Salkhit Windfarm Development

complete

EBRD is considering making a $700,000 equity investment to support the development phase of a proposed 50MW windfarm to be constructed and operated 70km from Ulaanbaatar. The investment would support the ongoing development of the project to a stage where its implementation arrangements are complete and construction can begin. The project will be the first renewable energy project and the first privately-owned generator in Mongolia. The transition impact of the project stems primarily from the following: Clean Energy LLC is a special purpose vehicle incorporated in Mongolia solely to develop the project. It is 100% owned by Newcom Group, one of Mongolia's leading commercial groups. An investment of up to $700,000 (€476,000 equivalent) to acquire 25% of the Company by way of initial acquisition from the Sponsor and participation pro rata in subsequent capital increases. The anticipated total cost of the development stage of the project, which is being supported by EBRD's investment, is $2,800,000. The Project has been categorized as B level under the Bank's Environmental and Social Policy 2008. The project is an equity investment in a Company developing a wind farm. However, the development is at an early stage and the Bank's financing will not be directly used for the construction of the wind farm. A corporate audit of the Company has been undertaken to ensure that it has the capacity to fully implement the Bank's Performance Requirements throughout the wind farm development, construction, operation and decommissioning. The wind farm project, which is to be developed by the Company in the future, was considered for direct financing and categorised B/0 by the Bank under the Bank’s Environmental Policy (2003) and B by the IFC in 2007. An Environmental and Social Impact Assessment (ESIA) was undertaken by an international consultant in accordance with EBRD and IFC requirements as part of the Bank’s Environmental Analysis. This confirmed that the impacts are limited and can be readily mitigated as part of the environmental and social management and monitoring plan developed for the Project. The ESIA and other related documents are available on the Company's website. As part of this project an Environmental and Social Action Plan (ESAP) will be agreed with the Company, which among others, requires the Company to implement the recommendations set out in the ESIA and comply with the Bank’s Performance Requirements in the future development and operation of the wind farm The Government of Japan, through the Japan-Europe Cooperation Fund, provided €290,000 to assist the Mongolian government and energy regulator to develop the regulatory framework for renewable energy. Further funding will be sought to continue this support, with particular focus on the areas of technical integration of intermittent power and market restructuring to accommodate the priority purchase of renewable energy and the pass-through of the feed-in tariff costs. The Government of Luxembourg provided €76,000 to assist in the preparation of the ESIA for the windfarm. D Gankhuyag, Manager, Business Development Tel.: +976 11313183 (w) E-mail: gankhuyagd@newcom.mn