Translated version of this PSD: Russian
A sovereign loan of up to EUR 4 million to finance Vostokelectro investment program. The program is aimed at the rehabilitation and modernization of low and medium voltage networks, including installation of 32,000 smart meters in Tup and Jeti-Oghuz regions in the east of Kyrgyzstan. The project will improve reliability of the power supply and will significantly reduce technical and commercial losses in the regions of operation.
With this investment the Bank will initiate a restructuring process of a public utility in order to improve operating efficiency and restore financial health. On top of the expected improvement in the operating performance, the Project will entail commercialisation of the Company's operations and increased transparency. This will be achieved via a TC support to review current billing and collection practices, as well as help with implementation of the restructuring process. In addition, the Bank will request an annual IFRS audit by a reputable audit firm and compliance with the ESAP.
The Project will increase revenue collections and introduce more commercial business practices.
It will also address energy efficiency improvements, reduction of commercial losses and increasing reliability of power supply.
The loan is made to the Kyrgyz Republic, to be on-lent to a state-owned JSC Vostokelectro electricity distribution company.
EBRD Finance Summary
Total Project Cost
Environmental and Social Summary
Categorised B (2014 ESP). Upgrading of the existing distribution networks and smart metering is mainly expected to result in environmental and social benefits. Environmental and social risks and impacts are mainly site specific and limited to the installation and construction works. No land acquisition or works in protected areas are expected. Nevertheless, a number of mitigation measures have been agreed with the Company and included in an Environmental and Social Action Plan (ESAP) to structure the Project to meet EBRD's 2014 Performance Requirements. Opportunities to maximise the benefits from smart metering for the end-users were also discussed with the Company.
An Environmental and Social Due Diligence (ESDD) was carried out by the Bank's environmental and social specialists. The scope of the ESDD included meetings with Vostokelectro central office and departments in charge of quality assurance, environment, public and client relations, human resources and health and safety management. Vostokelectro's largest workshop and storage sites were also visited, as well as worksites in the publicly accessible locations. Due to the nature of its activity, the company mostly works in inhabited rural and urban areas. The ESDD confirmed that the Company has the institutional capacity to implement the Bank's Performance Requirements (PRs) and that the anticipated environmental and social risks and impacts associated with the Project are limited and that the Project does not require an Environmental Impact Assessment or any additional environmental permit or authorizations as per the national legislation.
The company has procedures in place to meet national environmental, social as well as occupational health and safety requirements. The company however lacks a management system that would allow continuous improvement as well as good environmental and social performance throughout the
Company's operations. Occupational health and safety needs to be strengthened. The main causes of accidents are electrocutions, falls from height and traffic/road accidents. The ESAP requires the Company to implement, among others, the following measures:
Establish an integrated ISO9001, ISO14001 and OHSAS18001 certified management system;
Prepare, disclose to the staff and implement a Human Resources Policy meeting Kyrgyzstan legislation and EBRD performance requirements;
Develop and implement a Birds Protection Plan through the ISO14001 management system in liaison with local ornithologists (the city of Karakol is next to Karakol Lake important bird area);
Conduct a survey with a representative panel of customers in order to:
-Improve the management of planned disruptions, with a focus on notification time and media.
- Adjust the disruption notification procedure accordingly;
- Inform the customers about the various benefits related to smart metering for the domestic users (home displays, consumption follow-up tools, new payment methods, etc.); and
- Test the consumer expectations and preferences with regards to these potential benefits.
The Bank will monitor the project's environmental and social performance and compliance with the ESAP and the EBRD PRs by reviewing annual reports prepared by the Borrower on environmental and social matters. The Bank will also undertake monitoring site visits, as needed.
The following technical cooperation is envisaged to go along with the project:
TC technical audit and project preparation will be provided using the existing framework programme for the sustainable development of the power sector.
TC to hire a consultant to help implement the project including assistance in procurement of goods and services.
- TC to hire a consultant to develop a Corporate Development Program to improve billing and collection and other management practices.
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