Project Description

A sovereign guaranteed loan of up to EUR 62 million in favour of Elektroprivreda Srbije AD Beograd (“EPS”, or the “Company”), a fully state-owned power utility in Serbia. The loan proceeds will be used for the reconstruction of the existing hydro power plant (“HPP”) Vlasinske.

Also, the Project will benefit from EUR 15.4 million of grant funding from the European Union (EU), via the Western Balkans Investment Framework (“WBIF”), approved in December 2022 and supported by the EBRD.

Project Objectives

The Project aims at extending the useful life of the HPPs (128 MW) and increasing the installed capacity of the site by 8 MW, yielding approximately 310 GWh of increased production, as well as allowing for further development of the renewable energy in the country.

Proceeds of the loan will finance procurement of new generation units, accompanying auxiliary electromechanical systems of units and power plant, hydro mechanical equipment and control equipment for HPP consisting of four cascades, with the aim of replacing obsolete equipment.

The investment builds on the EBRD’s long engagement with the Company and will provide a further push to the Company’s prolonged corporate reform path, with the aim to strengthen its corporate governance and management as well as build opportunities for re-skilling the workforce affected by the green economy transition.

Transition Impact

ETI score: 60

ETI 60 i GET Direct Track

The Project targets the Green transition quality (GET Direct Track), as it aims at boosting the portion of renewable energy sources (RES) in Serbia’s power generation by enhancing the performance of the Vlasinske plant.

Client Information

ELEKTROPRIVREDA SRBIJE BELGRADE JSC

ELEKTROPRIVREDA SRBIJE BELGRADE JSC

Name: Elektroprivreda Srbije AD Beograd.

EPS is a vertically integrated power and mining utility 100% owned by the Republic of Serbia. The Company provides around 95% of domestic electricity production, which in 2021 consisted of c. 21,537 GWh from the TPPs (installed capacity of 4,079 MW), 630 GWh from the CHPPs (installed capacity 297 MW), and 11,667 GWh from the HPPs (installed capacity 3,015 MW).

EBRD Finance Summary

EUR 62,000,000.00

Sovereign guranteed loan in the amount of up to EUR 62,000,000

Total Project Cost

EUR 77,400,000.00

Total project cost is estimated at EUR 77,400,000.

Additionality

TC support for this operation has been provided by Austria DRIVE fund as follows:

• EUR 74,000 for Technical Due Diligence, for the purpose of reviewing technical specifications, suggesting procurement strategy and other technical aspects of the project;
• EUR 40,000 for Environmental and Social Assessment, for the purpose of reviewing environmental and social aspect of the project and devising Environmental and Social Action Plan, Non Technical Summary and Stakeholder Engagement Plan for the Project.

Environmental and Social Summary

The Project is Categorised B in accordance with EBRD’s 2019 E&S Policy.  The risks associated with the rehabilitation of existing hydropower assets has been assessed by way of independent E&S due diligence which has confirmed that impacts associated with the project can be readily identified and mitigated.  Vlasinske hydropower scheme is an existing cascade of four hydropower plants located in the southern part of Serbia.  Vlasinske hydropower scheme was initially constructed in two stages between 1946 and 1972. Vlasinske hydropower scheme is fed from Vlasina Lake, the highest (1211 m) and largest artificial lake in Serbia and the lake is now a protected area.  The cascade consists of four hydropower plants called Vrla 1 to 4, with a total capacity of 128 MW.  The Vlasinske hydropower cascade needs rehabilitation, in particular, electromechanical equipment are in poor condition and inefficient as the 128 MW Vlasinske cascade frequently only operates at an effective capacity of 60-80 MW.

The Project includes the replacement of generator units at Vrla 1-4 HPPs and associated equipment. No works are planned on Vlasina dam or at Lisina Pumping Station.  The only work that will be undertaken within the Vlasina Lake protected area is the replacement of electromechanical control equipment within the intake structure on Vlasina lake shore and ESDD has confirmed this will not affect the conservation objectives of the protected area and is within the existing foot print of the assets.  The reconstruction will allow the reliable and safe operation of Vlasinske HPPs for the next 30 years of operation, as well as increasing the installed capacity of the site from 128 MW to 136 MW via increased efficiency.  More significantly, an expected indirect impact of the rehabilitation is to provide major benefits for the development of renewable energy in the country and an increase the stability of the electricity system, and improve EPS’s ability to balance the grid, and allow for the increased penetration of intermittent renewables in the country’s generation mix.

The works schedule is such that in each period of rehabilitation half of the production units will be available, while the other half will be under rehabilitation. Considering that, the regimes of exploitation of the Vlasina reservoir as well as the regimes of the rivers that flow into the intermediate reservoirs will remain within the designed and approved limits during the rehabilitation period.  The Project will then be implemented by a Project Implementation Unit (PIU) formed of EPS staff and based within EPS premises. The primary risks and potential impacts associated with project implementation are related to the construction phase and include increase of traffic and usage of local infrastructure to allow access to the hydropower plants and an associated, temporary, increase of noise, exhaust emissions and occasional obstruction of passage during construction.  The operation phase is expected to be associated with the same current physical impacts as the rehabilitation: fluctuations of the water level in Vlasina Lake and variations of the flow in downstream rivers and canals, depending on operation.

An E&S Action Plan has been developed and agreed with EPS, the requirements of which will also be imposed on the PIU.  EPS has adopted the ESAP which includes project specific mitigation measures such as developing contractor E&S management plans to mitigate the full range of issues associate with rehabilitation works.  In addition, operational phase measures for good E&S practice will be reviewed and updated, including a review of the operating regime and impacts on downstream users.  Lastly, EPS will notify the applicable authorities on both sides of the international-border that the works will be undertaken and that no transboundary issues are anticipated. A Non-Technical Summary and Stakeholder Engagement Plan have been developed and will be disclosed by EPS and are attached here for reference.

Technical Cooperation and Grant Financing

TC support for this operation has been provided by Austria DRIVE fund as follows:

• EUR 74,000 for Technical Due Diligence, for the purpose of reviewing technical specifications, suggesting procurement strategy and other technical aspects of the project;
• EUR 40,000 for Environmental and Social Assessment, for the purpose of reviewing environmental and social aspect of the project and devising Environmental and Social Action Plan, Non Technical Summary and Stakeholder Engagement Plan for the Project.

Company Contact Information

Elektroprivreda Srbije AD Beograd
kabinet@eps.rs
www.eps.rs
Balkanska 13 11000 Beograd

PSD last updated

13 Jun 2023

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: projectenquiries@ebrd.com

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General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD’s Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank’s countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.