Telasi Distribution Company

completed

Summary Of Project Information (SPI)Project NameGeorgia - TelasiRegionEuropeSectorProject No009620Projected Board DateDecember 27, 1999Company NameAES Telasi JSCTechnical Partner and/or Major Shareholders American Electric Services Corporation (AES) Incorporated owns 75% of AES Telasi JSC (Telasi).     Project Cost Including proposed IFC investment The total project cost is US$147 million. The proposed IFC investment is an A loan of US$30 million.Location of project and Description of site Tbilisi, the capital city of Georgia, an urban area.Description of Company and Purpose of Project AES Telasi JSC is the recently privatized electricity distribution company of the capital of Georgia, which serves approximately 370,000 customers, delivering 2,197 GWh of electricity per annum (a major part of total national energy consumption). The project aims to reform and rehabilitate Telasi in order to bring it in line with modern utility practices. The project costs will include the rehabilitation of dilapidated physical assets; installation of meters and modern billing systems; and reform of governance and staff structures of Telasi. Georgia has suffered severe power outages over the last several years due to a breakdown in payment discipline. This has caused personal hardship for the citizens of Georgia and has hampered economic development. This project aims to improve the level of payments for electricity delivered by Telasi, which is the largest electricity distribution company in Georgia. By improving cash flows available to pay for generation of electricity, it is expected that outages in Georgia will decrease.Environmental Category and Issues This is a category B project according to IFC’s environmental and social review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. The review of this project consisted of appraising technical, environmental, and social information submitted by the project sponsor, as well as a site review by IFC’s technical staff. The following potential environmental, health, safety and social impacts of the project were identified: handling and storage of fuel chemicals; solid and liquid waste management; management of transformers or equipment containing PCBs; phase out of CFCs including Halon; and worker health, safety and training programs. Social issues include: management of land acquisition; economic displacement of people associated with the siting; and right-of-way alignment for new facilities and mitigation of the social impact of redundancies. The majority of the distribution system is underground with buried cable. The system is not located in any national parks or environmentally sensitive areas. The setting ranges from heavily industrialized to rural. The Environmental Action Plan (EAP) will identify active leaks, stop them and remove underground storage tanks and piping, unused electrical equipment, leaking transformers and vehicle repair pits and remediation of all areas. Additional research will be conducted to determine whether groundwater is used for potable purposes and if so evaluate the extent of contamination, if any, in the groundwater. Analysis of dielectric fluid were conducted and concluded that PCBs were below the method detection limit. Solid and liquid waste is limited to paper, scrap metal, electrical equipment, and oily waters from the vehicle maintenance areas. As part of the EAP, AES will also develop a program to segregate and dispose of solid waste according to type and level of hazard. AES Telasi has indicated that there are no CFC''s in the system. AES Telasi has implemented formal safety training courses initially for all outside workers and those dealing with electricity and materials. AES is also investing in safety equipment, reorganization of the safety department, drafting of a Safety Handbook, forming health care task force and implementing an annual health physical program. Most staff are members of the Professional Trade Union. A committee of specialist, trade union representatives, and AES Telasi employees was convened which developed a generous Voluntary Selective Severance (VSS) package. The company will also assist with the training courses and exams for those who opt for the VSS. Some 760 people have taken the package and left the company. The current number of employees is 1,699. Further reduction in staff are anticipated in April 2000.     The sponsor has demonstrated that the proposed project will comply with applicable Georgian and World Bank Group requirements.The is from the InfoShop.Host country location of environmental documentsThe Mayor''s offices in Tbilisi.Date SPI sent to InfoShop November 24, 1999“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 974-4384Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).