RLF - Lutsk District Heating - Phase II

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

A senior loan of up to €10.5 million to State Communal Enterprise "Lutskteplo" (the "Company") to finance the modernization of the district heating ("DH") system in the City of Lutsk (the "City"). The EBRD loan is a part of a broader financial package, which includes a €4.2 million investment grant from the EU Neighbourhood Investment Platform ("EU NIP") and a €1.0 million co-financing from the City. The Project builds upon the achievements of and lessons from the previous DH project in the City of Lutsk, which was financed by the EBRD, Clean Technology Fund and Eastern Europe Energy Efficiency and Environment Partnership.

Project ID 54875

Status Signed

Location

Ukraine

Business Sector

Municipal Infrastructure

Notice Type

State

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Company Contact Information

Mr. Bohdan Karachevskyi
office@teplo-dkp.lutsk.ua
+380 33 2773200
https://www.teplo-dkp.lutsk.ua/
SCE "Lutskteplo" 20, Hulaka-Artemovsckoho Str. Lutsk, 43005 Ukraine

Project ID 54875

Status Signed

Location

Ukraine

Business Sector

Municipal Infrastructure

Notice Type

State

Environmental Category

Approval Date

14 May 2024

Disclosure date

10 May 2024

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

RLF - Lutsk District Heating - Phase II (Ukrainian) (PDF, 0.18MB)

Project description

Project objectives

The EBRD loan and the investment grant from the EU NIP will be used to finance i) the replacement and interconnection of DH networks along with optimization of their diameters; (ii) the installation of heat pumps and biomass-fired boiler(s); and iii) the installation of dispatching and monitoring system also known as SCADA. The total Green House Gas ("GHG") emission reduction from the Project implementation is calculated to be 10,191 tonnes of CO2e per annum.

Transition impact

ETI Score:70

ject is part of the Resilience and Livelihoods Framework ("RLF"). The primary objective of the transaction is to contribute to Inclusive quality of the Framework by promoting access to vital services that enable people's livelihoods. The Project will contribute to preserving and improving the livelihoods of the residents in the City of Lutsk by ensuring reliable access to DH services, which have been negatively affected by the ongoing war. The Project will also support livelihoods of more than 20,000 Internally Displaced Persons ("IDPs") hosted by the City, the majority of whom cannot afford alternative heating solutions, and will enable IDPs to integrate into the local economy and rebuild their lives. The Project will also mitigate against health risks connected with abnormally low temperatures in residential apartments, public health and educational institutions.

Transition impact will be also derived from the Green quality. This will be inter alia achieved through diversification of energy sources thanks to the installation of new biomass boiler and air-water heat pumps. The Project will be the first DH project financed by the Bank in Ukraine that includes installation of heat pumps.

Client information

DISTRICT HEATING COMPANY LUTSKTEPLO OF THE CITY OF LUTSK

The Company is a municipal district heating ("DH") service provider wholly owned by the City of Lutsk and the existing client of the Bank.
The Company operates 43 boiler houses with the total installed capacity of 650 MWth. The heat transmission and distribution system consists of (i) 131.6 km (in two pipe measurement) of transmission and distribution pipelines of different diameters; (ii) 47 central heating substations, and (iii) circa 350 individual heat substations.

EBRD Finance Summary

EUR 10,500,000.00

Total project cost

EUR 15,700,000.00

€10.5 million senior loan co-financed by up to €4.2 million investment grant from the EU NIP, and up to €1.0 million local contribution.

Additionality

The Company and the City of Lutsk require the Bank's support amid the unprecedented crisis in Ukraine caused by the ongoing war. Local lenders are not able to provide such long-term financing with a grace period, given difficult economic situation in the country.

Environmental & Social Summary

Categorized B (2019 ESP) and Low-Medium risk. The Project will result in environmental and social benefits, associated with the enhanced resilience of the City's DH system, reduced natural gas consumption and heat carrier leakages, lower air emissions and improved overall quality, reliability and energy efficiency of the DH services. The Project will not involve any investments into fossil fuel generating capacities; and will focus on heat generation from renewable sources including sustainably produced biomass and heat pumps.

The Environmental and Social Due Diligence ("ESDD") was undertaken by an independent feasibility study consultant and included, inter alia baseline assessment, identification of long-term and priority investment programmes, assessment of the Company's capacity to manage Environmental and Social ("E&S") risks associated with the Project, notably labour management, workers and community health and safety, social aspects, etc.

Based on the ESDD, it has been concluded that the Bank's investment into the priority programme will improve efficiency and resilience of the DH system and will contribute to decarbonization of heat supply. This will be achieved by the installation of a biomass boiler with condensing economizer, the installation of heat pumps, replacement of obsolete DH networks with changes of their diameters where applicable and installation of interconnections in accordance with the recently approved DH scheme of the City, and installation of the dispatch and monitoring system, which will integrate IHSs monitoring system installed under the previous DH project. The feasibility study consultant identified several sources of sustainably produced biomass in the required amounts.

The ESDD has concluded that the Company already has some elements of the E&S Management System, and will continue to improve and address some gaps to bring the Project into compliance with Bank's Performance Requirements ("PRs"). The implementation of the Project will be associated with temporary adverse environmental and social impacts during the construction period only, such as noise and emissions, health and safety, waste management, traffic safety, contractor management, which will be addressed by the good practice construction management plans and contractor supervision. The Company operates in accordance with national legislation regarding labour and working conditions, however, some improvements are required in relation to the HR policies and workforce grievance mechanism to ensure compliance with PR2.

All activities related to the reconstruction and replacement of equipment and networks (except for short interconnections in accordance with the DH scheme approved by the City Council) will be carried out within the boundary of the existing enterprise or in the existing network tranches and will not be associated with any physical resettlement, economic displacement or impacts on cultural heritage.

To address the identified gaps, the Environmental and Social Action Plan ("ESAP") has been developed. It included, inter alia, improvements of the E&S Management system, environmental monitoring, improving HR policies and the workforce grievance mechanisms, developing contractors' labour management and monitoring policies and procedures. The ESAP has been agreed with the Client. The Project will be monitored in terms of its E&S performance through annual E&S reports and site visits when deemed necessary.

Technical Cooperation and Grant Financing

Pre-signing:

Feasibility Study - financed by the government of Sweden.

Post-signing:

Project Implementation Support and Public Service Contract update - will assist the Company's Project Implementation Unit with full procurement support, including preparing technical requirements and procurement documents, tendering and contracting, contract administration and works supervision, Public Service Contract update and ESAP implementation monitoring.

Company Contact Information

Mr. Bohdan Karachevskyi
office@teplo-dkp.lutsk.ua
+380 33 2773200
https://www.teplo-dkp.lutsk.ua/
SCE "Lutskteplo" 20, Hulaka-Artemovsckoho Str. Lutsk, 43005 Ukraine

Implementation summary

PSD last updated

10 May 2024

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.

For business opportunities with the EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) 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 also requires its clients to disclose information, as appropriate, about the risks and impacts of 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 of the Bank's activities 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 EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either 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. OCCO will follow-up all matters reported. It will review all matters reported. 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, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. 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 (for example, 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 the 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 and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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RLF - Lutsk District Heating - Phase II

Overview

Project timeline

Company Contact Information

Project description

Project objectives

Transition impact

Client information

EBRD Finance Summary

Total project cost

Additionality

Environmental & Social Summary

Technical Cooperation and Grant Financing

Company Contact Information

Implementation summary

PSD last updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)