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Thursday, 30 November 2023

ESG bonds for the reconstruction of Almaty CHP-3

An agreement on joint realization of the project of reconstruction of Almaty CHP-3 was signed today between Almaty Electrical Stations JSC (AlES) and Eurasian Development Bank (EDB).

EDB is planning to purchase Sustainability-Linked Bond (SLB – debt securities for financing environmental and social projects) issued by AlES to implement the project on reconstruction of Almaty CHP-3.

The solemn event related to the signing of the Agreement was held in Astana at the Astana International Exchange (AIX). In order to provide debt financing for the reconstruction project of Almaty CHP-3, AlES' first bond program related to sustainable development with a total nominal volume of up to 236.8 billion tenge was registered on the Exchange of the International Financial Center "Astana".

According to Almasbi Kamalov, Managing Director for Economics and Finance of Samruk-Energy JSC, a lot of work was done to organize the project financing, including environmental impact assessment according to international standards and assessment of applicable technologies taking into account global experience. Samruk-Kazyna JSC and Samruk-Energy JSC pay special attention to the development of Almaty agglomeration. In addition to the modernization of Almaty CHP-3, a number of important projects are being implemented in the Almaty energy hub, which will not only strengthen the energy potential of the region and reduce the deficit of maneuverable capacity, but also improve the ecology of the city, – said the representative of Samruk-Energy JSC.

"Eurasian Development Bank is focused on the implementation of mega projects, like the reconstruction of Almaty CHP-3, and in this context we highlight several important aspects. First, the installation of modern, environmentally friendly natural gas-fired combined cycle plants instead of worn – out coal-fired power boilers, which have exhausted their resource, will significantly improve the environmental situation in the largest city of Kazakhstan. This is fully in line with the principles of sustainable development to which the Bank adheres. Secondly, during the implementation of our major investment project on the development of the water and energy complex in Central Asia, the Eurasian Development Bank is actively assisting the countries in achieving energy security by providing financing and grants for pre-project work. Finally, we actively contribute to the development of new capital raising mechanisms and are pleased to participate in the issuance of the Sustainability-Linked Bond", emphasized Ruslan Dalenov, Deputy Chairman of the EDB Board.

The debut issue of the AlES Sustainability Bonds was realized with the support of the IFCA Green Finance Center, which provided the necessary advisory support and provided an independent opinion on the compliance of the bonds with the principles of sustainable development bonds (Second Party Opinion).

Daniyar Kelbetov, Chairman of the Board of Directors of the IFCA Center for Green Finance, said: "IFCA is committed to introducing innovative financial instruments to attract investments in environmentally sustainable projects. One such new financial product is sustainability-linked bonds (sustainability-linked bonds). We are pleased that today Kazakhstan is the first country in Central Asia to launch a market for these bonds, which contribute to the achievement of global carbon footprint reduction targets".

In addition to the EDB, other development institutions and second-tier banks may become potential investors in the project. Sky Bridge Invest JSC acts as a financial consultant and underwriter for the issue and placement of the bond program.

According to MFCA, AlEC's SLB bonds will be the largest sustainable development bond issue in Central Asia.

"In recent years, investors around the world have become increasingly aware of the importance of ESG criteria when making investment decisions. As a result, many companies have begun to incorporate ESG into their operations and business strategies. AIX is pleased to be in line with this trend by providing an opportunity to invest in sustainability through a line of affordable products", said AIX Board Chair Asel Mukazhanova.

The investment project "Reconstruction of Almaty CHP-3 based on a combined cycle gas turbine with a capacity of 500 MW" is implemented by Samruk-Energy JSC represented by its subsidiary organization – AlES. The project involves a radical upgrade of the power plant, with an increase in its capacity and maneuverability. The new CHP plant will generate combined heat and power. One of the key aspects of the project is the installation of modern environmentally friendly natural gas-fired combined cycle power units at the plant instead of outdated and exhausted pulverized coal equipment.

Reference:

Almaty Power Plants JSC (AlES) is an energy-producing organization engaged in the production of heat and electricity in Almaty city and Almaty region. It is part of the structure of the electric power holding Samruk-Energy JSC. AlES provides electricity and heat energy to about 70% of consumers in the Almaty region. The company includes CHP-1, CHP-2, CHP-3, Western Thermal Complex, Kapshagay HPP, Cascade of Almaty HPPs, PRE Energoremont, FRUW.

The Eurasian Development Bank is an international financial organization engaged in investment activities in Eurasia. For more than 17 years, the EDB has been promoting the strengthening and expansion of economic ties and comprehensive development of its member countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan. The EDB's authorized capital is USD 7 billion. The main share in EDB's portfolio is occupied by projects with integration effect in the areas of transport infrastructure, digital systems, green energy, agriculture, industry and mechanical engineering. In its activities, the Bank is guided by the UN Sustainable Development Goals and ESG principles.

Samruk-Energy JSC is the largest electric power holding in Kazakhstan. Main activities: production of electric and thermal energy; transmission, distribution and sale of electric energy; extraction of thermal coal. The holding comprises power and coal enterprises, including Ekibastuz GRES-1 LLP, Ekibastuz GRES-2 Station JSC, Bogatyr Komir LLP, Almaty Power Plants JSC, Moynak HPP JSC, Shardara HPP JSC and others. Established in 2007. 100% of shares are owned by Samruk-Kazyna JSC.

SkyBridge Invest JSC was established in 2008 and successfully provides its Kazakh and foreign clients with a wide range of professional services and advice on structuring, supporting and implementing major M&A transactions, restructuring of financial debt, arranging project financing, raising debt capital, arranging bond and Eurobond issues, restructuring bond loans, supporting IPOs and private placements, as well as participating in other significant transactions.