Tashkent DH - Tashteploenergo Project

Location:

Uzbekistan

Project number:

49214

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$ 100 million (€83 million) to the Republic of Uzbekistan ("RoU") to be on-lent and/or granted to the State Unitary Enterprise Tashteploenergo ("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 the heat distribution network, installation of individual heat substations and solar panels ("Project").

Project Objectives

The Project is expected to result in the reduction of gas consumption by 38 million m3 per year and associated annual CO2 emission reduction of 86 ktCO2. The Project will also bring water savings through the rehabilitation of pipes and the introduction of individual heat substations.

Transition Impact

Good
The sources of transition impact are:
1) Green. The Project will improve energy efficiency in heat distribution and consumption by replacing pipes, upgrading and replacing DH network pumps and installing individual heating substations and meters in the City of Tashkent. Furthermore, solar electricity systems will be installed at selected public buildings, which are expected to generate around 12 GWh of renewable energy annually. 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$ 100,000,000.00

Total Project Cost

US$ 100,000,000.00

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 noncompliances to be addressed with corrective measures in the ESAPs.

The PIP addresses investments related to increasing operating efficiency and decentralization of part of the district heating system operated by the Company (certain micro-districts will be disconnected from the centralised district heating system and new localised boilers and solar thermal installations on building rooftops will be installed). The ESDD has shown that the Project will reduce CO2 emissions, improve the energy efficiency of the heating infrastructure, and improve the reliability and quality of existing heating services. As the Project does not involve any network extension works, 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 Project may restrict local access to businesses, open public spaces and shops due to route diversions and potential increased traffic, however these impacts will be managed under the relevant plans included in the ESAP.

The ESAP developed for the Company includes improvements to EHS management systems, aligning technical specifications under PIP with EU standards, inclusion of ES requirements in the tender documents, requirements for development of a detailed Construction Environmental and Social Managements Plan (CESMP) to minimize any impacts related to the construction stage; review and formalise HR policies, implement internal grievance mechanism, establish contractor management and monitoring system and implementation of the SEP. The ESAP also addresses other aspects of the Company's operations (not directly linked to PIP) to align them with PR requirements, these include among other: review of the medium combustion plants (1-50MW) against the EU Medium Combustion Plans directive including the compliance after 2030, undertaking an asbestos survey, testing transformers oil for presence of PCB.

The Bank will monitor the implementation of the Project and the ESAP as well as the Company's environmental and social 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

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