The EDB to start implementation of yet another energy project in Russia

A new heating main will be built on the Kola Peninsula

Almaty, 5 February 2013. The Eurasian Development Bank (EDB) and Khibinskaya Teplovaya Kompaniya OJSC (KHTK OJSC) signed today a loan agreement that provides for the Bank’s financing of heating main construction in Murmansk oblast to connect the cities of Apatity and Kirovsk.

Under the agreement, the EDB is to open KHTK OJSC a non-revolving credit line of RUR 2 billion for 6 years. The project involves construction of 14 km of heating main from Apatity CHP TGK-1 OJSC to the central heat distribution station of the city of Kirovsk, Murmansk oblast, to transport heating energy to final consumers. Apatit OJSC-a major mining and chemical complex, part of PhosAgro Group engaged in phosphate mining and processing-is located in that city. This enterprise is the backbone one for the one-company city of Kirovsk.

District heating in Kirovsk is currently provided by operating fuel oil boiler-houses and the intra-city heating network belonging to Apatit OJSC. It results in high unit cost of heat generation, while heating tariffs significantly exceed those applied in Apatity.

The project implementation will let Apatit OJSC (which holds 50 % of the shares in KHTK OJSC) discontinue its non-core activities — energy generation, while TGK-1 OJSC (which holds 50 % of the shares in KHTK OJSC) will be able to improve the reliability and quality of heat supply to enterprises and households in Kirovsk, bring down their payments for heat consumption, and improve the environmental situation in the city by closing down obsolete boiler-houses.

The project is consistent with the EDB Strategy for 2011—2013: it is implemented in the area of energy sector infrastructure, and the energy sector is a priority for the Bank’s investment activity. Besides, its implementation benefits achievement of the Bank’s strategic objective of improving the energy efficiency of the economies of its member states.

Additional Information

Khibinskaya Teplovaya Kompaniya OJSC (KHTK OJSC) was established in 2007 to implement the project related to construction of the heating main from Apatity CHP TGK-1 OJSC to the central heat distribution station of the city of Kirovsk, Murmansk oblast. TGK-1 OJSC and Apatit OJSC are its founders, each holding a 50 percent stake.

The Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.

Read more about the EDB at https://www.eabr.org

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