Yuzhno-Sakhalinsk District Heating Project

Location:

Russia

Project number:

42904

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Approval date:

18 Dec 2012

Status:

Complete

PSD disclosed:

19 Oct 2012

Translated version of this PSD: Russian

Project Description

The EBRD is considering to extend a senior loan of up to RUB 450 million (EUR 11.3 million) to OJSC Sakhalinskaya Kommunalnaya Kompaniya (the “Company”) for rehabilitation of district heating infrastructure in the City of Yuzhno-Sakhalinsk (the “City”) in the Russian Far East.

Transition Impact

Transition impact is expected to be achieved through the:

  • Introduction of a public service contract which will regulate the relationship between the Company (as operator) and the City (as owner) and specify the rights and responsibilities of each party to improve service levels;
  • Improvement in the tariff methodology to ensure achievement of full cost recovery and incentives for cost efficiency;
  • Demonstration of successful cost restructuring including reductions in operating and maintenance costs.

The Client

OJSC Sakhalinskaya Kommunalnaya Kompaniya is a district heating, water and wastewater utility, 51.81 per cent owned by the City and 48.19 per cent by JSC SakhalinEnergo, a regional power generating company ultimately owned by the Russian Federation.

EBRD Finance

Senior corporate loan to the Company of up to RUB 450 million (EUR 11.3 million), guaranteed by the City.

Project Cost

Up to RUB 600 million (EUR 15 million).

Environmental Impact

The proposed project has been categorised B in accordance with the 2008 EBRD Environmental and Social (E&S) Policy, as the potential impacts are expected to be site specific and readily identifiable and addressed through mitigation measures.

The environmental and social due diligence for the project, which is ongoing, includes an independent third party environmental and social audit to assess the Company’s management capacity and systems to manage environment, health, safety and labour issues in its operations and an analysis of the potential (future) E&S impacts and benefits. It will also assess the Company’s ability to carry out the Project in compliance with the Bank’s Performance Requirements.

An Environmental and Social Action Plan (ESAP) will be prepared for the project, and a Stakeholder Engagement Plan will be developed that will include a grievance mechanism. Information on environmental and social performance and a summary of the agreed ESAP will be released to stakeholders.

This PSD will be updated when the results of due diligence are known.

Technical Cooperation

The following Technical Cooperation will support the project:

Pre-signing

  • Environmental and social due diligence, EUR 68,950, financed by the Bank’s own resources;
  • IFRS Audit: EUR 48,000, financed by the Bank’s own resources.

Post-signing

  • PIU training and initial support, up to EUR 500,000, to be financed by an international donor;
  • Corporate Development Programme including Public Service Contract (PSC), EUR 250,000, to be financed by an international donor.
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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