DJERDAP II HPP REHABILITATION - FIRST PHASE

An allocation of EPS Green Financing framework loan (2022-0716) to finance the rehabilitation of three hydropower units and related auxiliary and electrical systems by 2030. The powerplant is located inside Iron Gate II dam on the Serbian side of the Danube River.

The operation is an allocation of the framework loan EPS Green Financing (EIB/20220716) which finances promoter's key green investments in the electricity sector for the period 2024-2030 with a view to increase ultimately the national share of renewables to the target set by 2030. The operation fits into the Promoter's "Go Green Strategy 2022-2035" and supports Serbia's green transition by contributing to the modernisation of the existing portfolio of hydro power plants. The Project allocation aims at extending the useful life of three units at Djerdap 2 HPP by up to 30 years and increase their annual electricity generation, installed capacity power from 27 MW up to 32 MW and provide additional flexibility to the Serbian electricity transmission network by allowing more renewable energy sources to be connected.

Serbian EIA procedure is regulated by the Law on Environmental Impact Assessment aligned with Environmental Impact Assessment (EIA) Directive 2014/52/EU, amending the EIA Directive 2011/92/EU. The national competent authority for the issuance of Decisions regarding environmental impact assessment is the Serbian Ministry of Environmental Protection. The EIA and public consultation of the Djerdap 2 hydropower rehabilitation programme was carried out successfully and corresponding environmental consent was issued by the Ministry in 2023. The Bank has assessed the social aspects of the project and found them in line with its Environmental and Social Sustainability Framework. Based on information received, the rehabilitation works and outcomes do not entail substantial adverse environmental or social impacts, with no resettlement. Aside from upgrading the power units to modern standards, one of the positive environmental impacts at operational stage is the replacement of the old chemical system for demineralized water preparation, which currently uses HCl and NaOH, with a new one based on reverse osmosis (green technology). Danube river HPPs (Djerdap 1 and 2 HPPs) are included in the River Basin Management Plan for the Danube River Basin District (DRBMP) issued by the International Commission for the Protection of the Danube River. Exploitation of Djerdap 1 and 2 HPPs is coordinated with the Romanian side, as Hidroelectrica (the Romanian hydro utility) is the owner of the other half of each plant. Cooperation with Romania is based on mutual agreements, and for all activities a Joint Commission with participants from both sides takes decisions regarding river basin management.

The Bank will require the promoter to ensure that implementation of the project will be done in accordance with the Bank's Guide to Procurement and the relevant applicable EU public procurement rules. The promoter Elektroprivreda Srbije (EPS) is a state-owned electric utility company. Public procurement procedures as set in the Bank's Guide to Procurement will apply.

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