Semey District Heating

Location:

Kazakhstan

Project number:

43123

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

16 Dec 2015

Status:

Signed

PSD disclosed:

31 Mar 2014

Translated version of this PSD: Russian

Project Description

The EBRD is considering providing a loan of up to KZT  3 billion (€  9.7 million equivalent) to the State Communal Enterprise “TeploKommunEnergo” (the “Company”), a municipal district heating (DH) company in the City of Semey (“Semey”), to support a Priority Investment Program (PIP) with the goal to rehabilitate and upgrade the DH infrastructure in Semey.

The project will include measures for the modernisation and optimisation of the DH infrastructure through network rehabilitation, upgrade and modernisation of central heating substations (CHS) and introduction of individual heating substations (IHS) at the level of buildings equipped with heat meters ensuring automated control and regulation of heat supply. This will result in enhanced energy efficiency, reduction of hot water and heat losses in the system and improvements of environmental standards.

Transition Impact

The transition impact of the project is expected to include:

  • Tariff reform: the company will work closely with the regulatory authorities to secure tariff reforms required for the implementation of the investment programme while maintaining the level of tariffs within affordability constraints. The reforms will be covenanted in the Loan Agreement and the Project Support Agreement.
  • Demonstration of new replicable products and processes: the expansion of metering and tariff increases will help to demonstrate the potential of modern energy supply business practices in increasing the economic viability of district heating network operators.
  • CO2 reduction: the company will report its annual reduction in heat losses from which gas and CO2 savings will be calculated.
  • Behavioural change: the project will strengthen incentives for consumers to conserve energy through the on-going metering programme and the expansion of consumption-based billing.
  • Energy Efficiency: the project will bring energy efficiency improvements to the company’s operations and overall the city of Semey.

The Client

State Communal Enterprise “TeploKommunEnergo” in the city of Semey in the East-Kazakhstan Oblast, Kazakhstan.

EBRD Finance

A senior loan of up to KZT 3 billion, co-financed by the Clean Technology Fund (“CTF”) in the amount of up to US$ 6.4 million (€ 5.8 million equivalent).

Project Cost

USD 33.3 million including related technical cooperation to support the company with project preparation and implementation.
It is expected that the EBRD loan will be supplemented by (1) a USD 6.4 million Clean Technology Fund (CTF) co-financing loan from the EBRD Climate Investment Fund on concessionary terms, subject to the project approval by CTF, and (2) KZT 1.9 billion capital grant co-financing from the city of Semey.

Environmental Impact

The Project has been categorised B in accordance with EBRD's 2008 Environmental and Social Policy (“ESP”). The Project is expected to bring environmental and social benefits associated with the overall improvement in the quality and reliability of heating and hot water services in the city, improved energy efficiency and reduction of coal use in DH services with associated CO2 emission reductions, and reduced heat and water losses.

The Loan will be used to finance priority capital investments, including complex modernisation and optimisation of the DH infrastructure throughout the network rehabilitation, upgrade and modernisation of central heating substations (“CHS”) and introduction of individual heating substations (“IHS”) at the individual buildings level. The IHSs will be equipped with heat meters and will enable modern control and regulation of heat supply and heat distribution. This will result in enhanced energy efficiency, reduced consumption of hot water and heat losses in the system, and improved environmental standards.

Independent due diligence (“ESDD”) has been undertaken by an international consultancy as part of the technical feasibility study. ESDD included a review of the Company’s corporate environmental and social management capabilities and procedures in relation to its own workforce and construction contractors, and an analysis of the environmental and social impacts and benefits of the proposed investment programme to assess the Project against the EBRD's Performance Requirements (“PRs”).

ESDD established compliance of the proposed investment project with EBRD PRs, including relevant applicable national environmental and OHS legislation. ESDD confirmed the Project will improve quality and reliability of heat supply in the City, improve the living conditions in the houses because of the IHS installation, additional amount of generated energy.

An Environmental and Social Action Plan (ESAP) and Stakeholder Engagement Plan (SEP) were prepared based on mitigation measures and corrective actions identified during due diligence to cover construction and operation stages and have been agreed with the Client. The ESAP includes development of an environmental policy and procedures for the Company and further enhancing their monitoring programme.  The ESAP includes the requirement for environmental, health and safety and social requirements into contractor agreements and develop monitoring programme of contractor compliance; implementation of Stakeholder Engagement Plan, including media announcements prior to works commencement
 

Technical Cooperation

Pre-Signing

  • Preparation of a feasibility study with detailed PIP. EUR 295,000 financed by the Clean Technology Fund.

Post-signing

  • Project Implementation Support to assist the company with project management, design, procurement, engineering and supervision of works. € 650,000 to be financed by Finnish Ministry of Employment & Economy Technical Co-Operation Fund.
     
  • Corporate Development Support to assist with the introduction of a Public Service Contract, institutional capacity building, and implementation of Stakeholders Participation Programme. € 400,000 to be financed by Clean Technology Fund.
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.