AB Lietuvos Energija (f. Lietuvos Elektrine)

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The EBRD is considering providing a loan of up to €71 million to AB Lietuvos Elektrine (Borrower) for the construction of a new combined cycle gas turbine (CCGT) power plant of 450MW (Project) located at the Lithuanian Power Plant (LPP) in the city of Elektrenai. The Project will phase out LPP’s old conventional gas-fired units 3 & 4 whose lifetime comes to an end. The Project will also mitigate the consequences on Lithuanian power supply caused by the closure of the Ignalina Nuclear Power Plant by the end of 2009. The new CCGT plant will become commercially operational by 2013. The Project is expected to significantly increase the generation efficiency of the LPP thermal power plant and upgrading its environmental standard of operation by applying state-of-the-art CCGT technology, while supporting the completion of planned INPP decommissioning as agreed with the EU. AB Lietuvos Elektrine (Borrower) is the owner and operator of the 1,800MW thermal Lithuanian Power Plant (LPP). The Borrower is 96.4% State-owned and the remaining shares are listed on the Vilnius Stock Exchange. LPP is located in Lithuania, close to the city of Elektrenai, about 50 km west of the capital Vilnius. The EBRD is considering extending a long term loan of up to €71 million to fund a portion of the €360 million costs associated with the construction of the new 450MW CCGT plant (Project). The Ignalina International Decommissioning Support Fund (“IIDSF”), a consortium of local commercial banks and the Borrower are expected to provide the balance of the financing. €360 million. Environmental classification and rationale Following an Initial Environmental and Social Examination (IESE), the Project has been screened as category “B” under the Bank’s Environmental and Social Policy (2008), which requires an Environmental and Social Due Diligence (ESDD) of the Project. Environmental and social impacts associated with the replacement of two old and in-efficient gas fired unit with a state of the art Combined Cycle Gas Turbine (CCGT) at an existing power plant can be readily assessed and mitigated as part of an ESDD. The project does not result in the additional of generating capacity, above 300 MW thermal Due diligence undertaken and outcomes The ESDD consisted of an environmental and social audit of the existing power plant and environmental analysis of the planned investment. The ESDD was undertaken by an independent consultant. The Company is subject to IPPC permitting and an EIA was undertaken for the project in 2008 in line with National requirements. The Company has up-to-date environmental permits. The IPPC permit will need to be updated at the end of 2009. The key environmental issue is associated with air emissions, notably NOx emissions. The due diligence confirmed that the new CCGT plant as well as the existing units that will remain in operation will comply with EU environmental standards as defined by Large Combustion Plant Directive (LCP) and EU IPPC Directive. The CCGT plant will fully meet National and EU environmental standards. The project was subject to the Lithuanian EIA process and no material issues or complaints have been raised by the public. Stakeholder Engagement Plan (SEP) and additional Non Technical Summary (NTS) have been prepared to keep the public informed of project developments and the NTS has been published on the Company’s website, including the English version. The ESDD included a review of the company operations to asses the institutional capacity of the Company to implement the Bank’s Performance Requirements. The Company has a good environmental management system, but recommendations have been made for further institutional strengthening and the need for the development of a more formalized environmental, health and safety management system. The Company will also develop and publish on an annual basis a corporate environmental report. The Company has also committed to install continuous emission monitoring system on the new unit as well as unit 5 and 6, and to discontinue using unit 3 and 4 for heat and electricity generation upon the completion of the new CCGT plant (unit 9). Unit 3 and 4 will not be included in the new IPPC permit after 2010. These requirements together with the implementing of a Stakeholder Engagement Plan (SEP) have been included in the Environmental and Social Action Plan (ESAP), which has been developed and agreed with the Company. The Bank will monitor the implementation of ESAP for this project as well as the implementation of the corporate ESAP. An independent commissioning audit will be undertaken to verify that the plant fully meets the ESAP requirements. Information on the Company can be found on the Company web site. The Project NTS has been published on the Company’s website. Implementation requirements None.