Project name: TGK-8 Energy Efficiency Loan
Country: Russia
Project number: 38714
Business sector: Power and Energy
Public/Private: Private
Environmental category: A
Board date: 14 July 2009
Status: Passed structure review, Pending final review
Date PSD updated: 22 June 2009
Project description
and objectives: To provide financing to OAO Lukoil for the investment by its subsidiary TGK-8 in a highly efficient state of the art 410MW CCGT unit at the Krasnodar CHP plant in Southern Russia. The transaction will support the ongoing liberalisation of the Russian power sector and renew its ageing and inefficient power infrastructure.
Transition impact: The project enhances the strategic partnership between the Bank and Lukoil established through the Bank’s previous debt deals and promotes the benefits of privatisation for the implementation of specific investment projects.
The project will, in conjunction with other current and future projects, sustain the momentum of liberalisation and demonstrate the viability and efficiency of independent private operators in the sector. The addition of new generation capacity, whose power is entirely traded on the free market, will further deepen and strengthen that market and create the critical mass required to support the success of the liberalisation of Russia’s power sector.
The introduction of modern equipment, meeting EU Best Available Techniques (BAT) and environmental standards, will dramatically improve the environmental and operational efficiency of TGK-8’s Krasnodarskaya plant. At the same time the technical cooperation project associated with this loan will optimise TGK-8’s operation of all its existing facilities and improve its investment programme. Taken together this will establish new standards not just for TGK-8 but more broadly within the industry and raise the levels of efficiency across the sector.
The client: The Borrower, Lukoil, is one of the Russian oil majors and the second largest non-state publicly traded oil company in the world as measured by proven reserves of hydrocarbons. Lukoil is a majority shareholder of TGK-8 (Southern Generating Company) one of fourteen Territorial Generating Companies in Russia formed in the process of unbundling of RAO UES.
EBRD finance: A/B loan of up to USD 300 million (EUR 240 million).
Total project cost: RUB 15 billion (EUR 333 million).
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