Kazakhstan: Karaganda District Heating Reconstruction and Modernization Project (formerly Energy Efficiency Project)

Sovereign Project | 45068-002 Status: Proposed

Summary

The proposed Karaganda District Heating Network Rehabilitation project (the Project) aims to enhance operational efficiency of district heating (DH) systems in Karaganda province.

The Project impact will be improved energy efficiency in Kazakhstan, and the outcome will be a stable, safe and energy efficient district heating distribution network in Karaganda province. The PPTA outcome will be a well-prepared Project, and enhanced institutional capacities for identifying, developing and managing energy efficiency projects.

Latest Project Documents

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Consulting Notices See also: CMS

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Procurement Notices See also: Operational Procurement

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Procurement Documents

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Project Name Karaganda District Heating Reconstruction and Modernization Project (formerly Energy Efficiency Project)
Project Number 45068-002
Country Kazakhstan
Project Status Proposed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan: Karaganda District Heating Network Rehabilitation Project
Ordinary capital resources US$ 110.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Energy - Energy efficiency and conservation

Gender Equity and Mainstreaming No gender elements
Description

The proposed Karaganda District Heating Network Rehabilitation project (the Project) aims to enhance operational efficiency of district heating (DH) systems in Karaganda province.

The Project impact will be improved energy efficiency in Kazakhstan, and the outcome will be a stable, safe and energy efficient district heating distribution network in Karaganda province. The PPTA outcome will be a well-prepared Project, and enhanced institutional capacities for identifying, developing and managing energy efficiency projects.

The Project has three main outputs: (i) reconstruction and replacement of main and distribution pipelines and pumping stations, (ii) installation of individual and central heating points and substations, metering, and a supervisory, control and data acquisition (SCADA) system; and, (iii) institutional capacity building and awareness campaign including on financial management, procurement, safeguards compliance, access to finance including carbon finance and trading mechanisms, development of investment program and strategy, and project supervision and management support for the Ministry of National Economy, the Karaganda Oblast and City Akimat, LLC Teplotranzit, other utilities and other stakeholders.

Project Rationale and Linkage to Country/Regional Strategy

Kazakhstan''s rapid economic growth was accompanied by inefficient energy use, lost revenues, accelerated resource depletion, and adverse environmental and health impacts. It was the fourth most energy-intensive and the seventh most carbon-intensive economy in the world in 2008. Current installed capacity, mostly over 30 years old and based on Soviet technology, is 19.5 gigawatt (GW). Over 7 GW of coal-fired plants supply 85% of electricity and heating demand and generating 65% of greenhouse gas (GHG) emissions. The housing sector accounted for 24% of heat demand, and consumption increases 8-10% annually. Over 80% of DH networks need urgent replacement which is critical given the country's long and harsh winters with temperatures reaching minus 50 degrees Celsius.

Karaganda City with a population of 475,200, is the industrial center of Karaganda region. The city's DH network, operated by a municipality-owned limited liability partnership company (LLP) Teplotranzit (Teplotranzit), supplies all high-rise housing, part of 1- and 2-storey houses, and 50% of administrative buildings. Heat is generated at 2 privately-owned combined heat and power (CHP) plants. The network assets are 25 to 36 years old and are operating beyond service life. All 56 pumping stations require upgrade and failure rates are increasing. Pipeline wear is 75% and insulation is missing for 29% of the network. Heat losses are at over 18%, equivalent to revenue losses of approximately $20 million per heating season. Karaganda province has the second highest number of accidents nationwide (21.7% in 2010).

Karaganda City's 109 km primary heating network is divided into 2 operational areas, each with 6 non-automated pumping stations: (i) Novogorodskoy, built in 1966, and (ii) Maykuduksky, built in 1978. The 325 km distribution network with 47 pumping stations serves the Soviet, South East, October, Kirov, and Railway operational areas. Teplotranzit's technical inspections estimated the cost of replacing all distribution pipelines in 2011 at $482 million.

The Project will focus on the oldest network established in 1965, the Soviet operational area, which serves 127 km of heat networks (94 km aboveground, 25 km underground, and 8 km transit pipes) and 7 pumping stations. Subject to availability of cofinancing, rehabilitation of October and Kirov operational areas will be included. Given the potential for replication, provision of a multitranche financing facility will also be explored during PPTA.

The Project supports Kazakhstan's energy sector, prioritized under the ADB Kazakhstan Country Partnership Strategy for 2012-2016, and is included in the ADB's Kazakhstan Country Operations Business Plan 2012-2014. The Project supports the country's Comprehensive Energy Efficiency Plan 2012-2015, and Accelerated Industrial Innovation and Development Plan 2010-2014, and will help achieve the country's energy and carbon intensity reductions targets.

Impact Energy efficiency improvement in Kazakhstan.
Outcome Safe, stable and energy efficient operation of Karaganda province district heating network
Outputs

Retrofitted and upgraded Karaganda city DH network

Enhanced government capacities in identifying, developing, and managing energy efficiency projects

Geographical Location karaganda

Safeguard Categories

Environment B
Involuntary Resettlement C
Indigenous Peoples C

Summary of Environmental and Social Aspects

Environmental Aspects The project will not be located in or adjacent to any designated environmental protection areas and works will be carried out within the current right-of-way.
Involuntary Resettlement No major issues are expected to emerge on land acquisition or resettlement.
Indigenous Peoples No minority ethnic groups will be affected.
Stakeholder Communication, Participation, and Consultation
During Project Design Stakeholder consultations will be conducted during PPTA and project design. including as part of the preparation of the Initial Environmental Examination and the Land Acquisition and Resettlement Framework, following the ADB Safeguard Policy Statement 2009. A Poverty and Social Analysis survey was done in 2013 where stakeholder interviews and consultations were conducted. The first public consultation was conducted in Karaganda city on 15 September 2015, which was attended by over 100 stakeholders who expressed support for the project.
During Project Implementation Stakeholder consultations will be conducted, including as part of the updates to the Initial Environmental Examination and the Land Acquisition and Resettlement Plan, following the ADB Safeguard Policy Statement 2009

Business Opportunities

Consulting Services

The PPTA engaged a consulting firm to prepare feasibility study and technical specifications for the physical component, and for capacity development component. It is expected that this assignment would require 24 person-months (p-m) of international consultants' input and 31 p-m national consultants' input. The firm was recruited through the quality- and cost-based selection method using a full technical proposal in line with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). The quality cost ratio was 90:10 as the TA requires a high level of technical expertise. The firm is responsible for the quality and timely delivery of outputs and should have substantial experience on similar assignments in Central Asia or countries with similar climate as Kazakhstan, and on working with ADB and other international financing institutions.

The PPTA, among other tasks, needs to adequately address the following aspects relating to the ensuing project: (i) detailed loan executing agency capacity assessment, and suggested remedial action plan to build executing agency and implementing agency capacity to minimize procurement and financial management risks; (ii) proposed or indicative loan related procurement plan with suggested level of priority or, if applicable, post review based on executing agency and implementing agency capacity assessment; and (iii) indicative implementation schedule with proposed sequencing of consultant recruitment and procurement bidding and awarding.

Procurement The indicative procurement method will be international competitive bidding (ICB), in accordance with ADB's Procurement Guidelines (2010, as amended from time to time). A procurement plan will be prepared for the project and appropriate contracts will be utilized and incorporated into the procurement plan. A consulting firm will be recruited for construction supervision, project management, capacity building and safeguards compliance using the quality- and cost-based selection (QCBS) method (quality: cost weighting of 90:10), following ADB's Guidelines on the Use of Consultants (2010, as amended from time to time).

Responsible Staff

Responsible ADB Officer Cinderella Tiangco
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Energy Division, CWRD
Executing Agencies
Dept. for Budget Inv't &PPP Devt,Min of Nat'l Econ
010000, Astana, Kazakhstan, 8, Orynbor
Street, Kazakhstan

Timetable

Concept Clearance 11 Dec 2012
Fact Finding 08 Feb 2016 to 12 Feb 2016
MRM 31 Mar 2016
Approval 24 Jun 2016
Last Review Mission -
Last PDS Update 23 Sep 2015

None currently available.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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