RusHydro Bond Issue

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Translated version of this PSD: Russian In October 2010 EBRD participated in RUB 20 billion bond issue publicly placed by RusHydro, Russian hydro generating company. Initially it was envisioned that EBRD financing will contribute to the modernisation project at Saratovskaya HPP located on the Volga river and related goods, works and services will be procured in accordance with the Bank’s Procurement Rules in an amount not less than the Bank’s participation in this bond issue. Subsequently the parties agreed that the Bank could instead participate in the financing of Volzhskaya HPP rehabilitation project. Transition impact of this transaction would derive from several key aspects: promotion of energy efficiency and power generation from renewable sources; enhancement of Environmental, Health and Safety management through the implementation of the Environmental and Social Action Plan; promotion of capital market development by supporting the first rouble bond issue on the Eurobond market by a Russian energy company. OJSC “RusHydro” (RusHydro), a publicly listed Russian power generating company owning and operating 25 GW of hydropower capacity, 60% owned by the Government of Russia. EBRD purchase the bonds in the amount of RUB 4.5 billion. Total amount of the bond issue is RUB 20 billion. The Project was categorised B per the Bank’s 2008 Environmental and Social Policy. The associated project will be rehabilitation at Volzhskaya HPP (subject to internal approvals of EBRD). Due diligence was based on (i) past Bank activities with RusHydro and the Environmental Action Plan associated with a past (2006), on-going transaction; (ii) a detailed due diligence effort undertaken by consultants in late 2009 and focussing on safety, environmental and social issues, as well as a dedicated visit at Saratovskaya HPP undertaken by Bank specialists. Measures recommended by the independent consultants and validated by both the Bank and RusHydro mainly take into account (1) the lessons learned from the 2009 Sayano-Shushenskaya (S-SH) incident and (2) the specificities of Volzhskaya HPP, and should sanction and support RusHydro's on-going efforts towards bringing their dam and plant safety and environmental / social processes and procedures in line with international good practice. Main ESAP points are as follows: An Environmental and Social Action Plan (ESAP) has been agreed between the Bank and RusHydro to sanction agreed measures. Its implementation will be monitored by the Bank. None.