Starobeshevo Power Modernisation Project

complete

Supply and installation of a 210 MW fluidised bed boiler with ancillary equipment at Unit 4 of the Starobeshevo Power Station in eastern Ukraine. The project objective is to support the ongoing restructuring and commercialisation of the power sector, and the implementation of the sector investment plan leading to the closure of the Chernobyl nuclear power station as agreed between Ukraine and the G-7, by financing a priority investment. Contribute to reducing the country's energy intensity and imports through better utilisation of locally produced coal. Reduce atmospheric emissions. The project contributes to the transition process by supporting the commercialisation of the power sector and establishment of the competitive wholesale power market; by helping Donbasenergo achieve sound corporate finances; and by supporting payment discipline in the power sector. The borrower is Donbasenergo, one of four state-owned thermal power generation companies that were established in June 1995 under the wholesale reorganisation of the Ukrainian power sector. It has an installed generating capacity of 8,170 MW, which is equal to 15 per cent of the total installed capacity in Ukraine. EBRD loan of US$ 113.22 million (ECU 92.78 million equivalent). US$ 20.94 million would be financed by export credit agencies under ECLAT financing. Donbasenergo would finance the balance of US$ 29.04 million from its own resources. US$ 163.20 million. The project was screened as B/1, requiring an environmental analysis of the main impact of the proposed rehabilitation and an environmental audit of the station. These were undertaken by international consultants and reviewed by the Bank's environmental specialists. Also a member of the Environmental Appraisal Unit visited the plant and had discussions with the plant management and engineers. To demonstrate the environmental benefits of the fluidised bed boiler technology, the environmental impact of two rehabilitation scenarios were compared: (i) standard rehabilitation of the existing boiler with no design changes, and (ii) replacement of the existing boiler with a fluidised bed boiler. The economic analysis included a cost estimate of the environmental consequences resulting from pollutant emissions (particulates, sulphur dioxide, nitrogen oxides and carbon dioxide). In the financial analysis, consideration was given to the current and future pollution fees which could be imposed on the Starobeshevo power plant by the Ukrainian environmental authorities. The project will have a net positive impact on the environment by utilising "clean coal technology", which can efficiently burn low-quality coal and schlamm (residue of coal washing), the only available fuels in the region. The boiler will be designed to meet European Union and Ukrainian standards for air emissions. Mitigation measures identified during the environmental investigations have been included in the Environmental Action Plan for the station. These cover air emissions, water discharge, oil and chemicals storage, ash ponds and fire protection. A twinning technical cooperation project will provide assistance to the Starobeshevo power plant in identifying technical, environmental and managerial improvements at the station and implementation of the Environmental Action Plan. None.