Power Transmission Substations Rehabilitation

complete

Rehabilitation of six transmission substations crucial to the operation of Albania’s transmission system and to its participation in the regional energy market. This infrastructure development is part of an overall series of improvements needed in Albania and elsewhere in South East Europe for respective domestic purposes but which will also assist the region to achieve greater integration with the EU as planned under the Athens Process leading to a single electricity market. The project implementation will be managed by KESH through its Project Implementation Unit (PIU). The Bank has been involved in a succession of projects in the sector over the last 5 years, each with incremental transition impact based following an Action Plan which was developed with the co-operation of the IFIs and is renewed annually. Progress has been very good and Albania has also taken its place among the countries in Southeast Europe who are moving toward creation of a regional energy competitive market with open borders for trading power (the Energy Community of Southeast Europe). Given the need to strengthen physical and administrative issues related to cross border trading the Bank, in co-operation with the World Bank, which is co-financing parts fo the Project, will focus project support on the following three main areas (besides the physical upgrades to the system): 1. Strengthening the Transmission System Operator. Strengthen the TSO by establishing a detailed business plan. 2. Improving procurement procedures for importing electricity. New procedures should be drawn up that would expedite procurement while still ensuring that purchases are made through transparent competitive bidding, and improve import security. 3. Electricity Tariff Study. A new WB administered study, for which the EBRD has had input into drafting the TORs, would determine the economic and financial costs of supply of electricity at each voltage level and recommend revisions to the current structure that better reflect the economic and financial costs. This would provide a basis for future tariff adjustments to be approved by the regulator, ERE. The beneficiary company is the Albanian Power Corporation (KESH). KESH, established in 1992, is a vertically integrated state-owned company responsible for the generation, transmission and distribution of electricity in Albania. Sovereign guaranteed loan of up to USD 20 million. The EBRD loan will be used towards financing the substations rehabilitation contracts. Other co-financiers providing parallel financing are the World Bank (IDA) with USD 27.0 million and Albanian Power Corporation (KESH) with USD 5.14 million. USD 52.14 million. Screened B/1. KESH has undertaken the Environmental Audit of the substations to be upgraded and an Environmental Analysis of the planned investment project with technical assistance and support from the World Bank (“WB”). The investigations have shown that the rehabilitation of transmission substations is associated with limited adverse environmental, health and safety (“EHS”) impacts and that the project would improve the safety and environmental standards of the distribution systems as well as increase energy efficiency by minimising losses. The project has been structured to meet Albanian, EU and WB environmental standards and will introduce good international construction techniques and management practices to minimise potential EHS impacts. Mitigation measures incorporated in the project plans include: (i) contractors will employ appropriate techniques to protect the environment during construction, using designs and well-tested guidelines provided by the WB; (ii) Electromagnetic Field is not considered a serious problem with low and medium voltage lines, however WB or EU standards will be used; and (iii) The use of PCB in the oil for transformers or any other equipment is prohibited and this will be specified in the bidding documents. Site specific Environmental Management Plans have been developed for each of the eight sub-stations to be rehabilitated under the project. The EMPs include measures for mitigating construction impacts, noise, electromagnetic field and dust impacts, waste management and disposal as well as procedures for managing emergency situations such as oil leakage/spillage, fire or explosions. An environmental monitoring plan will assess the projects adherence to designed WB and EU environmental standards. The Bank’s environmental specialists visited KESH in January 2006 to review the status of the implementation of the existing Environmental Action Plans under the Bank’s previous loans. KESH has established an Environmental Management Unit, which has introduced key environmental management procedures and Action Plans for dealing with emergency situations, with hazardous waste, spill prevention, etc. Environmental monitoring system has been set up and monitoring and preventive/corrective action procedures have been introduced covering all KESH operations. KESH has disclosed the results of environmental investigations and the EMP in Albanian and English languages on its web site and has carried out consultations with project-affected groups and local NGOs. In accordance with Bank requirements, KESH has disclosed locally a summary of the relevant environmental issues associated with the EBRD funded project. None.