Taganrog Teploenergo II

Location:

Russia

Project number:

40894

Business sector:

Municipal and environmental infrastructure

Notice type:

Private

Environmental category:

B

Target board date:

09 Feb 2010

Status:

Cancelled

PSD disclosed:

18 Dec 2009

Project Description

The EBRD is considering providing a RUB 350 million loan to Taganrog Teploenergo, a privately-owned district heating company, to continue its expansion to other districts of the city of Taganrog by replacing an obsolete and inefficient oversized boiler house owned by a local industrial enterprise with new state-of-the-art boiler houses to ensure the secured supply of heat and improve the quality of district heating services in the city.

Transition Impact

The project will contribute towards improved frameworks for markets through the introduction of multi-year RAB tariff for heat transportation by the Teploenergo in 2011. The adoption of the new multi-year RAB tariff would significantly reduce the risk of investments in the sector due to increased transparency of the tariff setting process and improved predictability of revenues.

By introducing an independent board director, the Bank would also significantly improve the Company’s corporate governance and business conduct. The independent board director will be responsible for advising Teploenergo on the strategic issues, improvement of the internal processes and the overall discipline and for ensuring Teploenergo’s adherence to the provisions of the Corporate Governance Code.

The Client

Taganrog Teploenergo, a district heating company, providing heat and hot water services to both residential and industrial customers in the City of Taganrog.

EBRD Finance

Debt up to RUB 350 million

Project Cost

RUB 350 million

Environmental Impact

Categorised B (2008). The environmental and social issues associated with the construction of new boiler houses of up to 20 MW capacity each can be readily identified and mitigated. The Project also involves existing facilities and brownfield sites.
An independent environmental and social analysis of the proposed investment and an environmental, health and safety audit of existing operations were conducted in November-December 2009. The due diligence identified that the Project will bring about environmental benefits due to reduction of air emissions and improved energy efficiency. New boiler houses will be automated and allow a constant on-line control of the combustion process and consumption of energy and water. The project will generate some air emissions, construction waste and debris, increased dust and noise levels during the construction phase. These impacts can be mitigated through implementation of relevant protection measures and management plans.

The Company plans to complete the development of the Environmental Management System and obtain an ISO 14001 certification in 2011. The Company has in place an Occupational Health and Safety supervision system as well as time schedule for regular monitoring of working conditions. All key social and labour issues are incorporated into the officially issued Collective Labour Agreement approved by both Company's top management and trade unions.

The new automated boilers will increase the safety of operations as they allow a prompt intervention of operators in case of irregularities and prevent accidents. The Project will not trigger any involuntary resettlement or economic displacement due to the fact that new boiler houses will be situated in "brownfield" or undeveloped and abandoned municipal land areas. There will be no significant impacts on natural resources as there are no environmentally sensitive or protected areas present in the vicinity of the Project.

Although the Company has no written internal procedures in place for responding complaints, in practice, if any grievance is submitted, it is recorded and processed under the supervision of the General Director. The Environmental and Social Action Plan contains measures to conduct air and noise dispersion studies, measures on supervising the construction process to ensure that air emission, dust, noise and vibration levels are monitored and required mitigation measures are implemented; requirements on developing waste management plan and also compiling material safety data sheets on all chemicals to be used during the construction and operation. The ESAP also contains recommendations on improving the stakeholder engagement process and formalising existing grievance procedures as well as on developing and implementing an occupational health and safety management system. The implementation of the ESAP will ensure the project complies with the Bank's PRs.

Technical Cooperation

None.

Company Contact

Gennady Dvoryaninov
General Director
23a, Lomakina st.
Taganrog 347900
Russian Federation
Tel/Fax: +7 (8634) 38-39-52
Web site: http://tepts.ru/

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