Project detail - OSMANGAZI ELEKTRIK DAGITIM A.S.

Who is our customer

Osmangazi Elektrik Dagitim A.S. ("OEDAS") is established in Turkey. OEDAS is one of the twenty-one regional electricity distributors covering five provinces in central Turkey. OEDAS is owned by Zorlu Osmangazi Enerji Sanayi ve Ticaret A.S. ("Zorlu Osmangazi"), which in turn is part of the Zorlu Holding/Group.

What is our funding objective?

OEDAS plans to invest >USD400m during the period 2021-2025. For the financing of the required investments, FMO provides a senior long term loan in local currency ("TRY") up to the equivalent of USD100m out of which USD25m is uncommitted. FMO co-invests with International Finance Corporation (IFC"), European Bank for Reconstruction and Development ("EBRD"), the Asian Infrastructure Investment Bank ("AIIB") and DenizBank A.S. ("DenizBank"). OEDAS will fund the remainder from its cash flows. The investment objective and rationale are as follows: (i) the reconstruction and modernization of OEDAS' existing substations and lines and replacement of outdated equipment; (ii) the expansion of the automated electricity metering system (reading and billing); (iii) the expansion of the network and connection of new users; and (iv) installation of a new automatic control system and other auxiliary investments. For OEDAS' investments during 2017-2020, IFC, EBRD, Denizbank and FMO signed their first loan agreements in May 2018, with FMO then taking a USD65m (in local currency equivalent).

Why do we fund this investment?

OEDAS' investments contribute to among others an improved distribution network with lower technical losses, better metering and more electricity to end-users in need. Supporting the funding of OEDAS' investments does fit well with FMO's strategy, which includes among others (i) contributing to energy savings (by among others reducing technical losses, better metering, etc.) and (ii) enabling more and better connections with all end-users of electricity. FMO's Green and Reducing Inequalities Labels do also apply to this transaction.

What is the Environmental and Social categorization rationale?

FMO's E&S category for this transaction is B+, reflecting health and safety risks to employees and communities, and potential impacts on informal land users, biodiversity and cultural heritage. IFC PS1-4 are triggered; 5, 6 and 8 may potentially be triggered due to the nature of the distribution network, spread over the country. IFC PS7 is not expected to be triggered as the project is not likely to impact communities of indigenous people. Explicit reference is made to EBRD?s ex ante Disclosure and Project Summary Documents: this can be found at EBRD?s website (i.e.: https://www.ebrd.com/work-with-us/projects/psd/52705.html).

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Date	Total FMO financing
5/31/2018	USD 65.00 MLN