SEE PROJECTS 2009

ProjectsSouth-East European INDUSTRIAL Мarket - issue 4/2009

Porto Romano thermo-power plant, Albania

Albanian energy has been heavily dependent on hydroelectric production. About 98% of the energy produced in the country is generated by hydro power plants. These are no longer able to meet the increased demand of electricity stimulated by the recent economic growth. Seasonal hydrological conditions and an outdated distribution system have aggravated the situation, and Albania has been facing frequent power cuts.
As the way out of the current energy crisis, the Albanian government has been promoting a series of new hydropower plants and carbon-intensive power generation facilities. Among them the Albanian Ministry of Economy, Trade and Energy has instigated a coal-fired Porto Romano thermo-power plant (TPP) near the port city of Durres, eyed by the Italian energy company Enel.
In December 2007, the Albanian Minister of Economy, Trade and Energy and the CEO of the Italian energy company Enel, Fluvio Conti, signed a memorandum of understanding (MoU) for the development of the energy sector in Albania. Under the terms of the MoU, Enel agreed to construct a coal fired thermo power plant (TPP) and a transmission line to Italy.
According to the environmental assessment study, the plant would consist of two 800 MW coal-fired units, a jetty for handling the imported coal, a transmission line connecting the local substation to Tirana’s main substation and an undersea transmission line linking the facility with Italy. Half of the energy produced will be exported to the Italian market, provoking complaints that Italy is exporting its pollution to Albania instead of reducing it.
While the Albanian government hopes that the Porto Romano TPP will improve the country’s energy security, environmentalists see little sense in increasing the use of highly polluting coal, which would mainly be imported. Not only would coal power generation increase Albania’s carbon emissions and dependency on imported fuel, but it is also a source of significant local pollution, which already exceeds national limits.
So far, no international development lender has been officially considering financing for the Porto Romano project. Given the past and present involvement of international financial institutions in other fossil fuels backed energy generation projects in Albania, such as the combined-cycle power plant in Vlora, the Albanian environmental NGO coalition Ekolevizija calls upon the multilateral development banks and international development donors:
•Not to consider the Porto Romano TPP for finance.
•To prioritise sustainable energy projects, particularly in the field of renewable energy and energy efficiency, when it comes to review its three-year investment strategy for Albania at the end of this year.
•To encourage the Albanian government to find solutions for the energy security of the country via truly renewable energy and energy efficiency, and specifically to approve substantial regulatory incentives for the development of renewable energy projects.

Controversies associated with the Porto Romano thermo-power plant in Albania
Since the Porto Romano TPP is to be built and operated under a 25-30 year concession agreement, a transparent tender procedure would be expected. In June 2008 a consortium comprised of the Greek Public Power Corporation, the Greek cement group Titan, and the German power utility RWE expressed interest in the Porto Romano TPP. However, Enel now seems to be the only company involved and there has been no open call for tenders by the Albanian government.
The public hearings on the EIA that Enel prepared originally took place only in the village of Katundi i Ri. Following a complaint by the Ekolevizja coalition of environmental groups the Ministry of E nvironment, Forestry and Water Administration expanded the hearings to Durres and communities in Manze, Sukth and Ishem. Most of the people at the public hearings were not in favour of the project because of its massive capacity, the use of coal and the inappropriate location. People also fear increased air pollution as the EIA commissioned by Enel shows that air pollution in Durres and Porto Romano zones currently exceeds national limits and would be increased even further by the emissions of the TPP.
An independent quality review of the energy complex EIA commissioned by Ekolevizja highlighted more than 25 shortcomings in the assessment, including the study’s failure to consider alternative energy scenarios to coal power; analyse properly the carbon dioxide emissions; assess the socio-economic impacts of the project and provide for management and monitoring plans.
Based on this quality review as well as the opposition from the local communities the Municipality of Durres declared itself officially against the project in April 2009.
Source: Bankwatch



TASK Water Venture - Dilovasi Debt, Turkey

Project description and objectives
The EBRD is considering providing a loan of up to 16 million Euro and an equity investment to Turkish water company TASK, a joint venture between the Akfen Group (Turkey) and water company Tahal (Israel) with a view to upgrading and extending water and wastewater infrastructure in project cities/zones operated by TASK including refinancing and acquisitions. EBRD will assist in increasing private sector participation in the water market in Turkey by supporting the Company’s ongoing investment plans and acquisitions. The total project cost is up to 22 million.
Transition impact for the Project comes from:
•Increased Private Sector Participation. By supporting TASK, the Bank will be increasing private ownership forms in the water sector in Turkey through restructuring and improving water and wastewater services and will support the Company’s growth and expansion mainly though acquisition of new assets. The project will help to demonstrate that the private sector can be instrumental in implementing improvements in efficiency and increased service level in the water and wastewater sector.
•Demonstration effects of good corporate governance, transparency and business standards.
The client:TASK, a Turkish private company, is involved in managing and constructing facilities for production of drinking and potable water from surface and surface springs, collecting domestic and industrial water and providing wastewater treatment services. TASK has been awarded concessions for the Gulluk, Corlu, and Kars Water Supply and Wastewater Treatment systems as well as the Dilovasi Industrial Zone Wastewater Treatment and Main Collector Line BOT.

Environmental impact: Screening categories and rationale for classification
This project was categorised “B” in accordance with EBRD’s 2008 Environmental and Social Policy, indicating that, where there are environmental and social impacts associated with the project, these are likely to be site-specific and easily addressed through mitigation measures. The project will improve the quality and efficiency of water supply and wastewater collection and treatment in Gulluk and wastewater collection and treatment in Dilovasi Organised Industrial Zone.
The environmental and social due diligence included a review of the Company corporate environmental, health and safety and social (EHSS) management systems; site visits to Dilovasi and Gulluk; and a review of Concession and Service Level Agreements to assess current performance against EBRD’s Performance Requirements (PRs). Due diligence has confirmed that the Company and its operations are generally in compliance with the applicable Turkish environmental, health and safety and labour requirements. A review of the EIA for Dilovasi found that the project has been structured to meet Turkish and EU environmental, social, health and safety standards.
 Due diligence identified that the Company Corporate Management Systems are largely based on international standards (ISO 14001, ISO 18000), however some additional resources and procedures are needed for the successful implementation of these systems and to achieve compliance with EBRD’s Performance Requirements (PR’s).
The Company’s facilities are generally in compliance with national requirements for environment, health and safety although the Dilovasi site needs to address how excavated material will be disposed to ensure full compliance. There are currently no Corporate due diligence procedures for assessing the environmental, health and safety and social risks of projects as part of the investment planning process.

Summary of Environmental and Social Action Plan
An Environmental and Social Action Plan (ESAP) agreed with the Company addresses environmental and social issues identified during the due diligence, associated with the existing facilities and future investments. It aims to achieve and maintain compliance with national and EU standards and EBRD Performance Requirements within a reasonable time-frame. The ESAP includes:
•measures for improvement of the Company’s Corporate management system in such areas as EHSS due diligence of new investments, grievance mechanisms, land acquisition, cultural heritage and stakeholder engagement.
•improvements to operational control procedures at Project sites for such issues as: implementation of EHS management systems, EHS training, human resources issues, waste management, emergency response, stakeholder engagement and contractor management.
•the requirement for a Stakeholder Engagement Plan, including a grievance mechanism.
•The Company will provide the Bank with regular reporting on the implementation of the ESAP.
Source: EBRD

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