RusHydro Far East Loan

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The EBRD is considering a loan to OJSC RusHydro to finance balance sheet restructuring of OJSC Energy Systems of the Far East (ESV). Proceeds of the Loan will be used to optimize ESV balance sheet through refinancing of existing short term debt. The transaction will allow the Bank to engage with RusHydro on restructuring of the Far East energy system and facilitate completion of the power sector reform in Russia. RusHydro, one of Russia’s leading companies with high corporate governance and transparency standards will bring its operational, managerial and business expertise to ESV. Following transfer of ESV ownership to RusHydro, RusHydro will become a platform for corporatisation and commercialisation of ESV which will ultimately result in improved operational efficiency. Engagement in this transaction will give the Bank a unique opportunity to help the Company to develop a coherent restructuring plan for ESV sharing its experience and international best practice. OJSC RusHydro. Senior loan of RUB 8 billion. RUB 20 billion. This project is Category B under the Bank’s 2008 Environmental and Social Policy. Because EBRD financing will be used to repay debt for a new acquisition and not specific activities, there would be no direct or indirect environmental or social impacts. The Bank's approach to environmental and social appraisal is twofold, given the nature of the transaction. The first element will be to require RusHydro to apply the current RusHydro ESAP to ESV's assets and operations. This ESAP requires RusHydro to develop environmental and social management systems for the company and for specific facilities. In addition, the ESAP requires appropriately scaled appraisals of future upgrades and modifications of existing assets as well as new projects. RusHydro is now required to undertake an environmental and social audit of ESV and extend its management systems and programs to ESV and its assets on a defined schedule, with monitoring aimed at evaluating progress. Secondly, an independent consultant evaluated RusHydro's implementation of the existing ESAP and current environmental and social performance against the Bank's Performance Requirements. This audit has found RusHydro is making generally satisfactory progress toward full implementation of the agreed ESAP. Framework TC for Energy Efficiency audit of selected ESV power plants.