Project detail - Uludag Elektrik Dagıtım A.S.

Who is our prospective customer?

Established in Turkey, Uludag Elektrik Dagitim A.S. (“UEDAS”, the “Company”) is one of the twenty-one regional electricity distribution companies in the country. It is operating in the Uludag region, which includes four provinces in the southern part of the Marmara Sea. The Company is responsible for undertaking investments and operations & maintenance of the medium and low voltage distribution network in the region. UEDAS is ultimately owned by Actis Long Life Infrastructure Fund through intermediary subsidiaries.

What is our funding objective?

The purpose of the financing is to fund the approved CAPEX program expected to exceed USD 200mln for the remainder of the current implementation period (covering 2021-2025) to expand, modernize, the distribution network in the UEDAS concession area. FMO provides a senior long term loan of up to USD 30mln equivalent in Turkish Lira (“TRY”) and co-invests with two multilateral development banks. The rest of the funding need will be covered by commercial banks as well as equity contribution.

Why do we want to fund this investment?

Financing UEDAS' investments fits well with FMO’s strategy as it contributes to (among others) the expansion and modernization of the distribution network in a key industrial area of Turkey. Proceeds of the financing are earmarked towards investments leading to improvements in the continuity and quality of supply, grid expansion and renewal as well as implementation of smart grid technologies to further limit faults in the network. FMO's Green Label also applies to this transaction.

What is the Environmental and Social categorization rationale?

E&S category for FMO is B+, due to the capital expenditure cycle and investment phases required in operating UEDAS (expansion through new lines as well as upgrading and refurbishing existing parts of the network) and the need for routine land procurement in delivering these investments. Potential risks relate to: i) Environment and Social Management System (implementation, route planning/site selection and considerations for PS5 and PS6; Environmental and Social Sustainability, etc.); ii) Occupational health and safety (including electrocution, fire), hazardous materials, etc.; iii) waste management, iv) community health and safety and the awareness provided regarding risks of the power network, v) land acquisition process and its compliance with PS5 and (vi) potential biodiversity impacts. Relevant IFC Performance Standards (PS): 1-6. IFC PS 7 on Indigenous People and PS 8 on Cultural Heritage are not considered to be applicable, assessment confirmed by the external consultant during due diligence. There is a Chance Find Procedure being implemented to identify potential triggers of PS8. UEDAS’ integrated management system has been established within the framework of the following standards: (i) ISO 9001; (ii) ISO 14001; (iii) OHSAS 18001; (iv) ISO 27001; (v) ISO 10002; (vi) ISO 22301; and (vii) ISO 18295. As part of the gap analysis, the environment and social action plan includes a request for the client to do a detailed Climate Change risk assessment.