Aktobe CHP rehabilitation

cancelled

Aktobe CHP’s rehabilitation and efficiency improvement investment programme would include: (i) installation of a new 30 MW steam turbine, (ii) installation of a new 25 MW Gas Turbine unit with Heat Recovery Steam Generator, subject to outcome of detailed feasibility study, and (iii) other energy efficiency projects, including boilers’ modernisation. The project will increase generation capacity and significantly improve the plant’s efficiency and environmental performance to address the growing demand in the Aktobe region in a sustainable manner This project will achieve significant transition impact: The project once completed will achieve significant efficiency improvement, and the increase in capacity of this power plant fuelled by associated gas will contribute to the diversification of power generation towards less carbon intensive fuel, which, in Kazakhstan, is otherwise dominated by lignite coal fired plant. The project is identified as a priority under the Sustainable Energy Action Plan (SEAP) signed between the EBRD and the Government of Kazakhstan earlier this year. The Project will seek to further improve the Borrower’s financial transparency and quality of financial information through IFRS statements going forward and quality standard improvement through ISO 9001 and ISO 14001 by end 2012. In parallel, as part of implementation of the SEAP, the Bank will continue to work directly with the Anti-Monopoly Agency and the Ministry of Energy and Natural Resources to further improve tariff methodologies applicable to regulated heat and electricity activities in line with international practice, through inter alia, the implementation of consultants’ recommendations provided to date under Technical Cooperation Aktobe CHP Joint Stock Company owns and operates a gas-fired combined heat and power plant with total 102 MW and 1,139 Gcal/h installed capacity in Aktobe in North West Kazakhstan. Senior secured long term loan: up to USD 40 million. Approximately USD 50 million. Screening category and justification The project was screened as B/1 under the Bank’s Environmental Policy (2003) and was subject to an Environmental Audit and an Environmental Analysis of the proposed investment plan to ascertain future compliance with national and the EU environmental standards. Due diligence undertaken and outcomes The environmental due diligence of the Project was undertaken by an independent international environmental consultant and included site visits and meeting with local regulators. The Company operates a gas fired combined heat and power plant (CHP), which had been originally designed as a coal fired plant in the 1940s (until 2000 the plant operated using heavy fuel oil). The plant dates from the 1940s and upgrades are needed to improve the plant’s operational performance, reliability as well as increase energy efficiency and reduce environmental impacts. The environmental due diligence has confirmed that the plant is in general compliance with National environmental standards, and additional benchmarking was undertaken against the EU environmental standards, although direct comparison was difficult to make as the technology employed is of a lower efficiency than at similar power plants in EU. Nevertheless, the environmental impacts of the plant are low and the main environmental issues in the region are associated with localised industry. The environmental due diligence confirmed that the Bank’s financing is structured to meet National and EU environmental standards. The overall implementation of the program will increase capacity to address growing demand in the Aktobe region of Kazakhstan and achieve higher efficiency as well as reduce the environmental impacts of the plant. Based on the environmental due diligence an Environmental and Social Action Plan (ESAP) was developed and agreed with the Company. This includes The ESAP also includes the need to undertake additional studies as part of the planned modernization programme and need to liaise with the local authorities to address among others, future permitting and the extent of sanitary protection zone Implementation requirements A Technical and Energy Efficiency Audit was carried out by MWH, an Italian Consulting under a TC framework contract funded by the U.K. Government. The audit covered the facilities of the plant and resulted in proposals for investments projects that will be included in the loan.