EDB Commenced Major Infrastructure Project in Chechnya
The EDB became the first bank authorised by Russia to implement priority projects in Chechnya.
Moscow, 17 December 2009. Today the EDB signed a package of loan agreements on the project Rehabilitation and Reconstruction of Thermal Power Plant-4 in Argun, the Chechen Republic. In accordance with these agreements the EDB will open a ten-year credit facility for Argunenergo for a total of 2.980 billion roubles.
This is the largest infrastructure project being implemented in the energy sector of the Chechen Republic. It includes repairs and modernisation of a thermal power plant which will become the first rehabilitated power generation facility in Chechnya. The plant will have an installed capacity of 50 MW. The project aims to satisfy the internal demand for electric power in Chechnya by substituting power export from other Russian regions. At present, the absence of power generating capacity from Chechnya results in an increase in power tariffs (up to 40%), in connection with losses in grids (up to 10 MW). The launch of the Argun Thermal Power Plant—4 will allow the shortage of electric power in Chechnya to be eased.
This project is listed among priority investment projects of Chechnya. At the same time, it is the first project being implemented under the Programme of State Guarantees for Bank Loans for investment projects in Chechnya, which is included in the federal law On the Federal Budget in 2010 and the Planned Period of 2011—2012.
The project will generate a significant developmental effect: the growth in the power industry will lay the foundations for sustainable economic development, and provide an impetus for rehabilitation of the economy, the social sector, the processing industry, agriculture, and services.
The project has a great social significance. Over 70 new jobs will be created under the project itself, and the launch of the power plant will allow production to be recommenced and the capacity of industrial facilities in Argun to be increased, which in turn will allow at least 1,000 new jobs to be created. Tax revenue during the loan period will total about 3.6 billion roubles. The project is also expected to produce a positive effect on the housing and utilities sectors in Chechnya. In this context, the project is fully in line with the EDB’s strategic objectives and mission.
Additional Information
The Argun Thermal Power Plant-4 is the major facility of the Chechen power industry. It is located in Argun, the third largest industrial centre in Chechnya. It was commissioned in the early 1960s, and was the only source of heat for industrial and residential buildings in the region. During the war of the late 1990s the plant was heavily damaged and most of its equipment could not be rehabilitated. In 2001—2004 attempts were made to rehabilitate the plant, some new equipment was supplied, and test launch of the power generating unit was made.
However, the long standstill without conservation measures and the use of low-quality water resulted in corrosion of the heating and pipeline systems. Most of the equipment was considered unusable and need to be replaced.
The historic installed capacity of the plant was 12 MW.