Timisoara District Heating

Project Description

The proposed project is designed to increase the overall efficiency of the district heating system in the City of Timisoara. The project represents a modernization and an extension of the existing co-generation plant.

Increased efficiency will enhance the reliability and quality of supply of both electricity to the power grid and heat to the district heating network allowing the Timisoara municipal district heating company, Colterm S.A., to reduce generation and maintenance costs.

The Bank’s funds will be used to finance the installation of new gas and steam turbines with hot water recovery boilers for co-generation of heat and electricity.

Transition Impact

Commercialisation and improved system management

• The proposed project will improve the performance of the district heating system through improved commercialisation of the municipal district heating company.

• This will be supported by a corporate development programme to improve the commercial performance and standards of corporate governance of the Company, tariff structure reform and operating subsidies reform.

• A service agreement will be concluded between Colterm S.A. and the City providing for service and commercial performance standards to be achieved by the Company.

Framework for markets

Full cost recovery tariffs and increased transparency in billings will also improve customer satisfaction and encourage energy conservation.

The Client

Colterm S.A., the municipal district heating company owned by the City of Timisoara.

EBRD Finance

Loan of EUR 15 million to Colterm S.A. structured as A/B loan with an EBRD A Loan of up to EUR 10 million and a B Loan to a participating bank of up to EUR 5 million. The Loan will be guaranteed by the City of Timisoara.

Project Cost

EUR 21 million.

Environmental Impact

Screened B/1. Significant environmental benefits can be expected from the rehabilitation of existing district heating network. Any adverse impacts are expected to be limited to short-term environmental, health and safety issues arising from installation works, which can be adequately mitigated by taking environmental protection measures into consideration in project planning and work practises. An environmental due diligence of the proposed transaction is currently underway. An EAP will be developed and agreed with the Client based on the findings of the environmental due diligence. A summary of the project impacts along with the required mitigation measure will be released locally to affected stakeholders prior to Final Review.

Technical Cooperation

The project has already benefited from a technical, financial and institutional feasibility study funded from the UK Government and from an environmental due diligence funded by UNDP/GEF.

It is expected that further Technical Co-operation assistance will be provided to assist Colterm S.A. in institution-building and training component in support of a corporate development programme.