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CEZ Shperndarje
Environmental & Social Review Summary

This Environmental and Social Review Summary is prepared and distributed in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Board dates are estimates only.
Any documentation which is attached to this Environmental and Social Review Summary has been prepared by the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content.
Project number 29208
Country
Albania(IDA)
RegionEurope and Central Asia
SectorDistribution Business
Department
Company nameCEZ Shperndarje
Environmental category:B
StatusCompleted
Date ESRS disclosedFebruary 16, 2011
Previous EventsInvested: September 2, 2011
Signed: July 1, 2011
Approved: March 23, 2011
View Summary of Proposed Investment (SPI), click here

OverviewCategory &

Applicable Standards
Key Issues

& Mitigation
Community/

Engagements
Client's

Documentation

Overview of IFC's scope of review
Documents reviewed:
- Information provided by CEZ ShpŰrndarje SHA (the “Company”) about the Company’s environmental, health and safety and social performance and programs to implement, in response to IFC’s questionnaires.
- The Company’s newsletters to employees about how the Company is planning to improve its service “Buletin informative per ponunjesit e OSSH-se).
- Technical and Environmental Due Diligence report prepared by FICHTNER (on behalf of IFC and EBRD), January 2011
- “Private Sector Participation in Albanian Power Distribution, Distribution Network, Environment Baseline Conditions, SNC Lavalin, June 2008.

Company Interviews and Field Visit in March 2010:
Face-to-face meetings with CEZ ShpŰrndarje officers in charge of environmental, health and safety and human resources aspects, as well as field visits to selected facilities of the Company (electricity distribution lines, substations, administration buildings, customer telephone center, warehouses).
Project description
CEZ ShpŰrndarje is the power distribution company of Albania. The Company operates under the power distribution system operator and retail public supplier licenses, serving around 1.1 million customers. The project is to provide long-term financing to the Company to support its 2009-2013 investment program, which is aimed at reducing distribution losses, enhancing operational efficiency, improving reliability of electricity supply and connecting new customers (“the Project”).

CEZ ShpŰrndarje is 76 per cent owned by the Czech energy group, ČEZ a.s. (“CEZ” or the “Sponsor”) which acquired this controlling stake in the Company through the privatization which was successfully concluded in May 2009.

The Company owns, operates and maintains Albania’s electricity distribution system in medium and low voltage lines (from 35 kV to 0.4 kV) including substations (110 kV/35kV) and 35 kV step down substation transformers. In 2009, the Company purchased 6,500 GWh from the grid and sold 4,260 GWh of electricity with the distribution loss of 34%. This loss rate is expected to be improved to 21% in 2014. The Company has about 5,000 employees.

The Company’s 2009-2013 investment program, starting from CEZ’s acquisition of the Company, is expected to cost around €154 million and will consist of the following measures: (i) modernization of the distribution network, including refurbishment of substations, (ii) installation of new meters, (iii) connection of new customers, and (iv) implementation of a new billing system.

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