RZD Energy Efficiency Project

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Translated version of this PSD: Russian The EBRD is providing financing to JSC Russian Railways (“RZD”) in the amount of GBP 130 million (€147 million equivalent). The proceeds provided by the Bank will enable RZD to start implementing energy efficiency and railway station modernization programmes. The transition impact potential of this project relates to the introduction of modern and integrated energy management standards, project preparation methodologies and development of skills to optimise the implementation of energy efficiency projects. The transaction will focus on providing the demonstration effects of successful restructuring (focused on energy management and energy efficiency) and setting standards of corporate procedures and conduct. The transaction supports the implementation of RZD’s energy efficiency and railway stations modernization programmes, covering, among others: i) introduction of advanced integrated energy management systems; and ii) implementation of modern systems and equipment optimising the use of energy for lighting and other operational needs in stationary facilities. Within the EBRD financed activities the focus will be on introducing modern energy efficiency technologies (e.g., LED lighting). The development of higher standards for energy performance is actively supported by the EBRD through the Technical Co-operation (TC) projects which will also support RZD to: i) develop energy audits and benchmarking of energy performance methodology to improve planning and allocation of capital resources and on-going improvements of energy performance; ii) introduce energy efficiency considerations in its procurement procedures; and iii) review alternative financial mechanisms for scaling up energy efficiency investments (e.g., through ESCO models). The energy audit and the benchmarking methodology will be implemented across a number of selected stationary facilities. A dedicated methodology for optimising the identification and appraisal of energy efficiency investments; The TC package developed by the EBRD will support RZD in the definition of its “Smart Station” concept: the development of a set of technologies, applications and operational systems which will improve the interfaces with passengers, enhance the level of comfort and accessibility of railways facilities and reduce the use of energy. Russian Railways, a joint-stock company incorporated in the Russian Federation (“RZD”) and 100 per cent owned by the Russian Federation. RZD is a vertically integrated company that manages infrastructure and operates freight and passenger train services. The EBRD is providing a GBP 130 million (€147 million) loan. GBP 650 million finance for RZD’s general corporate purposes, including GBP 130 million from the EBRD earmarked for energy efficiency investments. Categorised B. Environmental and social (E&S) issues associated with the rehabilitation and energy efficiency improvements at the existing railway stations may result in some temporary environmental and social impacts, depending on the project location and nature of the proposed energy efficiency and railway station modernisation programme. The energy audits implemented under the technical assistance support will also include E&S appraisal of potential impacts of investments in the selected pilot projects, which will be structured to meet the EBRD’s performance requirements included in the EBRD’s Environmental and Social Policy (2008). Labour, health and safety requirements for the contractors during construction works and project implementation are anticipated to be covered through RZD’s compliance with the EBRD’s Procurement Policies and Rules. The outcomes of the energy audits and E&S appraisal will support implementation of the E&S Assessment Methodology for future projects under energy efficiency and railway station modernisation programmes and modernize the RZD’s existing energy audit methodology. The Project will be complemented by two TC components: (i) The first component for €150,000 consists of a review of the investments covered by the EBRD financing aiming to confirm the technical and economical feasibility of the investment proposed; assess incremental investments; assist RZD in the development of an energy auditing and cost benefit analysis methodology, which will also include the environmental and social assessment of the investments. (ii) The second TC package for €1 million is to support project management and implementation supervision, preparation of relevant tender documents, implementation of energy management systems and standards, and feasibility study for exploring complementary solutions to finance energy efficiency in RZD, through for instance ESCOs or PPPs.