The project enables the borrower to address urgent investment needs for the rehabilitation of the district heating networks in the cities of Buzau, Fagaras, Oltenita, Pascani and Ploiesti.
The project will:
- increase significantly the heating systems' efficiency by reducing the fuel, heat and water losses, and support demand-side investments;
- contribute to the implementation of a market-oriented regulatory framework in the heating sector and support the commercialisation of the heating companies; and
- create environmental benefits by reducing the SO2, NOx, particulates and CO2 generated by the companies' heating production and distribution facilities.
The project will:
- contribute to the formation and expansion of small and medium-sized enterprises;
- contribute to the implementation of a cost-based pricing of energy and effective collection of receivables;
- support the implementation of a market-based system for regulating the sector and reduce the market distortions in the sector; and
- improve effective corporate governance and speed up the transfer of market-economy management skills.
The borrower is Romania, and the beneficiaries and implementing agencies are the district heating companies operating in the municipalities of Buzau, Fagaras, Oltenita, Pascani and Ploiesti.
The proposed loan is US$ 45 million (ECU 36 million): 15 years' maturity and five years' grace period.
The total project cost is estimated at US$ 74.38 million (ECU 59.5 million).
The project was screened as B/0, requiring an environmental analysis. This was carried out for all five towns covered by the project by an independent international consultant. As part of the environmental due diligence, a quantitative analysis of air emissions for two scenarios was undertaken, comparing:
- a business-as-usual scenario, i.e. the level of emissions if the system continues to operate without technical modifications but production increases to meet current heat demand, and
- a least-cost scenario, i.e. the level of emissions following implemention of the rehabilitation programme and conservation measures to be financed under this project.
The analysis demonstrated that the project will have a positive environmental impact as it will significantly reduce air emissions.
All boilers will burn natural gas as the main fuel. The new boilers will comply with Romanian and European Union emission standards as shown below:
Air emissions from new boilers (mg/Nm3) Project
Nitrous oxides 200
Sulphur dioxide 35
Air emissions from new boilers (mg/Nm3)EU standards
Nitrous oxides 350
Sulphur dioxide 35
Other project components will be designed and implemented in accordance with applicable Romanian laws and good international practices.
The results of the environmental analysis were discussed with the local environmental authorities, who endorsed the conclusions presented by the consultants. Environmental and health and safety permits to commence construction and rehabilitation works have been issued by the Romanian regulatory authorities.
Technical cooperation will focus on procurement, engineering design and a project management advisory service to ensure that the project is properly implemented.
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