Rotor Elektrik Uretim A.S

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public 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 decision. Board dates are estimates only.

Project number	27191
Company name	Rotor Elektrik Uretim
Country	Turkey
Sector	Utilities
Environmental category	B
Department	Infrastructure
Status	Pend PDS-IR

Date SPI disclosed	July 28, 2008
Projected board date	September 8, 2008

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed IFC loan will be extended to Rotor Elektrik, a subsidiary of Zorlu Enerji, one of Turkey’s largest private power companies. The proceeds of the loan will be used to finance the construction of a 135 MW wind farm in the province Osmaniye in Southern Turkey.

The project will significantly increase Turkey’s wind generation capacity and will be the country’s largest wind farm built to date. It will contribute to addressing the Turkish power deficit and increase the country’s power generation from clean renewable sources while supporting the rapidly growing national economy.

Anticipated development impact of the project

Once operational, the project will:

- increase Turkey’s electricity output from wind energy;
- in doing so, displace carbon emissions, reducing pollution and contributing to the effort to reduce global warming;
- by size and nature of the transaction, influence Turkey’s ability to attract foreign investment in the renewable energy sector and position Turkey as an alternative emerging market destination for wind power investments;
- contribute to the development of a merchant power operations and private sector investment in Turkey’s energy sector.

IFC's expected development contribution

IFC’s additionality to the investment comprises:

- providing financing for a large part of the project cost, with a longer average life than that available from commercial banks, during a portion of which the project will be exposed to merchant risk;

- providing comfort to co-lenders and participant banks, both through IFC’s structuring role, and in light of Turkey’s regulatory and political risk; and

- ensuring the implementation of adequate environmental and social standards in line with World Bank Group standards, which are not required under Turkish legislation.

Environmental and social issues - Category B

This is a Category B project because a limited number of specific environmental and social impacts may result from construction of this green field wind power project. These impacts, including visual, noise, contractor and construction impact management, will be managed by the sponsor in close detail consistent with IFC and national requirements. An independent EIA was completed and an Environmental Management Plan (EMP) has been developed. Potential cumulative impacts associated with a second phase of the project were also assessed as part of the EIA. The project, and the proposed Phase 2, is located on Forestry Department land, all of which is plantation forest.

The EIA confirms there will be no measurable impact on sensitive fauna or flora. No resettlement or economic displacement will result from the project. Several small parcels of land will be purchased/leased from private owners for a 1km section length of the project’s transmission line; these transactions will be completed on a willing seller-market basis. Particular care will be needed during construction related to erosion control and waste management associated with road expansion; this is specifically addressed in the EMP. Formal and informal consultations conducted to date indicate strong support for the project due to the jobs and benefits it will bring to the local agrarian economy. Visual and noise impacts are minimal due to the topography and distance to nearest receptors. From an environmental and social perspective the project is very positive due to the carbon benefits it will generate. Rotor Elektrik has presented plans to address the impacts and other requirements, and will, upon implementation of specific agreed measures, comply with the IFC Performance Standards on Social and Environmental Sustainability.

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