ICBC provides $30 million loan for Efeler Geothermal Power Plant (GPP) Project

On July 24, 2019, Gurmat Elektrik Uretim A.S. -- a special purpose vehicle (project company) that is jointly owned by Guris Holding A.S., Guris Insaat ve Muhendislik A.S. and Mogan Enerji Yatirim Holding A.S. — signed a syndicated debt financing package with a group of six lenders [European Bank for Reconstruction and Development (EBRD), the Asian Infrastructure Investment Bank (AIIB), the Black Sea Trade and Development Bank (BSTDB), Isbank, the Industrial Development Bank of Turkey (TSKB), and ICBC Turkey] for the Efeler Geothermal Power Plant Expansion Project. Under the financing arrangement, AIIB, EBRD, and BSTDB issued loans worth $100 million, $60 million, and $20 million, respectively. Isbank issued a $90 million loan, while ICBC Turkey issued a $30 million loan and Industrial Development Bank of Turkey (TSKB) issued a $50 million loan. These loans carried maturity lengths of 11.5 years. The purpose of the project is to finance the expansion of a 97 MW geothermal power project located in the region of Aydin, Western part of Turkey. The expansion involves the construction of three additional binary GPP units — namely, the 22.6MW Efe-6, the 25MW Efe-7, and the 50MW Efe-8 — along with associated transmission lines, boreholes (22 production wells and 20 reinjection wells), and a pipeline network interconnecting the powerhouse and production wells. The primary infrastructure of the project includes the power plant units consisting of conventional steam turbines, borewells, pipelines, and emergency ponds to collect the geothermal fluids during a crisis. The electricity generated by Efe-6 is fed to the national grid via the existing 3.9km-long 154kV overhead transmission line of the Gürmat-1 GPP, while Efe-8 will use the existing 154kV Gürmat-2 transmission line. Interconnection with the transmission grid requires the construction of two new switchyards adjacent to the Efe-6 and Efe-8 site. Efe-7 is interconnected to the grid without any switchyard using a 31.5kV underground cable system that is 0.9km-long. The project is expected to help Turkey achieve a stable baseload geothermal power generation capacity of 810 gigawatt-hours (GWh) a year in 2022. Dse Enerji was responsible for project implementation. The project was prepared in accordance with the EBRD Environmental and Social Policy (EBRD E&S Policy) and the EBRD Performance Requirements (EBRD PRs). The Project was placed in Category “A", in accordance with the EBRD E&S Policy, due to risks associated with the over-ground network of connecting pipelines, their location near populated areas and agricultural land, cumulative land take of the project company’s geothermal power plants and operational carbon dioxide (CO2) and hydrogen sulfide (H2S) emissions. The project was subject to a national Environmental Impact Assessment (EIA) procedure and permits were granted by the MoEU for Efe-6, Efe-7 and Efe-8 Geothermal Power Plants (GPPs). The MoEU's approval of the Efe-8 EIA was challenged by a local CSO in Aydin in July 2017 in the local Administrative Court, which revoked the approval in September 2018. An appeal decision by the Chamber of the Council of State reversed the lower court's decision in December 2018, thus rendering the initial granting of the EIA approval valid and in effect while sending back the case to the lower court for re-examination and rendering of a further decision. With this Council of State decision, the project company could proceed with the construction of Efe-8 on the ground of the initial EIA approval; however, the approval needed to be reconfirmed by the Administrative Court. The ESIA prepared in accordance with EBRD’s standards for the original Gürmat-2 project and an ESIA Addendum for the expansion project were disclosed on the EBRD’s website respectively on September 24, 2014 and November 13, 2018. Additional due diligence was undertaken in 2019 following stakeholder concerns and updates on the project permitting resulting in additional mitigation measures. As required by the Lenders, an independent consultant was retained by the project company in 2019 to conduct an Environmental and Social Due Diligence (ESDD) of the project and prepare an Environmental and Social Assessment (ESA), Stakeholder Engagement Plan (SEP), and Non-Technical Summary (NTS). The ESDD confirmed that the project’s existing and anticipated environmental and social risks and impacts have not materially changed since the ESIA Addendum disclosure in November 2018, but the scrutiny on the industry across Turkey and challenges to geothermal operations in the Germencik region had heightened. It also confirmed that the project was not expected to have any impacts on any protected areas, and it was not expected to be associated with any resettlement. The project was structured to comply with the EBRD's PRs and national requirements. The ESDD also confirmed the project company’s track record in implementing an Environmental, Health, Safety and Social Management System (EHSSMS) in line with the national legislation and familiarity with good international industry practice. However, additional areas for improvement were identified during the ESDD and an updated Environmental and Social Action Plan (ESAP) were developed and disclosed to ensure that the project and operations followed the EBRD's PRs. Measures to mitigate environmental and social impacts during construction, operation, and in case of incidents such as leakage of geothermal fluids, and to strengthen stakeholder outreach were included in the design of the project and relevant 2019 E&S documentation disclosed on the EBRD’s and Company’s website in English and Turkish. As per the 2018 ESIA addendum and confirmed by the 2019 ESA, land acquisition for the project was completed on a willing-buyer/willing-seller basis, and no direct/indirect physical displacement or disruptions in livelihood occurred. Compensation was assessed by the EBRD to have been satisfactory. Outstanding land acquisition for Efe-8's transmission line by the national power distribution company will be monitored by the Company for compliance with PR1 and PR5. The Efe-6 unit came online in August 2017, followed by the Efe-7, which began commercial operations in October 2018. The environmental impact assessment (EIA) of the Efe-8 was approved after reconsideration by the Turkish government in December 2018. EMRA issued the license for the final unit in 2019. The expansion was originally expected to reach completion with the commissioning of Efe-8 in October 2020. Efe-8 ultimately came online in January 2021.

Additional details

1. This project is also known as the Gürmat-2 GPP Expansion Project. The Turkish project title is Efeler Jeotermal Enerji Santrali'dir. 2. Gurmat Elektrik Uretim A.S. , which owns Mogan Enerji Yatirim Holding (85%), Güriş Holding (4.72%), Güriş Inşaat ve Muhendislik (4.72%), Gurenerji Elektrik Uretim (0.56%), and Mr. Müsfik Hamdi Yamantürk (5%), operates the Efeler geothermal power plant.

Number of official sources

15

Number of total sources

22