Kazakhstan District Heating Modernisation Framework

cancelled

Translated version of this PSD: Russian The EBRD is considering to provide up to USD 140 million of loan together with the Clean Technology Fund (CTF) to district heating companies in Kazakhstan. The projects will finance priority investment programmes in district heating networks in several cities in Kazakhstan, aimed at rehabilitation and improving energy efficiency of existing heat distribution networks in these cities. The investments are expected to yield significant reductions in heat losses, CO2 emissions and coal savings, and contribute to market transformation towards sustainable energy use in the district heating sector in Kazakhstan. EBRD financing will, subject to confirmation by the Clean Technology Fund Trust Fund Committee, be complemented by concessional financing from CTF of up USD 42 million to address affordability constraints associated with tariff increases linked to these investments. This project is part of the Kazakhstan District Heating Programme, the EBRD/IFC joint initiative to address energy efficiency in privately and municipally owned district heating networks in Kazakhstan utilizing CTF Funds. The framework/sub-projects will address the issues of chronic underinvestment in district heating networks due to artificially low tariffs, largely unmetered consumption below actual use, substantial heat losses in distribution and quality of service provision. The project will also bring improvements in financial, operational and efficiency performance of the project companies, supported by technical assistance. Tariff increases, introduction of appropriate incentives for efficiency improvement at the operating level and increase in metering coverage will contribute towards improved frameworks for markets. The framework will have high demonstration effects, as the project cities could be seen as a model for other cities in Kazakhstan/ other central Asian countries with similar problems in the municipal infrastructure sector. TOO “Teplotransit Karaganda” is a municipal company providing heat distribution services in the City of Karaganda. CAEPCO is an existing Bank client in the Kazakh power and energy sector. CAEPCO is one of the first private companies to take over district heating networks in Kazakhstan. CAEPCO operates district heating networks in Pavlodar, Ekibaztus and Petropavlovsk. It was established in August 2008 and is currently the largest private vertically-integrated power and district heating company in Kazakhstan. USD 100 million alongside USD 42 million from CTF (subject to separate approval). Up to USD 202 million. Each sub-project will be assigned an environmental E&S category individually. Any environmental and social risks potentially associated with individual projects within the Framework are likely to be site-specific and can be readily identified and mitigated. The due diligence of individual projects shall include an environmental and social analysis of proposed investments and an environmental, social, health and safety audit of the existing operations and facilities of borrowers. ESAPs will be developed for each sub-Project within the Framework. Standard actions may include, but not limited to the development of environmental, health and safety management systems and stakeholder engagement plans; development and implementation of labour and community health and safety requirements for contractors; waste management plans; mitigation measures for reducing noise, vibration and dust nuisances and managing construction-related traffic and minimisation of disruptions to regular supply of heat and hot water; and implementing appropriate asbestos removal, handling and disposal procedure The ESAPs will be part of the legal agreements between the participating companies and the EBRD. This PSD will be revised once the due diligence and ESAPs are finalised. None.