure and of the district heating plant Akademenergo are aware about the importance of the environment, health and safety issues, there are some compliance issues associated with the operation of the district heating plant Akademenergo with incomplete permitting process and delayed payment of pollution fees. Waste management also requires significant improvement.

Ongoing construction impacts are associated with the high dust levels, increased noise from the construction machinery, poor waste storage and unfenced trenches and foundations that pose community safety risks. There are also issues with provision of adequate accommodation to the migrant construction personnel, hired by the general construction contractor.

While the Client carried out public consultation under Russian law and is pro-active on promoting the benefits of the new development, their efforts need to be expanded to provide timely information on the adverse impacts of the project and proposed mitigation measures to the stakeholders. An Environmental and Social Action Plan has been developed that contains mitigation measures for all identified impacts. Consultants have also developed a Stakeholders Engagement Plan providing a detailed framework for identifying and engaging with stakeholders.

Technical Cooperation

None.

Company Contact

Mr. Alexei Migalin,
Deputy CFO, Corporate Finance

Phone: +74957558081 (ext.5216)
Email: A.Migalin@renova-sg.ru

 

Business opportunities

For business opportunities or procurement, contact the client company.

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