A syndicate of banks will finance the conversion of Almaty CHPP-2 to gas

Work on converting to gas and completely modernizing one of the largest thermal power plants in Kazakhstan, Almaty CHPP-2, has reached the stage of practical implementation. After the international tender for the construction of a gas station announced in October, issues related to sources of financing for the project have been resolved.

Today, November 25, 2022 in Almaty,  a Loan Agreement was concluded  between  Almaty Electric Power Plants JSC  (AlPP), the owner of the station, and  the European Bank for Reconstruction and Development  (EBRD) on financing the project “Modernization of Almaty CHPP-2 with minimizing the impact on the environment ” The transaction amount is  130 billion tenge.

During the event, an Agreement of Intent to provide financing for the project was also signed between AlES and  the Development Bank of Kazakhstan  (DBK).

Work on the construction of a new gas station on a site next to the old CHPP-2 is planned with the involvement of funds from a syndicate, leading international and Kazakh banks –  the EBRD, the Asian Development Bank  (ADB)  and the Development Bank of Kazakhstan  (DBK). Financing will be carried out in the national currency – tenge, with a floating interest rate tied to TONIA (Tenge OverNight Index Average).

The project is being implemented with the support of  Samruk-Kazyna Fund JSC . The National Welfare Fund will provide its corporate guarantee, which, according to experts, helps to minimize risks and improve lending conditions, and the agreement itself ensures the project is secured with long-term financing.

The loan agreement was signed by Erlan Kirkimbaev, Chairman of the Board of AlES JSC and Aida Sitdikova, Director of the Energy Department for the Eurasia, Middle East and Africa regions of the EBRD. The document signing event took place with the participation of representatives of the EBRD, DBK, Samruk-Energy JSC, AlES JSC, and the Akimat of Almaty.

Chairman of the Board of Samruk-Energy JSC Serik Tyutebaev noted that a lot of work was done to organize financing, including an assessment of the environmental impact according to international standards and an assessment of applicable technologies taking into account world experiences.

“The Government of the Republic of Kazakhstan, the Samruk-Kazyna Foundation and Samruk-Energy JSC pay special attention to the development of Almaty and the Almaty agglomeration. In addition to the modernization of Almaty CHPP-2, to improve the environmental situation and further development of renewable energy facilities in the Almaty energy hub, we are also implementing the project “Construction of a gas station with a combined cycle capacity of 545 MW” on the territory of Almaty CHPP-3. This facility will be put into operation in 2025 and will significantly reduce the shortage of maneuverable capacity in this region,” said Serik Tyutebaev.

According to EBRD Vice President Alan Pius, the bank plans for climate and green finance to account for more than half of the EBRD’s annual investments by 2025. “This is an excellent example of a green project that will improve the air quality in Almaty, the quality of life of the local population and bring Kazakhstan closer to compliance with the Paris Agreement and its goal of achieving carbon neutrality by 2060,” said the EBRD representative.

Let us recall that earlier, on October 27, 2022, the EBRD announced the start of a two-stage open international tender, which is conducted in accordance with the rules of an international financial institution. The technical specification for the selection of an EPC contractor and the draft EPC contract were developed according to the “yellow book” of FIDIC (International Federation of Consulting Engineers). Acceptance of applications from potential contractors for the supply of equipment, design and construction of a new gas station at the Almaty CHPP-2 site as part of the first stage will last until December 15, 2022.

The project “Modernization of Almaty CHPP-2 with minimization of environmental impact” involves the construction of a new station using gas turbine technologies with a capacity of up to 600 MW at the site of Almaty CHPP-2. The deadline for full commissioning is December 2026. The goal of the project: to reduce the negative environmental impact of the station on the environmental situation in Almaty by converting the station to burning natural gas, as well as providing consumers in Almaty and the Almaty region with a reliable and uninterrupted supply of heat and electricity in accordance with load schedules.

According to experts, the station gasification project meets the most stringent requirements of the Republic of Kazakhstan and the European Union. These compliances will reduce emissions of harmful substances from thermal power plants by 93%; will exclude from the emissions of suspended particles and sulfur oxides, the formation and disposal of ash and slag waste; will ensure silent operation of the units. All this together should reduce the station’s zone of influence on the environment and residents of the Almaty agglomeration.