OREANDA-NEWS. June 05, 2008. The EBRD is providing the state-owned Kazakhstan Electricity Grid Operating Company (KEGOC) with a \\\\$400 million syndicated unsecured loan to finance the second stage of the modernisation of substations and high-voltage equipment to ensure the efficiency, reliability and safety of Kazakhstan’s transmission system, reported the press-centre of EBRD.

The project is the first signing under the Sustainable Energy Action Plan (SEAP), launched by the Government of Kazakhstan and the EBRD, to promote the conservation and rational use of energy resources as well as the efficient and sustainable supply of power and energy in the country.

The EBRD will provide half of the loan to KEGOC with the remaining \\\\$200 million (?127,5 million) to be syndicated to financial institutions, including Bayerische Landesbank, Dexia Credit Local, Unicredit Group, RZB, Banca Infrastrutture Innovazione e Sviluppo S.p.A, Cordiant Capital, Calyon and Kommunalkredit International Bank under a A/B loan structure.

Successful syndication at tenors reaching an unprecedented 15 years is expected to send a reassuring signal to the investment community in Kazakhstan as well as to international investors in Kazakhstan in currently challenging market circumstances.

Volker Kuntz, Senior Vice President of Bayerische Landesbank said: “By investing in this project to increase the power system stability and reliability in Kazakhstan, BayernLB makes a considerable contribution to Kazakhstan’s economic development and by fostering sustainability, plays an active role in protecting the environment and in meeting needs of future generations.”

Kazakhstan’s available power capacity is largely located in the north, while in the south energy has to be imported. KEGOC is currently trying to eliminate the imbalance with the construction of a new north-south transmission line, which the EBRD is co-financing and which is due to be completed in 2009. The Bank has also been involved in the modernisation of the existing transmission infrastructure since 1999.

Almassadam Satkaliyev, President of KEGOC, said “the signing of the loan for the Implementation Phase II became feasible due to the systematic work of the Government of Kazakhstan in developing the electricity sector. Other positive factors include support provided by the holding Samruk and the high level of relations with the EBRD that arranged the syndication of the loan on optimal terms.”

The Government of Kazakhstan is determined to reduce the high energy intensity of the domestic economy in light of the rapidly growing demand in the country and increasingly constrained supply capability. To achieve this, the SEAP envisages a two-tier approach with investments in energy saving and efficiency measures as well as in the rehabilitation and construction of power plants.

The plan also recommends policy and regulatory measures to be implemented by the government with support from the EBRD. The ultimate objective is to support Kazakhstan’s sustainable growth, economic diversification and competitiveness.

In addition to making investments, the EBRD will use the SEAP framework to support the drafting of relevant laws, improvements of the regulatory framework and the introduction of best international practice. The EBRD is already working directly with the government on an advisory basis to improve existing legislation and can provide additional assistance through technical cooperation funds.

The Sustainable Energy Action Plan was signed by Kazakhstan’s Minister of Economy and Budget Planning, Bakhyt Sultanov, Minister of Energy and Mineral Resources, Sauat Mynbayev, Minister of Environmental Protection, Nurlan Iskakov, Chairman of the Agency for Regulation of Natural Monopolies, Nurlan Aldabergenov, and EBRD President Jean Lemierre.

“This agreement underlines the strong relationship between Kazakhstan and the EBRD”, President Lemierre said. “We strongly support the country’s drive to increase its energy security and have a very strong pipeline of energy projects in Kazakhstan both on the demand and supply side.”

The EBRD is the largest single investor outside the oil and gas sector in Kazakhstan. To date the Bank has signed about 100 projects and invested ?3,5 billion in the country.