Hidroelectrica - Rehabilitation of Stejarul HPP

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The EBRD is considering providing a loan up to EUR 110 million to S.C. Hidroelectrica S.A., to finance the rehabilitation of 6 units of Stejarul Bicaz Hydro Power Plant (HPP) with a total installed capacity of 210 MW. The rehabilitation shall ensure a new life cycle for the entire power plant (of at least 30 years) with increased availability, efficiency and safety in operation. The Project will lead to an increase in the efficiency of Stejaru HPP and in the flexibility of the units to be used as peak capacity, using state-of-the-art technology. It will assist in the modernisation of the most efficient generator in the Romanian energy sector, and further contribute to Romania’s ambitious targets in renewable energy generation. The Project will promote regional integration through investments in infrastructure able to produce ancillary services on a regional scale. Having a state of the art technology will be pivotal to providing reliable and efficient ancillary services throughout the region which will underpin the co-operation between the neighbouring grid operators for closer integration of their systems. The Project is developed and will be implemented by the state owned hydro power company, S.C. Hidroelectrica S.A., also the biggest electricity producer in Romania with a market share of between 25-35% on the Romanian energy market. Hidroelectrica manages a network of 273 HPPs and pumping stations with a total installed capacity of 6482 MW. In 2010, Hidroelectrica had a total generation capacity of 19.85GWh The EBRD is considering providing a loan of up to EUR 110 million (around 80% of the Project’s cost) in an A/B loan framework, with the EBRD’s A Loan of up to EUR 70m. The total Project cost is estimated at EUR 136.9million. The project has been categorised B in accordance with the EBRD Environmental and Social Policy 2008. The Bank's due diligence confirmed that environmental and social impacts associated with the modernization of an existing cascade of hydropower plants (HPPs) are limited and can be readily mitigated as part of project implementation. Hidroelectrica has a comprehensive Integrated Management System (IMS) for Quality, Environment and Occupational Health and Safety which is certified to EN ISO 14000:2004, EN ISO 9000:2008 and OSHAS 18000:2007. The IMS is implemented by system and operational procedures which cover the main EHS issues of their operations. The ESDD confirmed that the Company has the institutional capacity to fully implement the Bank's Performance Requirements. A number of minor issues have been identified during the due diligence and these have been included in an Environmental and Social Action Plan (ESAP) to be implemented by the Company over time. The major risk from Company facilities would be on downstream communities in case of flooding due to heavy rain or dam failure. The Company has developed and implemented a Prevention Plan for emergency situations and they have implemented an electronic alarm system which covers all the downstream communities located in close proximity to the Bistrita cascade. The Prevention Plan and alarm warning system have been developed in conjunction with, and have been approved by, the relevant local authorities including the Prefect Institution, the County Inspectorate for Emergency Situations (ISU) and the Police Inspectorate. Bistrita SH has an Operational Procedure for Emergency Preparedness and Response Capacity, and a comprehensive procedure for conducting internal and external emergency drills and an emergency organisation plan is in place. Internal training themes for Emergency Situations are prepared and developed by the Company at all facilities. The ESDD confirmed that, as these are existing facilities, the project will not have a material impact on biodiversity. The Company, together with the regulators, manages existing protected areas and the implementation of more modern technology will reduce possible impacts. The Company and the "National Administration of Romanian Waters" (Apele Romane) have developed a long term integrated sustainable management plan for natural water resources. This includes: generating hydroelectric power; preservation of aquatic life; creating favourable conditions for birds in new protected areas; attenuating of high floods and protecting communities downstream; and supplying water to downstream communities. The rehabilitation project will increase and improve the operation of Stejaru HPP and implicitly will have a positive impact on the sustainable management of the Bistrita River. The ESDD made a number of recommendations, primarily in the area of corporate management and operational improvements. These have been incorporated into an Environmental and Social Action Plan (ESAP) agreed with the Company. The main feature has been the need to develop and implement a comprehensive Stakeholder Engagement Plan (SEP). The Bank will monitor the implementation of the ESAP and SEP. None