Tashkent DH - Tashteplocentral Project

Location:

Uzbekistan

Project number:

49213

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

19 Sep 2018

Status:

Signed

PSD disclosed:

13 Jul 2018

Translated version of this PSD: Russian | Uzbek

Project Description

The Bank will provide a sovereign loan of up to US$ 50 million (€42 million) to the Republic of Uzbekistan ("RoU") to be on-lent and/or granted to the State Unitary Enterprise Tashteplocentral ("Company") to finance the Company's Priority Investment Programme ("PIP"). The PIP includes such investments in district heating infrastructure of the city of Tashkent as rehabilitation of boiler equipment and acquisition of pumps ("Project").

Project Objectives

The Project is expected to (i) improve energy efficiency in heat generation and result in around 100 GWh of annual energy savings, which translate into around 55 ktCO2 annual savings; and (ii) deliver water savings by improving technological processes in sanitary cooling.

Transition Impact

Good

The sources of transition impact are:
1) Green. The Project will increase the energy efficiency of heat generation and deliver water savings. Therefore, the Project qualifies as a positive climate change mitigation activity.

2) Resilient. The Project will focus on financial and operational improvements to achieve cost recovery and sustainability of the Company.

Client Information

UZBEKISTAN SOVEREIGN

EBRD Finance Summary

US$ 50,000,000.00

Total Project Cost

US$ 50,000,000.00

Environmental and Social Summary

The Project has been categorised B in accordance with the EBRD's 2014 Environmental and Social Policy. The Environmental and Social Due Diligence (ESDD) for the proposed Priority Investment Programme (PIP) for the Project was carried out as part of the Feasibility Study by independent consultants engaged under the IPPF. It included a review of current practices, an assessment of the Project's potential E&S impacts and a review of the Company's current E&S provisions and management capacity. All PIP components will be subject to local permitting procedures and EIA law (OVOS) in the future. An Environmental and Social Action Plan (ESAP) has been developed for the Project and will be agreed with the Company under a separate Project Agreement prior to Board approval. Stakeholder Engagement Plans (SEP) and a non-technical summary (NTS) have also been developed and will be disclosed.

The Company has assigned environmental, H&S and HR personnel with a good understanding of environmental and social national legal responsibilities related to their operations. The Company is operating in compliance with national legislation and related permits (where issued) with some non-compliances to be addressed with corrective measures in the ESAPs. The Company operates largely in compliance with the local environmental legislation, and the non-compliances identified by regulators are being addressed within the given time-scale. The environmental management focuses on permitting and monitoring emissions to air and water. An inventory of emitted pollutants is in place, and the company pays fees for emissions to air and discharges to water. Waste management is documented and an inventory of disposed waste maintained. Currently one of the large boiler plants (over 50MW) meets EU Best Available Techniques Associated Emission Limits (BAT AEL) with regards to NOx and CO.

The PIP involves the installation of several new co-generation gas turbines at existing Company boiler houses, which will allow the Company to produce both heat and electricity and increase operational efficiency. Whilst the Project will include the addition of gas turbines and a number of gas engines at 4 plants, most of the improvements will apply to burners and other measures to increase efficiency. The proposed PIP will bring 15 out of 48 boilers into the compliance with the EU AELs. The ESDD has shown that the Project will reduce CO2 emissions, improve the energy efficiency of the heating infrastructure, resulting in an overall reduction in gas, electricity and water use, and improve the reliability and quality of existing heating services. The boiler plants not addressed by the PIP will be subject to a detailed review based on their operational profiles and running hours and investment plans for further upgrades to meet EU BAT AELs will be prepared on a risk-based approach. As the Project will be carried out within existing TTC sites, no land is planned to be purchased or acquired. The negative impacts are predominantly short-term in nature and relate to the construction/ rehabilitation works.

The ESAP developed for the Company includes improvements to EHS management systems aligning technical specifications under PIP with EU BAT AELs, improvements to storage of sulfuric acid, improvements to internal grievance mechanism, inclusion of ES requirements in the tender documents, establishing contractor management and monitoring system, requirements for development of a detailed Construction Environmental Management Plan (CEMP) to minimise any impacts related to the construction stage and implementation of the SEP. The ESAP also addresses other aspects of the Company's operations to align them with PR requirements, namely: a detailed review of the boiler plants not covered by the PIP, consideration of risk-based improvements and development of a long-term plan to achieve compliance with BAT AELs; review of a number of boilers using heavy fuel oil (as a backup) against BAT AEL emissions for heavy oil-fired boilers; ongoing monitoring of the volumes of heavy fuel oil stored at these plants considering application of Seveso requirements; review of the oil delivery systems and practices; review of the discharged waste waters against BAT AELs and development of a plan to introduce waste water pre-treatment.

The Bank will monitor the implementation of the Project and the ESAP as well as the Company's E&S performance by reviewing the Company's annual environmental and social reports and undertaking monitoring visits as needed.

NTS | SEP

Technical Cooperation

Pre-signing:

• TC 1: Technical, financial, environmental and social due diligence. The assignment's cost was €300,000, funded by Infrastructure Project Preparation Facility (IPPF).

Post-signing:

• TC 2: Corporate Development Support to the Company to enhance its institutional, operational and financial capacity. The assignment's cost is estimated at €200,000, to be financed by an international donor or the EBRD Shareholder Special Fund.

Company Contact Information

Sevar Astanov
info@mjko.uz
+99871 234-07-28
+99871 234-06-08
http://mjko.uz
1 Niyozbek Yuli street, Tashkent City, 100035, Uzbekistan

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Text of the PIP

Project Complaint Mechanism (PCM)

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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.