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PROPOSAL FOR REVIEW
Project Title: Russian Federation: Project for the
Phase-out of Ozone Depleting
Substances - Second Tranche
GEF Focal Area: Ozone Depletion
GEF Eligibility: Ratified the Montreal Protocol in
1988; GEF eligibility
on the basis of IBRD eligibility
Total Project Cost: US$104.3 million
GEF Financing: US$60 million (total)
US$8.6 million (first tranche)
US$35.0 million (second tranche)
Government Counterpart US$ 44.3 million (total)
Financing of GEF Component: US$ 12.7 million (first tranche)
US$ 21.5 million (second tranche
Cofinancing/Parallel Financing: None
Associated Project: None
GEF Operational Pocal Point: Mr. Alexander Averchenkov, Deputy
Minister
Ministry of Environment
GEF Implementing Agency: World Bank
Executing Agency: World Bank
Local Counterpart Agency: Russian Ministry of Environmental
Protection and Natural Resources, and
investment sub-project beneficiaries
Estimated Starting Date: July, 1996
Project Duration: Two years
GEF Preparation Costs: US$ 1.25 million
($0.95 million GEF PPA and
$0.30 milion US TDA TA)
RUSSIAN FEDERATION: PROJECT FOR
THE PHASE-OUT OF
OZONE DEPLETING SUBSTANCES - SECOND TRANCHE
BACKGROUND
1. This document addresses the second tranche of the Russian Federation ODS Consumption Phase-out Project (the Project) which was approved in principle by the GEF Council in May 1995 for US$60 million in GEF grant funding of eligible investment sub-projects in high ODS consumption sectors. The umbrella project which includes the first tranche of available funds ($8.6 million) has proceeded through appraisal and is anticipated to complete negotiations and Board approval processing steps, such that the grant becomes effective in June 1996.
2. Russia recognises its legal obligations as a developed country signatory to the Montreal Protocol respecting targeted ODS phase-out schedules. However, the country's economic capability to complete this task has declined significantly, since ratifying the London Amendments in 1992. As a consequence, it has fallen behind in phase-out activities and will not be able to meet its phase-out schedule obligations. A number of steps have been initiated to ensure that its obligations are met. Responsibility for ODS phase-out activities has been assigned to the Ministry of Environmental Protection and Natural Protection (MEPNR). A comprehensive Country Program as described below has been developed and formally adopted by the government. This Program acknowledges that Russia will be out of compliance with its obligations as of January 1, 1996 and proposes a revised phase-out schedule. Russia has presented its Country Program to the Global Environmental Facility (GEF) Council and to the Parties to the Montreal Protocol, formally acknowledging its non-compliance status and confirming its commitment to the revised phase-out schedule in writing. Russia has also undertaken to address issues associated with exports of ODS through an agreement with the Parties to the Montreal Protocol which outlines the actions to be taken. Similarly, Russia is expected to be a developed country contributor to the Multilateral Fund for the Implementation of the Montreal Protocol (Multilateral Fund), with in-kind contributions. While no contributions have been made to date, Russia has undertaken to resolve its current arrears position and fulfil its contribution obligations when its economic conditions improve.
3. Russia is one of the world's largest producers and consumers of ODS. In 1990 when production peaked, it was estimated that 198,000 MT was produced, accounting for between 15 -20% of world production. In 1992, Russian ODS production had fallen by 26% to 146,500 MT (including 21,000 MT HCFC and 59,000 MT CTC). This production supplies 100% of the domestic market, as well as the requirements of the countries of the FSU, and other export markets that continue to exist. Russian domestic consumption also peaked in 1990 at approximately 70,000 MT and had fallen by 40% to 48,365 MT in 1992. Consumption continues to decrease primarily due to the economic downturn and, to a lesser extent, phase-out action that has been taken. Five sectors account for Russia's ODS use: aerosols (46%), refrigeration and air-conditioning (27%), fire protection (14%), foams (11%) and solvents (2%).
4. The Former Soviet Union (FSU) ratified the Montreal Protocol in November, 1988 as a developed country. The Russian Federation continues the FSU membership in the Protocol and in January, 1992, Russia ratified the London Amendments. However, ratification of the Copenhagen Amendments has not occurred. Based on its ratification status as a developed country under the Montreal Protocol, Russia's obligations for ODS phase-out are in accordance with the accelerated developed country schedule for halons (January 1994), and for CFC, CTC and MCF (January 1996).
GOVERNMENT ACTIVITIES:
5. The development of the ODS phase-out Country Program was completed in August 1994 with Danish support and World Bank technical input. A position paper based on the Country Program has been prepared by MEPNR, describing an achievable phase-out program. This position paper and the Country Program have been adopted in a formal Resolution the Government, dated May 24, 1995 as the legal basis for its implementation. Assuming availability of international financial assistance, it targets ODS phase-out for 1999, somewhat ahead of the London Amendment schedule (January 2000), but slower than the Copenhagen Amendment schedule (January 1996). Production would be phased out consistent with domestic consumption phase-out schedules, and phase-out in countries of the FSU to which Russia is the sole supplier, particularly Ukraine and Belarus. For this reason, Russia's export of ODS to other countries after January, 1996 are being accommodated on a transitional basis in its agreement with the Parties to the Montreal Protocol. As requested by the Ozone Secretariat in their letter of January 5, 1996, the Government has provided the additional information on their ODS phase-out plans dated February 26, 1996.
6. Russia has also established the basic institutional structure to support the administration of the proposed ODS phase out program. An Inter-Agency Commission has been created to coordinate ODS policy among all relevant government agencies with specific subcommissions dealing with legal, technical, economic/institutional, and monitoring aspects. An ODS Task Force has been established by ministerial decree within MEPNR and an ODS Phase-out Implementation Unit (ODS PIU) has been established within the Ministry's Centre for Project Preparation and Implementation of International Projects on Technical Assistance (CPPI). The ODS Task Force has been assigned overall responsibility for regulating and monitoring the national phase out strategy, acts as a secretariat for the Inter-Agency Commission, and is responsible for reporting ODS information as required by international agreements. As documented in the Country Program and designated in the Government Resolution Number 526, various policy and regulatory initiatives are currently under development within MEPNR including the issuing of production/import licenses, the introduction of sector specific bans, and allocation of economic support for ODS replacement projects at the industry level from Russian and international sources. These institutional strengthening initiatives specific to the phase-out of ODS are consistent with Russia's overall commitment to increasing its overall institution capacity in environmental management. The country is currently investing US$60 million in such strengthening related to various environmental problem areas through the World Bank Environmental Management Project Loan.
7. Because of its limited financial and technical capacity, Russia has made little progress to date with ODS phase-out. Therefore, it has requested GEF assistance to accelerate this work. Provision has been made for the GEF to provide limited financial support to transitional economies that do not meet Multilateral Fund criteria on country grounds, but nevertheless need technical and financial assistance. In addition, the Government has requested the World Bank to assist it to mobilise donor funding for additional phase-out initiatives covering both production and consumption.
PROJECT OBJECTIVES:
8. As one of the World's largest producers and consumers of ODS, Russia is a major contributor to global ozone depletion. With the rapid phase-out progress being made in other countries, Russia's relative contribution will further increase. For this reason, the implementation of the proposed Country Program, prepared along the same lines as country programs for the Multilateral Fund, is viewed as an international priority in addressing the overall global issue. Within the context of the country programming exercise, this project's main objective is to assist Russia with the rapid phase-out of ODS consumption in a manner consistent with international efforts in the field, while ensuring that this is accomplished with a minimum of economic dislocation. The project's more specific objectives are: i) to allow Russia to credibly meet its consumption phase-out obligations under the Montreal Protocol within a realistic time frame; ii) to facilitate access to financial resources needed for ODS consumption phase-out from a range of international and domestic sources; iii) to provide modest technical assistance and institutional strengthening; iv) to fund enterprise specific investments in critical high consumption sectors; and v) to ensure that ODS phase-out activities accommodate economic and social impacts that may result.
LESSONS FROM PREVIOUS BANK INVOLVEMENT AND TECHNICAL REVIEW:
9. This proposed project follows the first tranche of approved subprojects in Russia which are expected to be implemented soon. In addition, ODS phase-out projects utilising GEF resources are at early stages of implementation in Bulgaria, Czech Republic, Hungary, Slovakia, and Slovenia. Therefore, direct World Bank experience and associated lessons are limited. However, as one of the Multilateral Fund Implementing Agencies, the World Bank is now implementing ODS phase-out projects in fifteen countries. A number of lessons have been learned from experience with these projects including: a) the importance of a national phase-out policy or Country Program as a basis assuring commitment and ownership by the client country; b) the value of strong enterprise/government linkages to achieve phase-out objectives; c) the need for institutional strengthening and training for local implementation units and financial intermediaries; d) the utility of using umbrella grant agreements with the Multilateral Fund supporting a pipeline of sub-projects subject to individual appraisal and approval; and e) the importance of technical support in the preparation and review of sub-projects. Additional lessons have been learned from other World Bank projects in Russia, including the importance of: a) identifying a consistent committed counterpart team with sufficient authority to move the project forward; b) coordinating among key interested parties at the federal, regional and enterprise levels; c) early detailed attention to procurement and other implementation issues; and d) involving local consultants and institutes in the process. Lessons from the EMP indicate the need for early appointment of project managers and implementation teams so that critical procurement activities can be initiated on loan effectiveness.
10. The design, preparation and structure of the Project incorporates these lessons in a number of ways. Project preparation work has involved a well defined Country Program, identification of a wide selection of sub-projects, and provision of technical and procurement assistance to participating enterprises. The Montreal Protocol Multilateral Fund umbrella grant agreement model, covering a sub-project pipeline, is being utilized. Technical assistance has been provided to strengthen institutional capacity within the government, implementing agency and enterprises. Project processing procedures will parallel those used for Multilateral Fund projects, including the utilisation of the technical review capability established for these projects.
11. Established local implementation organizations developed through other Bank initiatives are being utilized. Implementation arrangements based on MEPNR implementation through a project implementation unit (CPPI, the Center for Project Preparation and Implementation) have been established and are already operational.
TECHNICAL REVIEW:
12. Each subproject was reviewed by technical specialists from the STAP roster of experts. These reviewers also serve on the Ozone Operations Resource Group (OORG), a body of international experts initially set-up by the World Bank to review subproject proposals for funding by the Multilateral Fund of the Montreal Protocol. The subprojects have been revised to reflect the comments of the STAP reviewers, and are consistent with the GEF ODS Operational Strategy. These documents are available in the project file at the World Bank.
PROJECT FINANCING, BUDGET AND INCREMENTAL COSTS:
13. Under the umbrella GEF ODS Consumption Phase-out Project, the total project net investment cost is estimated to be US$104.3 million. US$44.3 million, net of operating cost savings, will be financed by enterprise funds and commercial banking sources. The proposed GEF grant of US$60.0 million will cover up to 100% of eligible incremental investment and one time costs for subprojects, consistent with incremental costs eligibility criteria, as adopted by the GEF in its Operational Strategy but will exclude incremental operating costs. The proposed GEF grant includes US$1.7 million for a sub-grant processing charge (3% of investment sub-grants). For the subprojects proposed for the second tranche, US$56.5 million in incremental investment costs will be incurred. US$21.5 million will be financed by enterprise funds. Enterprise capacity to provide their portion of the investment will be verified at appraisal. The proposed GEF grant of US$35.0 million will cover up to 100% of eligible incremental investment costs, net of incremental operating cost savings, as well as US$1.0 million in sub-grant processing charge (3% of investment sub-grants) and US$0.53 million in technical assistance. No retroactive financing is currently anticipated but, if requested, it would be based on eligibility as defined in the GEF Operational Strategy.
14. The cost of project feasibility studies has totalled US$1.25 million, which includes US$0.95 million provided by GEF Project Preparation Advances for the aerosol and refrigeration consumption sectors, as well as for ODS production phase out, and US$0.30 million by the United States Trade and Development Agency for solvent, foam and fire fighting sectors.
ISSUES, ACTIONS AND RISKS:
15. The following outstanding issues and actions will be addressed during the course of second tranche appraisal and further processing:
(a) Resolution of additional information and clarification points that have been
set as conditions of OORG review approval;
(b) Confirmation of enterprise financial viability, inclusive of ability to finance
their portion of sub-project investments;
(c) Verification of enterprise legal status and written confirmation of enterprise
participation;
(d) Signing of the Sub-grant Agreements between each of the first tranche
beneficiary enterprises and the CPPI;
(e) Development of detailed procurement plans for each sub-project, ensuring
the application of World Bank procedures to purchases for which GEF sub-
grant resources are to be applied; and
(f) Completion and review of sub-project specific EA's by the Bank, along with
confirmation of local environmental approvals.
16. Risks associated with the Project are generally comparable to other industrial and institutional development activities in Russia. These include: a) the fragmented decision making process on environmental and investment matters at the federal and regional levels; b) the limited enforcement capability to support environmental initiatives; c) conflicting mandates and lack of cooperation between government agencies; d) lack of familiarity with Bank procedures, investment planning, and project management; e) difficulties in arranging financing of local costs for environmental investments; and f) the general economic climate in the country. Project specific risks are primarily associated with the sustained financial viability of participating enterprises, the need to support ODS consumption phase-out with domestic supply of substitute materials and equipment.
17. The Project has been designed to minimize these risks to the maximum degree possible. The general institutional risks associated with activities in Russia are mitigated by the overall institutional strengthening provided by the EMP, and the direct policy and regulatory assistance provided to MEPNR for ODS phase out. Administrative and project management risks are reduced by focusing the Project's operational implementation responsibility within the CPPI, including the addition of specialty ODS technical and project supervision resources. Risks associated with financing local costs are addressed by facilitation of co-financing assistance through the NPAF as required. Sub-project specific risks associated with enterprise viability and technical capability are mitigated by the comprehensive preparation work undertaken, completing enterprise financial evaluations prior to appraisal, use of commercially proven ODS conversion approaches and technology, and the provision of procurement and financial planning assistance as part of project implementation. The development of HAP and HFC-134a supply capability for the aerosol and refrigeration sectors respectively is expected to be commercially viable as a result of markets created by conversions initiated through this Project. The development of supply capability for both ODS substitute materials is also being facilitated by involvement of the National Pollution Abatement Facility in co-financing investments in this area.
PROJECT DESCRIPTION:
18. The umbrella GEF Project (Annex 1) targets priority consumption phase-out activities in the aerosol and refrigeration sectors, along with the provision of modest technical assistance at both the institutional and enterprise levels to facilitate and accelerate Country Program implementation. It is structured as a framework project consisting of a series of sub-projects eligible for a total GEF funding amount of US$60.0 million. The proposed sub-projects, listed in Annex 1, account for a total investment of US$104.3 million, net of operating cost savings. The sub-projects have been selected for appraisal by MEPNR with World Bank assistance, based on the project preparation work in the aerosol and refrigeration sectors, undertaken under a GEF Project Preparation Advance. They have been reviewed by the Ozone Operations Resource Group (OORG) established by the World Bank to provide technical advice on technology selection under the Multilateral Fund. It is anticipated that the subprojects will be processed in several tranches as funds are approved by the GEF Council. The second tranche of US$35.0 million addressed by this document consists of six sub-projects from the aerosol sector, two domestic refrigeration sub-projects and one sub-project in the commercial refrigeration sector. The first tranche of US$8.6 million was approved by the GEF Council in May 1995, appraised in October 1995 and is currently being prepared for negotiation. A third tranche will be submitted for GEF Council approval , based on the project performance of the first tranche sub-projects. During appraisal of sub-projects, the GEF ODS phase-out operational policies will be followed in calculating the incremental costs, taking into account: entreprise ownership; exports; financial viability; and retroactive financing.
INVESTMENT SUBPROJECTS:
19. Aerosol Sector ODS consumption in the form of CFC propellants in Russia likely represents the largest and most cost effective single consumption phase-out opportunity in the world today. The Russian Federation has an established aerosol industry that continues to consume large quantities of CFC's. The CFC aerosols (78% of total aerosols) are strongly favored by the cosmetic industry and are selling readily even in a suppressed economy. In 1992, consumption of CFC's by the aerosol industry totalled 18,150 MT, approximately 46% of the total ODS consumed in Russia. Since that time, several major aerosol producers have undertaken conversions on their own resulting in an overall decline in consumption. However, those continuing to use CFC's have generally maintained usage despite economic conditions and most recently consumption is again rising. Based on 1994 consumption, an estimated 2,456 MT and 10,615 MT will be phased out in the first and second tranches respectively to phase-out a total of 13,121 MT. This effectively eliminates ODS use in this sector. Phase-out in the aerosol sector is efficient and cost effective with low unit abatement costs. The effectiveness of the GEF grant is enhanced since the enterprises will fund a significant portion of the costs, with the GEF grant serving as a key stimulus for enterprise investment. This phase-out can be achieved relatively quickly, with a targeted completed date of late 1999. With the exception of one enterprise utilizing mechanical pumps, all aerosol sub-projects utilize hydrocarbon aerosol propellant (HAP) as a replacement for CFC propellant in common aerosol sprays. HAP is a purified form of liquid petroleum gas (LPG) and is currently available is limited quantities in Russia. Current Russian capacity is estimated at 1,000 MT/year with potential existing for additional capacity to be added rapidly as demand develops. An additional 10,000 MT/year of capacity has recently been committed to based on the base demand created by the Arnest sub-project in the first tranche. The technology for use of HAP has developed globally since 1980 and is readily available.
20. The second tranche contains six aerosol sector sub-projects which will phase-out 10,615 MT per year of ODS through conversion to HAP propellant. Summaries of these projects are provided in Annex 2 and are described as follows:
(a) JSC Halogen, has installed capacity to produce 22.5 million cans per year. In 1994, production was 15.5 million cans with CFC usage of 1,435 MT. This is approximately 8% of consumption in the sector. 1995 consumption is estimated to rise to 1,560 MT based on the first half year of production. The manufacturing operation involves only product formulation and filling with cans and valves being purchased externally. The enterprise's conversion requirement applies to filling facilities to HAP which involves the purchase of one new filling line, upgrading of a second, and installation of infrastructure for handling and storage of flammable HAP including a finished goods warehouse, hydrocarbon tank farm, rail cars and storage facilities, gas detection systems and training. The total incremental investment required is US$2.8 million, of which US$2.0 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$1.40/kg. ODP.
(b) Novosibirsk Domestic Chemical Plant (NDCP) is a fully integrated aerosol manufacturer and the county's largest traditional CFC consumer in the sector. It has an installed capacity of 40 million cans/year. In 1994, production was 20 million cans with CFC consumption of 3,700 MT or 20% of usage in the sector. In order to use HAP safely, the enterprise must replace it's entire can and valve making facility, plus convert its filling operation and upgrade storage facilities. Existing can manufacturing operation cannot produce aerosol containers strong enough to withstand the higher pressures required for HAP. Similarly precision valves are required to minimize leakage and fire hazards associated with the use of HAP based aerosol products. The total incremental investment required is US$10.9 million, of which US$8.5 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$1.40/kg. ODP.
(c) JSC Himprom Domestic Chemistry Plant, has a capacity of 20 million cans/year but has only produced an average of 6.4 million cans/year over the past three years. This is the capacity on which this sub-project is based. Average annual ODS consumption over this period is 1,769 MT/year or 10% of usage in the sector. The sub-project involves conversion of the operation to HAP propellant. This will require replacement of filling lines, new valve manufacturing facilities, and addition of hydrocarbon storage and handling infrastructure in the form of a tank farm, tank cars and a finished goods warehouse. The total incremental investment required is US$4.3 million, of which US$2.9 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$1.65/kg. ODP.
(d) JSC "Novomoscovskbytchim, has an installed capacity of 40 million cans/year but has historically made considerably less than this. The average production over the last three years has been 10 million cans/year with an average annual consumption of 1,219 MT of ODS or 7% of usage in the sector. This is the capacity on which the sub-project is based. Conversion to HAP propellant requires the installation of two new filling lines, development of HAP off loading and tank farm facilities, installation of purification equipment, building a finished goods warehouse and other hydrocarbon handling infrastructure. The total incremental investment required is US$4.9 million, of which US$3.8 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$3.11/kg. ODP. The STAP review has identified US$0.5 in potential cost reductions in equipment to be covered by the GEF sub-grant and this is currently being evaluated.
(e) Altaichimprom Production Association, located in Slavgorod, is an integrated aerosol manufacturer and a division of a chemical complex that also produces ODS materials. It has an installed capacity of 20 million cans/year but produces considerable less than this. The average annual production over the last three years is 2.3 million cans with ODS consumption of 591 MT/year. Due to the poor quality of existing filling equipment, cans and valves, the complete facility would require replacement to convert to HAP. As a result conversion to mechanical pumps has been selected. This requires purchase and installation of blow molding machines, molds and liquid filling lines. The total incremental investment required is US$2.4 million, of which US$2.1 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$3.61/kg. ODP.
(f) Mosbytchim, located in Moscow, is a partially integrated aerosol manufacturer specializing in consumer products. It has an installed filling capacity of 20 million cans per year but typically produce about half this level. Average annual production over the last three years has been 10.2 million cans with ODS consumption of 2,211 MT/Year. The conversion of this facility requires investment in hydrocarbon tank farms, HAP purification equipment, explosion proof filling lines, a finished goods warehouse, support infrastructure for handling a flammable material, and training. The total incremental investment required is US$8.7 million, of which US$2.6 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$1.93/kg. ODP. The STAP review has identified US$0.6 in potential cost reductions in equipment to be covered by the GEF sub-grant and this is currently being evaluated.
21. Refrigeration Sector ODS consumption of refrigerant (CFC-12) and for foam insulation (CFC-11) in the manufacture of domestic, commercial and industrial refrigeration products, involves 3,594 MT/year of ODS material. In addition, the refrigeration servicing sector is estimated to account for an annual consumption of 4,500 MT/year. Twelve domestic refrigerator manufacturers, four stand alone domestic compressor producers, six commercial refrigeration equipment manufacturers and eleven industrial refrigeration equipment manufacturers have been identified in the overall sector. Eleven investment sub-projects (five refrigerant and six foam) in six of the largest domestic refrigerator manufacturers have been selected for the Project. These manufacturers accounted for 77% of ODS consumption in the domestic refrigeration sector in 1993. An estimated 1,972 MT/year ODP will be phased out based on current consumption. In addition, two investment sub-projects in the major commercial refrigeration equipment manufacturer has been included in the Project. This accounts for 33 MT/year ODP phase-out. These sub-projects involve the replacement of CFC-12 refrigerant with HFC-134a or, a propane/butane mixture, and the detection of leaks, and evacuation and testing facilities for refrigerators and freezers. The total sub-project cost including increased operating costs is US$8.4 million of which US$1.6 million is incremental capital investment. A GEF grant of US$1.5 million is proposed. The sub-project cost effectiveness is US$7.65/kg. ODP. The OORG review has conditionally approved this sub-project, subject to clarification information on the following: training; field testing; vacuum pump selection; condition and disposition of existing equipment; and filling machine sizing. These issues are currently being evaluated.
(c) ANPO Marikholodmash is the largest manufacturer of commercial refrigeration equipment in Russia. In 1994, it produced 24,700 units or 48% of the county's output. Two sub-projects are proposed for GEF funding. The first involves the conversion of foam insulation blowing operations from CFC-11 to cyclopentane with a phase-out benefit of 15 MT/year, based on 1994 usage. The conversion requires investment in a new foam blowing line and associated infrastructure to store and handle the flammable hydrocarbon. The total incremental investment required is US$1.3 million, of which US$0.5 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$7.12/kg.. ODP. The sub-project has been approved by the OORG review conditional on clarification of safety standards applicable to cyclopentane storage. This is currently being resolved. The second sub-project involves conversion of equipment charging lines from CFC-12 to HFC-134a. An estimated 18 MT/year of ODS usage will be eliminated, based on 1994 production. Purchased compressors designed for HFC-134a will be used. The sub-project requires investment in product development and re-design, evacuation and recovery units, leak detection equipment, and servicing capability. The total incremental investment required is US$0.5 million, of which US$0.2 million is proposed as a GEF sub-grant. The sub-project cost effectiveness is US$9.00/kg. ODP.
23. Technical assistance will be directed to strengthening Russian institutional capacity for ODS-phase-out, project preparation in the refrigeration servicing sector, and implementation support for the Project's investment activities. This will supplement current resources available within MEPNR, including those available through the World Bank's Environmental Management Project (EMP). The technical assistance component of the second tranche (US$0.53 million) will have the following elements: i) support for the implementation of the regulatory initiatives initiated through the first tranche technical assistance component; ii) development of co-ordination capacity related to phase-out and regulatory action with other countries of the FSU; iii) provision of resources for project preparation work related to refrigeration servicing sector; and iv) implementation of public awareness and information programs developed under the first tranche.
RATIONALE FOR FUNDING UNDER THE GLOBAL ENVIRONMENTAL FACILITY:
24. Russia is the largest producer and consumer of ODS material in the world today, but lacks the financial capacity to undertake comprehensive phase-out in accordance with its obligations under the Montreal Protocol. In excess of US $220 million is estimated to be required for phasing out ODS production and consumption in Russia. As a developed country signatory to the Montreal Protocol, it is not eligible for support from the Multilateral Fund, but is eligible for GEF funding as defined in the GEF Operational Strategy. The project is consistent with GEF Guidelines for ODS phase-out. These guidelines have been carefully developed to reflect Montreal Protocol policies and procedures, thus ensuring consistency of approach between GEF and Montreal Protocol projects. These guidelines endorse working with a range of enterprise specific subprojects that offer substantive ODS phase-out gains, but require investments for which the beneficiary enterprise would not be able to obtain sufficient financing from commercial sources. Within these subprojects, grant funding is limited to eligible incremental investment costs, while the enterprises are responsible for financing the balance from their own resources or loans. Integration of the project's implementation with other Bank initiatives in the Russian Federation, particularly the National Pollution Abatement Fund (NPAF), will facilitate additional financing as well as draw on the project management capability within MEPNR provided under the Environmental Management Project (EMP), of which the NPAF is a major component
SUSTAINABILITY AND PARTICIPATION:
25. The overall project's sustainability is based on Russian Federation's commitment to ultimately meeting the country's obligations under the Montreal Protocol, and to provide a sound institutional and policy framework for its overall ODS phase-out program. This institutional and policy framework will be supported by the EMP, along with the provision of modest additional technical assistance to MEPNR for strengthening its ODS phase-out implementation operations. Sustainability of enterprise specific sub-projects has been assured through a thorough evaluation of proposed technologies and their cost effectiveness in relation to other alternatives. The overall financial viability of participating enterprises is currently being evaluated, as a prerequisite to subproject appraisal and final selection. Assessment of domestic and export market potential will be included in this evaluation, as well as enterprise financial management and marketing plans.
26. As part of the Country Program development, MEPNR undertook consultations with a broad spectrum of enterprises and interested parties: other ministries, including industry, economics, finance, NGOs, industry associations and others. Enterprises were given the opportunity to participate in the project as long as they could provide the necessary data for project staff to evaluate their financial viability, technological capabilities and eligibility for financial assistance. Consultations with enterprises and other interested parties continued through a series of country workshops held under the aegis of the Montreal Protocol on identification, preparation and implementation, as well as during actual project design.
INSTITUTIONAL FRAMEWORK AND PROJECT IMPLEMENTATION:
27. Existing institutions which are now established and staffed will be responsible for various aspects of project implementation. The Government has assigned MEPNR as the executing agency for the project. Within MEPNR, the overall supervision of the Project is assigned to the ODS Task Force, which will coordinate its implementation within the framework of the overall Country Program and with other Government agencies through the Inter-Agency Commission established under the Country Program. Direct project implementation responsibility has been assigned to the CPPI which has been established by MEPNR for implementation of the Russia Environmental Management Project (EMP) and other internationally financed projects. Within the CPPI, the ODS PIU will have responsibility for managing the technical assistance components related to institutional strengthening.
28. For the technology conversion components in the aerosol and refrigeration sectors, the CPPI will supply the Project with procurement, administrative and financial management services, consistent with Bank practices and procedures. More specifically, the ODS PIU will be responsible for administering sub-project appraisal, supervision, disbursement approvals, progress reporting, and ensuring compliance with GEF procedures. The unit will also support the project through assistance with preparation of financing packages and facilitation of co-financing arrangements, utilizing as appropriate the National Pollution Abatement Facility (NPAF). Enterprises will be responsible for sub-project preparation and implementation under the terms of Sub-grant Agreements with the CPPI.
29. The Project will be covered under an Umbrella Grant Agreement with MEPNR which defines the overall framework by which GEF grant funds can be disbursed to enterprise specific sub-projects, consistent with the release of funds by the GEF Council in several tranches. A Project Administration Agreement will be established between MEPNR and the CPPI to define administrative, implementation and financial agency services. Individual sub-projects will be covered by Sub-grant Agreements between the CPPI and the participating enterprises. Both the Grant Agreement and Sub-grant Agreements are to be patterned after those utilized for the Ozone Project's Trust Fund (OTF). Sub-projects will be approved in accordance with the Bank's trustee obligations to GEF and individual sub-project funding will be subject to prior approval by GEF. The Umbrella Grant Agreement and The Project Administration Agreement will be developed and executed during processing of the first tranche. Sub-grant Agreements will be developed at appraisal of the sub-projects with their execution being a condition of subgrant disbursement.
ENVIRONMENTAL ASPECTS:
30. The Project has been assigned a "B" rating for environmental assessment (EA) purposes. Each sub-project will be subject to environmental appraisal in accordance with the guidelines and procedures established by the NPAF to meet both Russian Government and World Bank EA requirements. Potential environmental impacts include those associated with the flammability and air emissions characteristic of hydrocarbon based non-ODS substitutes, and site specific impacts associated with manufacturing plant developments or modifications. Acceptance by the Bank and approval of local regulatory authorities will be a condition of subgrant effectiveness.
PROJECT BENEFITS:
31. The Project's primary benefit will be its contribution to ODS phase-out in Russia, which is now one of the largest remaining consumers and producers of ODS in the world. The sub-projects identified for the Project are estimated to phase-out 15,354 MT/year based on 1994 consumption. It involves the major consuming manufacturers in the two largest consuming sectors. Consumption in the aerosol sector will be eliminated, and all major consumers in the domestic refrigeration sector and the largest single consumer in the commercial refrigeration sector will be phased out. The framework that the Project provides and its facilitation of access to other resources will enhance Russia's ability to initiate other ODS phase-out projects, either independently, or potentially as part of future GEF funded projects. More specifically an extensive pipeline of potential enterprise specific sub-projects will be available for Bank, GEF, NPAF and donor funded operations in the future. The implementation of the Project will enhance Russia's credibility with the international community in meeting its obligations respecting ODS phase-out. The Project will directly assist enterprises in modernization of manufacturing capability and in the development of export ready products utilizing non-ODS technology. The institutional capacity for monitoring and regulatory enforcement of ODS phase-out will also be strengthened under the Project.
TIMETABLE:
32. The following steps are planned for project processing of
the second tranche:
Step Estimated Date
GEF Council Approval April 1996
Estimated Project Effectiveness July 1996
Estimated Project Completion June 1998
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: JSC Halogen: Conversion of aerosol production to HAP
LOCATION: Perm
SECTOR: Aerosols
ODS USE IN SECTOR: 18,150 MT CFC per yr. - 1992
PROJECT IMPACT: 1,435 MT CFC per yr. - 1994
1,560 MT CFC per yr. - 1995 (estimated)
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 2,826,000
Incremental Operating Cost(Savings) $ (641,000)
Project Cost (Net of Savings) $ 2,185,000
GEF Funding Requested $ 1,976,000
FINANCING: JSC Halogen: $ 850,000
Global Environmental Facility: $ 1,976,000
COST EFFECTIVENESS: $1.40/kg. ODP
IMPLEMENTING ENTERPRISE: JSC Halogen
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP. The subproject was approved in its current form.
PROJECT DESCRIPTION
The use of CFC's at JSC Halogen will be eliminated through the conversion to hydrocarbon aerosol propellant (HAP). The enterprise which is part of a major chemical complex producing ODS has installed capacity to produce 22.5 million cans per year. In 1994, production was 15.5 million cans with CFC usage of 1,435 MT. This is approximately 8% of consumption in the sector. 1995 consumption is estimated to rise to 1,560 MT. The manufacturing operation involves only product formulation and filling, with cans and valves being purchased externally. The sub-project covers: i) conversion of filling facilities to HAP through the purchase of one new filling line and upgrading of a second (to ensure safety); ii) installation of infrastructure for handling and storage of flammable HAP, including a finished goods warehouse, hydrocarbon tank farm, rail cars and storage facilities, gas detection systems; and iii) worker training. There is adequate space within the enterprise premises to safely erect HAP storage tanks. HAP supply will occur either from the refinery in Perm, or in nearby Chaikovsky.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: Novosibirsk Domestic Chemical Plant (NDCP): Conversion of aerosol production to HAP
LOCATION: Novosibirsk
SECTOR: Aerosols
ODS USE IN SECTOR: 18,150 MT CFC per yr. - 1992
PROJECT IMPACT: 3,700 MT CFC per yr. - 1994
3,272 MT CFC per yr. - 1995 (estimated)
3,568 MT CFC per yr. - (Last 3 yr. Average)
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 10,909,000
Incremental Operating Cost(Savings) $ (2,421,000)
Project Cost (Net of Savings) $ 8,488,000
GEF Funding Requested $ 8,488,000
FINANCING: Novosibirsk Domestic Chemical Plant: $ 2,421,000
Global Environmental Facility: $ 8,488,000
COST EFFECTIVENESS: $2.38/kg. ODP
IMPLEMENTING ENTERPRISE: Novosibirsk Domestic Chemical Plant
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: The subproject was reviewed by STAP, and approved in revised form.
PROJECT DESCRIPTION
The use of CFC's at NDCP will be eliminated through the conversion to hydrocarbon aerosol propellant (HAP). The enterprise is the county's largest traditional CFC consumer in the sector with a an installed capacity of 40 million cans. In 1994, production was 20 million cans with CFC consumption of 3,700 MT or 20% of usage in the sector. In order to use HAP safely, the enterprise must replace it's entire can and valve making facility, plus convert its filling operation and upgrade storage facilities. Existing can manufacturing operation cannot produce aerosol containers strong enough to withstand the higher pressures required for HAP. Similarly precision valves are required to minimize leakage and fire hazards associated with the use of HAP based aerosol products. Extensive worker training to handle HAPs safely is required. Upgraded infrastructure to handle flammable HAP is being currently developed by the enterprise with its own resources.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: JSC Himprom Domestic Chemistry Plant: Conversion of aerosol production to HAP
LOCATION: Volgograd
SECTOR: Aerosols
ODS USE IN SECTOR: 18,150 MT CFC per yr. - 1992
PROJECT IMPACT: 1,558 MT CFC per yr. - 1994
1,255 MT CFC per yr. - 1995 (estimated)
1,769 MT CFC per yr. - (Last 3 yr. Average)
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 4,342,000
Incremental Operating Cost(Savings) $ (616,000)
Project Cost (Net of Savings) $ 3,726,000
GEF Funding Requested $ 2,925,000
FINANCING: JSC Himprom Domestic Chemistry Plant: $ 1,416,000
Global Environmental Facility: $ 2,925,000
COST EFFECTIVENESS: $2.38/kg. ODP
IMPLEMENTING ENTERPRISE: JSC Himprom Domestic Chemistry Plant
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved in its revised form.
PROJECT DESCRIPTION
The use of CFC's at JSC Himprom will be eliminated through the conversion to hydrocarbon aerosol propellant (HAP). The enterprise is affiliated with one of the country's largest producers of ODS materials and itself has a capacity of 20 million cans/year. However, it has only produced an average of 6.4 million cans/year over the past three years. This is the capacity on which this sub-project is based. Average annual ODS consumption over this period is 1,769 MT/year or 10% of usage in the sector. The sub-project involves replacement of filling lines, new valve manufacturing facilities, addition of hydrocarbon storage and handling infrastructure in the form of a tank farm, tank cars and a finished goods warehouse. In addition, a personnel training program to meet the safety guidelines and flammability risks is also included.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: JSC "Novomoscovskbytchim": Conversion of aerosol production to HAP
LOCATION: Novomoskovsk, Tula Oblast
SECTOR: Aerosols
ODS USE IN SECTOR: 18,150 MT CFC per yr. - 1992
PROJECT IMPACT: 926 MT CFC per yr. - 1994
1,131 MT CFC per yr. - 1995 (estimated)
1,219 MT CFC per yr. - (Last 3 yr. Average)
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 4,876,000
Incremental Operating Cost(Savings) $ (664,000)
Project Cost (Net of Savings) $ 4,312,000
GEF Funding Requested $ 3,791,000
FINANCING: JSC "Novomoscovskbytchim": $ 1,085,000
Global Environmental Facility: $ 3,791,000
COST EFFECTIVENESS: $2.38/kg. ODP
IMPLEMENTING ENTERPRISE: JSC "Novomoscovskbytchim"
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved subject to cost-reductions in the filling lines and LPG compressors. These issues have in addressed in a project addendum.
PROJECT DESCRIPTION
The use of CFC's at JSC "Novomoscovskbytchim" will be eliminated through the conversion to hydrocarbon aerosol propellant (HAP). The enterprise has an installed capacity of 40 million cans/year but has historically made considerably less than this. The average production over the last three years has been 10 million cans/year with an average annual consumption of 1,219 MT of ODS or 7% of usage in the sector. This is the capacity on which the sub-project is based. Conversion to HAP propellent requires the installation of two new filling lines, development of HAP off loading and tank farm facilities, installation of purification equipment, building a finished goods warehouse and other hydrocarbon handling infrastructure. In addition, personnel training to meet the safety standards and fire and explosion risks are also included. The enterprise is meeting about 10% of the incremental conversion costs from its own resources, and also covering additional infrastructure-enhancement costs of about $1.5 million.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: JSC "Altaichimpom Production Association"": Conversion of aerosol production to mechanical pumps
LOCATION: Slavgorod
SECTOR: Aerosols
ODS USE IN SECTOR: 18,150 MT CFC per yr. - 1992
PROJECT IMPACT: 620 MT CFC per yr. - 1994
384 MT CFC per yr. - 1995 (estimated)
591 MT CFC per yr. - (Last 3 yr. Average)
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 2,638,000
Incremental Operating Cost(Savings) N/A
Project Cost (Net of Savings) $ 2,638,000
GEF Funding Requested $ 2,138,000
FINANCING: JSC "Altaichimpom": $ 500,000
Global Environmental Facility: $ 2,138,000
COST EFFECTIVENESS: $3.61/kg. ODP
IMPLEMENTING ENTERPRISE: JSC "Altaichimpom Production Association'
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved in revised form. An addendum to the project document addresses STAP request for additional information.
PROJECT DESCRIPTION
The use of CFC's at JSC "Altaichimpom" will be eliminated through the conversion to mechanical pumps. The enterprise has an installed capacity of 20 million cans/year but production has declined since 1990 from this level to less than 2 million cans/ year currently with a three year average consumption of 591 MT/year of CFC or 2% of consumption in the sector. Conversion of the current filling lines and plant infrastructure to handle HAP would be very expensive. Mechanical pumps are compatible with current product formulations, except with certain insecticides which will be filled at the nearby NDCP. The investment required involves purchase and installation of blow molding machines, molds for bottles, and liquid filling equipment.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: Mosbytchim: Conversion of aerosol production to HAP
LOCATION: Moscow
SECTOR: Aerosols
ODS USE IN SECTOR: 18,150 MT CFC per yr. - 1992
PROJECT IMPACT: 2,585 MT CFC per yr. - 1994
2,083 MT CFC per yr. - 1995 (estimated)
2,211 MT CFC per yr. - (Last 3 yr. Average)
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 4,677,530
Incremental Operating Cost(Savings) $ (633,000)
Project Cost (Net of Savings) $ 4,015,189
GEF Funding Requested $ 4,015,000
FINANCING: JSC "Novomoscovskbytchim": $ 633,000
Global Environmental Facility: $ 4,015,000
COST EFFECTIVENESS: $1.93/kg. ODP
IMPLEMENTING ENTERPRISE: Mosbytchim
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved subject to cost reductions in the filling lines, storage tanks, high-pressure pumps, and LPG compressor. These issues have been addressed in an addendum, and costs revised accordingly.
PROJECT DESCRIPTION
The use of CFC's at Mosbytchim will be eliminated through the conversion to hydrocarbon aerosol propellant (HAP). The enterprise has an installed capacity of 20 million cans/year but has historically made considerably less than this. The average production over the last three years has been approximately 10 million cans/year with 1995 consumption of 2,083 MT of ODS or 11% of usage in the sector. This is the capacity on which the sub-project is based. Conversion to HAP propellent requires the installation of new filling lines, new tank farm facilities, modifications to the finished goods warehouse and other hydrocarbon handling infrastructure.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: A/S KRP "Biryusa: Conversion of from CFC-11 to cyclopentane as a foam blowing agent.
LOCATION: Krasnoyarsk
SECTOR: Domestic Refrigeration
ODS USE IN SECTOR: 2,000 MT CFC-11
PROJECT IMPACT: 302 MT CFC per yr.
PROJECT DURATION: 2.5 years
PROJECT ECONOMIC LIFE: 12 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 17,578,000
Incremental Operating Cost(Savings) $ 5,576,000
Project Cost (Net of Savings) $ 23,152,000
GEF Funding Requested $ 5,497,000
FINANCING: A/S KRP "Biryusa": $ 17,655,000
Global Environmental Facility: $ 5,497,000
COST EFFECTIVENESS: $9.00/kg. ODP
IMPLEMENTING ENTERPRISE: A/S Krasnoyarsk Refrigerator Plant "Biryusa"
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subprojects was reviewed by STAP. To review recommended compliance with Multilateral Fund cost-effectiveness threshold norms. This was finalized during the World Bank appraisal of the subproject. The requested GEF grant is now with the cost-effectiveness threshold, and the enterprise will finance the residual
PROJECT DESCRIPTION
The sub-project will phase-out of 302 MT/year ODP through conversion of the existing facilities from CFC-11 foam blowing agent to cyclopentane. The enterprise has a production capacity of 750,000 refrigeration units and one million compressors per year. This sub-project will phase-out 302 MT/year of CFC-11 based on current production of 650,000 units/year. The sub-project will be undertaken in two phases. The first phase will produce one hundred units to confirm techniques and procedures. The second phase will involve the installation and commissioning of replacement foam forming lines for doors and cabinets along with appropriate support infrastructure to safely handle cyclopentane and mitigate its flammability risk. This will include new storage and transfer piping systems, upgrading of plant fire protection and electrical systems, addition of explosion proof foam mixing facilities, plant ventilation, and training.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: JSC "SEPO": Conversion of from CFC-11 to cyclopentane as a foam blowing agent.
LOCATION: Saratov
SECTOR: Domestic Refrigeration
ODS USE IN SECTOR: 2,000 MT CFC-11
PROJECT IMPACT: 210 MT CFC per yr.
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 2,790,000
Incremental Operating Cost(Savings) $ 3,935,000
Project Cost (Net of Savings) $ 6,725,000
GEF Funding Requested $ 2,579,000
FINANCING: JSC "SEPO": $ 4,145,000
Global Environmental Facility: $ 2,579,000
COST EFFECTIVENESS: $10.40/kg. ODP
IMPLEMENTING ENTERPRISE: JSC Saratov Electrounit Production Association
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved in its current form.
PROJECT DESCRIPTION
The sub-project will phase-out of 210 MT/year ODP through conversion of the existing facilities from CFC-11 foam blowing agent to cyclopentane. The enterprise has a production capacity of 650,000 refrigeration units with actual production approaching this level. The sub-project will be undertaken in two phases. The first phase involves project development, product testing and training. The second phase will involve the modification of existing equipment, replacement of various components such as mixing equipment and installation of cyclopentane storage and handling infrastructure.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: JSC "SEPO": Conversion of from CFC-12 refrigerant to HFC-134a and elimination of CFC-113 solvent in compressor production.
LOCATION: Saratov
SECTOR: Domestic Refrigeration
ODS USE IN SECTOR: 1,200 MT CFC-12 and 2,000 MT CFC-113
PROJECT IMPACT: 228 MT ODP per yr.
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 1,579,000
Incremental Operating Cost(Savings) $ 6,834,000
Project Cost (Net of Savings) $ 8,413,000
GEF Funding Requested $ 1,562,000
FINANCING: JSC "SEPO": $ 6,861,000
Global Environmental Facility: $ 1,562,000
COST EFFECTIVENESS: $7.65/kg. ODP
IMPLEMENTING ENTERPRISE: JSC Saratov Electrounit Production Association
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved subject to additional explanatory information on training, field testing, justification of some components, and the age and logistics of current equipment. These issues are being currently addressed by the enterprise, and would be elaborated in an addendum.
PROJECT DESCRIPTION
The sub-project will phase-out of 228 MT/year ODP through conversion of the existing facilities from CFC-12 refrigerant to HFC-134a and eliminating production of dated CFC-12 compressors in favour of externally purchased units, This eliminates current CFC-113 use. The enterprise has a production capacity of 650,000 refrigeration units with actual production approaching this level. The sub-project will be undertaken in two phases. The first phase involves a trail production run, product testing and training. The second phase will involve conversion of the production lines with investment in facilities for drying lubricating oil, charging equipment, leak detectors and testing facilities.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: ANPO Marikholodmash: Conversion of from CFC-11 to cyclopentane as a foam blowing agent.
LOCATION: Yoskar-Ola, Mari El Republic
SECTOR: Commercial Refrigeration
ODS USE IN SECTOR: 50 MT CFC-11
PROJECT IMPACT: 15 MT CFC per yr.
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 15 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 1,251,000
Incremental Operating Cost(Savings) $ 203,000
Project Cost (Net of Savings) $ 1,454,000
GEF Funding Requested $ 356,000
FINANCING: ANPO Marikholodmash: $ 1,098,000
Global Environmental Facility: $ 356,000
COST EFFECTIVENESS: $7.12/kg. ODP
IMPLEMENTING ENTERPRISE: ANPO Marikholodmash:
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved subject to clarification on the type of proposed cyclopentane storage. This issue is being addressed by the enterprise, and would be elaborated in an addendum.
PROJECT DESCRIPTION
The sub-project will phase-out of 15 MT/year ODP through conversion of the existing facilities from CFC-11 foam blowing agent to cyclopentane. The enterprise is the largest manufacturer of commercial refrigeration equipment in Russia. In 1994, it produced 24,700 units or 48% of the county's output. The conversion requires investment in a new foam blowing line and associated infrastructure to store and handle the flammable hydrocarbon.
SUB-PROJECT SUMMARY
COUNTRY: RUSSIAN FEDERATION
SUB-PROJECT TITLE: ANPO Marikholodmash: Conversion of from CFC-11 to HFC-134a refrigerant.
LOCATION: Yoskar-Ola, Mari El Republic
SECTOR: Commercial Refrigeration
ODS USE IN SECTOR: 78 MT CFC-12
PROJECT IMPACT: 18 MT CFC per yr.
PROJECT DURATION: 2 years
PROJECT ECONOMIC LIFE: 10 years
SUB-PROJECT COSTS: Incremental Capital Cost $ 503,000
Incremental Operating Cost(Savings) $ 2,508,000
Project Cost (Net of Savings) $ 3,011,000
GEF Funding Requested $ 153,000
FINANCING: ANPO Marikholodmash: $ 2,856,000
Global Environmental Facility: $ 153,000
COST EFFECTIVENESS: $8.50/kg. ODP
IMPLEMENTING ENTERPRISE: ANPO Marikholodmash:
IMPLEMENTING AGENCY: The World Bank
COORDINATING NATIONAL Ministry of Environmental Protection and Natural
BODY: Resources
STAP REVIEW: This subproject was reviewed by STAP, and approved in its current form.
PROJECT DESCRIPTION
The sub-project will phase-out of 18 MT/year ODP through conversion of the existing facilities from CFC-12 refrigerant to HFC-134a. The enterprise is the largest manufacturer of commercial refrigeration equipment in Russia. In 1994, it produced 24,700 units or 48% of the county's output. The sub-project involves conversion of equipment charging lines. Purchased compressors designed for HFC-134a will be used. The sub-project requires investment in product development and re-design, evacuation and recovery units, leak detection equipment, and servicing capability.