Vez Svoghe mini hydro project

complete

The EBRD is considering providing a financing for the construction of nine small hydro power plants (combined installed capacity of 25.7 MW) along a 33 km stretch of the middle section of the river Iskar. The plants will be built, owned and operated by Vez Svoghe Ltd – a special purpose company owned by Petrolvilla Bulgaria (90%) and the municipality of Svoge (10%). Petrolvilla Bulgaria is controlled by the Petrolvilla & Bortolotti S.p.A. group, which is primarily engaged in the provision of energy and energy-related products and services in northern Italy. It should be noted that the first two of these nine plants are being partially financed under the Bulgarian Energy Efficiency and Renewable Energy Credit Line (www.beerecl.com) and that construction of these two plants has begun. As part of its financing of the remaining seven plants, EBRD will consider re-financing the first two plants. Therefore, all nine plants have been included into the project scope. The transition impact stems from supporting an investment that is expanding the Bulgarian renewable energy sector and the demonstration effect arising from the project; the Project development is expected to strengthen the framework for the renewable energy market in Bulgaria as it will be implemented based on the provisions of the supporting Renewable Energy and Bio-fuels Law in Bulgaria. Petrolvilla & Bortolotti has experience in building and operating technically similar small hydro power plants in Italy and in undertaking such projects in cooperation with municipalities. The latter aspect has the potential to help promote the development of public – private partnerships for smaller renewable energy projects. Finally, the Bank’s participation will ensure that the project is implemented in accordance with best environmental practices. Vez Svoghe Ltd, supported by Trentino Energia, a renewable energy developing company within the Finenergy Group (Italy). EUR 75 million. Anticipated to be approximately EUR 115.9 million. Screening category and justification The project involves the development and operation of nine small hydro plants along the Iskar River in Bulgaria. Due to the nature of the development and its potential cumulative impacts on the Iskar River, the EBERD has categorised the project A/0. Due diligence undertaken and outcomes An Environmental Impact Assessment (EIA) was carried out by independent experts in accordance with national law and EBRD’s Environmental Policy (2003) requirements in 2007. This consisted of an assessment of environmental and social impacts associated with the construction and operation of the nine mini hydro plants and updating the Bulgarian EIA to take account of the Bank’s Environmental Policy requirements and best international practice. To meet the Bank’s EIA process requirements, a Public Disclosure and Consultation Plan and an addendum to the Bulgarian EIA were also prepared. Overall, the construction of the small hydro power plants has been assessed to result in a net positive environmental impact through reduced greenhouse gas emissions and the diversification of energy sources away from nuclear and fossil fuels. To maximise the benefits of the investment, it is important to mitigate the potential adverse environmental impacts and risks. These include any potential detrimental impact on the following: adjacent nature protection areas; flora and fauna (in particular fish populations); visual impressions; river sediments; and cultural / architectural heritage. The environmental EIA showed that there are no significant environmental issues associated with the project and that the project is likely to improve the environmental condition of the river and increase the amenity value to the local communities. An Environmental Management Plan (“EMP”), including relevant mitigation and monitoring measures, was developed as part of the EIA and this is being implemented by the Company and its contractors. Following a request for the Bank to consider providing additional financing to the project, the Bank has undertaken a monitoring visit and an assessment of the project against the Bank's Environmental and Social Policy (2008) and its Performance Requirements. The investigations concluded that the EIA that has been disclosed since 2007 is fit for purpose. The Company has been implementing the requirements set out in the original EIA. The ESDD also confirmed that the Company has sufficient capacity to implement the project in accordance with the relevant Bank's Performance Requirements. Implementation requirements There is an Environmental and Social Impact Assessment available for this project. Technical cooperation funding has been provided by the UK Department for International Development (DFID). Plamen Dilkov, Managing Director Vez Svoghe Ltd 7/B Stephan Karadja 1000 - Sofia, Bulgaria Tel: +359.2.988.85.70 E-mail: plamen.dilkov@finenergy.it Website: http://www.vezsvoghe.com/