Development of Ventspils District Heating

1

• Development of Ventspils District Heating
• System in Latvia
• 2005/LV/16/C/PE/001

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Background Information

• 08/2005 Submission of the project application
  to the European Commission
• 08/2006 Decision of the European Commission on
  approval of support from the Cohesion Fund
• 02/2007 Signed participant agreement by and
  between the municipal company SIA
  "Ventspils TERMO" and Stadtwerke Flensburg
  GmbH (SWF)

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Project Costs(as planned in 2005)

• Total costs EUR 81,268,462.00
• Total eligible expenditure EUR 47,952,345.00
• Share of support as 72
• Support from the CF EUR 34,605,360.00
• Two project components are implemented within the
  project framework with the following support
  ratio Component A - 64 and Component B - 74 .
• Project-related costs are eligible until
  30/11/2010.

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Construction of a CHP Station

• Main purpose reduction of SO2 emissions
  reached partially in the end of 2009 (by closing
  down the heating plant on Brivibas Street),
  completely - in 2011.
• Specific objectives
• Closing down the heating plant located in a
  residential area (Brivibas Street), replacing it
  with a new back-up heating plant, reduction of
  SO2 emissions reached partially in 2009
• Combined heat and power generation reached
  completely in 2011.

5
Project Funding

• Budget of the project will be adjusted to market
  situation during negotiated procedure with credit
  institutions
• The market development trends for energy
  equipment as well as energy tariff dynamics have
  been take into consideration in the elaborated
  procurement documentation for the loan tender.
  The corresponding cash flows have been calculated
  up to 2031
• Opening of bids for the loan tender is planned to
  take place on 10/04/2008, followed by a
  negotiated procedure with the chosen credit
  institutions that will end simultaneously with
  tenders for works (June - July 2008).

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Updated Project Implementation Timeframe
(indicative) (I)

• 02/10/2006 Elaboration of documentation for
  procurement contract
• 12/2007 01/2008 Procurement Commissions start
  their work
• 14/02/2008 Launch of loan procurement for
  project funding
• 19/02/2008 Launch of procurement tender for
  construction of a CHP plant
• 02/04/2008 Closing tender for experts for
  evaluation of bids for the construction of a
  CHP plant with no results (MoF)
• 04/2008 Planned launch of tenders for
  construction of a connecting pipeline and for
  engineering services
• 10/04/2008 Deadline for submission of tender
  bids for the loan tender
• 30/05/2008 Deadline for submission of tender
  bids for the construction of a CHP plant

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Updated Project Implementation Timeframe
(indicative) (II)

• 06/2008 Planned evaluation of bids
• 06 - 07/2008 Planned signing of agreements
• Q3 2009 Planned to complete construction of the
  connecting pipeline
• (upon EC decision 30/04/2009)
• Q4 2009 Planned to complete construction of a
  back- up heating plant
• Q3 2011 Planned to complete construction of the
  CHP plant (upon successful award of
  procurement contracts deadline for completion
  of works will be updated one of the
  evaluation criteria deadline for completion
  of contract) (upon EC decision 30/11/2009)

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Timeframe

• Project application (01/08/2005)
• Signed EC decision (25/08/2006)
• Agreement with Enprima/Lakalme
  (02/10/2006)
• Participant agreement in PPP
  (27/02/2007)
• Published by PMB CHP station
  (19/02/2008)
• Published by PMB connecting pipeline,
  engineer (04/2008)
• Signing of agreements (07/2008)
  implementation 38 months
• End of period

05 06 07 08 09
10 11 12
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Project Implementation Risks

• Capacity shortage in the energy market for
  equipment (producers/suppliers), market
  overheating continues
• Delays in timeframe (related with equipment
  supplier's delivery capacities)
• It is planned to complete the construction of the
  CHP plant in September 2011 which significantly
  exceeds the deadline for physical implementation
  stated in EC decision (30/11/2009), as well as
  the overall deadline for completion of physical
  implementation of the 2000 - 2006 period projects
  (December 2009).
• Increase in costs/growing prices for the project
  (taking into account when organising the loan
  tender)

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