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19 June 2003 - General Director of Lenenergo Andrey Likhachev and President of the European Bank of Reconstruction and Development Jean Lemierre signed today a $40m loan agreement at the company's St Petersburg headquarters.
According to the terms of the agreement, the facility funds will finance the final stage of the construction of a new 180 MW-capacity power generation block at the Thermal Power Plant N 5 in St Petersburg. The total cost of the project is estimated at $60m.
Lenenergo, the major power utility in Northwest Russia, is expected to repay the credit in seven years. The loan will finance the replacement of old generating equipment installed back in the 1920-s, thus securing power and heat supply to 500 000 residential customers in one of the largest industrial districts of St. Petersburg.
The new power equipment will significantly improve the environmental characteristics of the plant's operations and lead to a sound reduction of its wastewater and gas emissions.
Over the past several years EBRD has demonstrated a growing interest towards the restructuring of Russian regional power companies. The bank issued two similar loans to the Moscow power utility Mosenergo in the past five years ($30m in 1998 and $70m in 2002). In 2002 RAO "UES of Russia", Lenenergo's major shareholder, signed a $100m loan agreement with EBRD. Another $100m were invested by the bank in 1997 to finance a geothermic power plant construction project at the Kamchatka peninsular. With the last loan to Lenenergo, the volume of EBRD investments in the Russian power industry have totalled $340m.
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