Mazar IPP Afghan

pending

International Finance Corporation (“IFC”) is considering A Loan of up to US$21.4 million and, (b) an interest rate swap for all the senior loans of US$ 62.3 million for a loan equivalent (LEQ) exposure of US$1.1 million to Afghan Power Plant Company (“APPC” or “Project Company”) to build, own, operate, maintain and transfer an independent 58.56 MW green-field, natural gas based reciprocating engine power plant (the “project” or “Mazar IPP”). APPC is a subsidiary of the Ghazanfar Group (the “Sponsor”), which is a private Afghan enterprise with operations across Afghanistan, Central Asia and the Middle East.The project is one part of the larger efforts towards development of an interconnected national transmission grid that utilizes available national energy resources and is synchronized with key import transmission lines to more effectively serve the population and domestic development goals. The project will utilize natural gas supplied by the Afghan Ministry of Mines and Petroleum/Afghan Gas Enterprise from existing gas fields located 100 km west of the project site near Sheberghan in Jowzjan Province, Afghanistan. Electricity generated by the Mazar IPP will be dispatched by Da Afghanistan Breshna Sherkat (“DABS”), the Afghan national utility entity, under the terms of a 20-year Power Purchase Agreement.The Mazar IPP will be a greenfield development located in Dehdadi District, Balkh Province in northern Afghanistan, situated approximately 17 km southwest of the provincial capital Mazar-e Sharif and 15 km southeast of the town of Balkh. The nearest residences are located more than 1 km away to the north and west of the project site. There are two existing industrial facilities nearby, namely; Northern Fertilizer and Power Plant (“NFPP”) designed to produce 48 MW of energy located about 300 m north, and Jade Glass Manufacturing Plant located about 100 m east of the project site. The project site is currently empty and leased from the Ministry of Energy and Water under a renewable 25-year lease agreement. Previously, the land was used as a public grazing land. An ESIA report prepared for the project did not flag pre-existing contamination at the project site as an issue of concern.The 58.56 MW natural gas-fired reciprocating engine power plant, prime movers will be six Wartsila model 20V34SG spark-ignited. The fuel will be natural gas. Engine cooling will be provided by a dry, closed-loop fin-fan radiator system. There is an existing pipeline that provides natural gas to the NFPP. An ~300 m long, 12-inch diameter spur line will be constructed to connect the power plant to the existing pipeline. An access road will be constructed form a nearby interconnection point to the public road. A 220-kV overhead electricity transmission line will be constructed to interconnect the Mazar IPP with the Sheberghan to Mazar-e Sharif 220 kV transmission line which is located approximately 11.3 km north of the project site.According to the ESIA, no major environmental and social (E&S) risks are anticipated in relation to the DABS transmission line or the access road; however, the final social and environmental impacts associated with transmission line will be subject to review under the National Environmental Protection Agency (NEPA)’s ESIA process as well as additional review by IFC. The 11.2 km transmission line is considered as an associated facility as it would not have been built in the absence of the project and since the transmission line is needed for the successful implementation of the project. The construction of the Mazar IPP will be carried out through a fixed-price turnkey EPC contract in a 50:50 joint venture with two affiliates of Hassan Allam Holdings SAE i.e. HA Construction (100% subsidiary of Hassan Allam Holdings) and Power Generation Engineering Services Company (60% indirect shareholding by Hassan Allam Holdings). Hassan Allam Holdings, a privately held conglomerate based in Egypt that has interests in engineering, procurement, construction, building materials, and utilities, will also invest 10% equity requirement in the Mazar IPP through its Netherlands subsidiary, HA Utilities BV.The operation of the facilities will be carried out through an operations and maintenance agreement that will be performed through a JV company to be formed comprising of Hassan Allam Holdings and Ghazanfar Group. This will be backed by a Long-Term Service Agreement (LTSA) with Wartsila.