According to the terms of the agreement, NEFCO will extend a loan of EUR 3.5 million for the project. Other financiers include the EU, which has provided a grant of EUR 9.5 million and the Swedish Ministry of Foreign Affairs, which has availed SEK 6.9 million. As part of the programme, the authorities in the Kaliningrad region have also decided to finance the construction of new wastewater treatment plants in the towns of Baltisk and Ozerki at an estimated cost of about EUR 10 million.

The treatment plant will be entirely reconstructed as a result of the project, which includes the rehabilitation of the main sewers and pumping stations as well as the installation of frequency converters. Measures will also be taken to stop leakages from broken and rusty pipelines.

The 35-year-old plant processes the wastewater discharged by 56,000 people residing in the towns of Svetlogorsk, Zelenogradsk and Pionersk. The amount of wastewater discharged by the towns is around 12,000 cubic metres per day. When the project is completed, the plant will handle wastewater from 67,000 people as new residential areas will be connected to the network, and the upgrade will triple the plant’s capacity to 35,000 cubic metres. 

According to preliminary calculations, the project will reduce phosphorus discharges by around 13 tonnes per year, which is equivalent to unprocessed discharges from a population of some 18,000 persons. The project is also expected to reduce energy consumption by at least 30 per cent.

“It’s a highly cost-effective way of reducing eutrophicating discharges to the Baltic Sea because in this project the per-tonne price of removing phosphorus is a fraction of that obtaining in the Nordic countries, says NEFCO’s Senior Investment Manager, Ulf Bojö.

The project is part of an extensive wastewater facilities rehabilitation programme, which covers several small towns and villages in the Kaliningrad region. The EU and NEFCO have identified 20 locations in urgent need of wastewater treatment facilities rehabilitation. The first in line are Svetlogorsk, Pionersk and Zelenogradsk, partly because of their exposed location on the coast, and partly also because of the proactive efforts of the local water company, OKOS.

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Under the terms of the agreement, Rossibbalt Ltd will also be able to establish a sawdust supply system and procure a silage cutter, new sensors, anti-explosion devices and a new chimney for the production plant. The investment, which is expected to save the company some 1.1 million rubles a year, will enable the Rossibbalt Ltd to switch over from fossil fuel to renewable energy based on wood waste and sawdust left over from the production process. Emissions of carbon dioxide, sulphur and nitrogen oxides as well as soot will be minimized and energy consumption will be reduced by some 3,200 kilowatt hours per year. 

“This is NEFCO’s first project financed from its Facility for Cleaner Production in the Kaliningrad region, and our aim is that, there will be similar projects in the region soon”, says NEFCO’s Investment Manager, Peter Henningsen.

NEFCO is currently carrying out a web based marketing campaign in Russia to inform prospective clients about its Facility for Cleaner Production. The campaign, which is being jointly carried out with the Finnish marketing agency, Netbooster, is targeted at small and medium-sized companies in Northwest Russia. 

The Facility for Cleaner Production was established in 1997 to promote technological investments in industrial projects in order to curb the emission of harmful substances into the environment. The facility can finance up to EUR 350,000 or 90 per cent of the investment cost for such projects in the form of loans at favorable conditions.
Currently, the Facility for Cleaner Production has some 62 new projects under funding consideration.

Learn more about Rossibalt Ltd. (In Russian)

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Read about a similar project financed by NEFCO in Ukraine

Learn more about the Facility for Cleaner Production 

Under the terms of the agreement, Vnesheconombank will explore opportunities to co-finance directly or through subsidiaries and affiliated companies projects approved and financed by NEFCO in Russia. Vnesheconombank may provide financing in the form of loans, guarantees, leasing transactions or other financial instruments.

“This agreement clearly shows that there is a lot of interest in environmental banking and investments, particularly within the energy efficiency sector in Russia, and we hope that this Memorandum will enable us to expand our lending activities and finance a wide range of new projects in the country," says NEFCO's Managing Director, Magnus Rystedt.

Vnesheconombank is a state financial corporation established by the Russian Federation and is one of the oldest financial institutions in the country. Since 2007, Vnesheconombank has operated as a national development bank with a mission to assist the state in meeting the current challenges of Russia’s social and economic development. In September 2011, the corporation's total assets exceeded 2,380 billion rubles.
Learn more about Vnesheconombank

Learn more about NEFCO's cooperation with Raiffeisen Bank in Russia 

Learn more about NEFCO's cooperation with Prime Finance Bank in Russia

Located in the Leningrad region of Russia, the city of Kingisepp has some 50,000 inhabitants. Kingisepp hit the news headlines in Finland, Sweden and Russia earlier this year when the Baltic Marine Environment Protection Commission, HELCOM, reported that alarming levels of phosphorus were detected in the Luga River close to Kingisepp.

HELCOM and the Finnish Environment Institute estimate that the annual phosphorus discharge from Kingisepp could be in excess of 1,000 tonnes, a figure corresponding to one third of Finland’s annual phosphorus discharges into the Baltic Sea.

Although EuroChem’s fertiliser factory was initially identified as the main culprit, recent findings indicate that earlier mining and fertiliser production operations are responsible for the high levels of phosphorus discharges into the Baltic Sea. In February, NEFCO participated in a fact finding mission to Kingisepp, which also included talks with representatives from EuroChem.

 
“A feasibility study to determine the technical requirements of the project, and how it should be financed needs to be conducted before the start of operations. After that we can also assess how the project will benefit the state of the Baltic Sea", says NEFCO’s Vice President Kari Homanen. 

According to NEFCO’s Senior Manager, Karl-Johan Lehtinen, measurement of phosphorus levels in the Luga River and the surrounding area will be carried out this spring to find tangible solutions to the challenges at hand. “NEFCO is prepared to offer environmental expertise and loan financing to reduce the phosphorus load from Kingisepp to the Baltic Sea”, says Karl-Johan Lehtinen.

A considerable amount of NEFCO’s investments in the Baltic Basin relate to projects, which benefit the ecological state of the Baltic Sea, and the company’s environmental status reports for 2011 indicate that these initiatives resulted in reducing phosphorus discharges by 1,126 tonnes during the reporting period. The corresponding figure for nitrogen was 5,732 tonnes, a figure equivalent to untreated wastewater discharges by about 1.7 million people.

Read our press release in Finnish

Read our press release in Swedish

Learn more about HELCOM

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Shortlisted applicants will be invited to present a full proposal. The final applications shall be submitted to NCF tentatively by late April, 2012. The exact date and detailed guidelines and templates will be provided to the shortlisted applicants in due course. 

NCF will evaluate and score the final applications based on NCF's guidelines and applications will be ranked based on the scoring. Negotiations will be conducted starting from the highest scoring applications until the funding for the third call has been allocated.  

The Nordic Climate Facility, which is funded by the Nordic Development Fund (NDF) and jointly administered with NEFCO, provides partial grant financing for innovative climate related projects in low-income countries in Africa, Asia and Latin America. Financing can be granted to Nordic institutions, organizations, companies, and authorities which have established cooperation with a partner in low-income countries. The third call addresses innovative low-cost climate solutions with a focus on local business development.

Read the NCF Newsletter 2012

Learn more about the Nordic Development Fund

Learn more about the Nordic Climate Facility 

The town administration in Gurievsk has upgraded the street lighting system by replacing obsolete street lamps with low-energy LED lights. Reducing electricity consumption also generates environmental benefits since the project will reduce sulphur and carbon emissions and remove environmentally hazardous mercury from the old lamps. The project in Gurievsk is financed jointly by the municipality and NEFCO's Facility for Energy Saving Credits.

The Facility for Energy Savings has since its inception financed a wide range of municipal projects in Northwest Russia. Under the terms of the facility, NEFCO may finance up to 90 per cent of the investment costs of a municipal energy saving project.

In 2009, the Russian parliament passed a new law requiring all Russian municipalities to draw up action plans to improve their energy efficiency. This means new business opportunities for NEFCO in Russia.

The newly published video on Gurievsk is NEFCO’s first video production this year. As of 29 February, NEFCO’s videos on YouTube had generated some 13,000 clicks.

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Learn more about the project in Gurievsk

Learn more about the Facility for Energy Saving Credits

A total of 66 new projects were approved and administered by the corporation in 2011. The number of projects approved and financed by NEFCO have steadily increased during the last five years and reached new levels. The monetary value of all funds managed by NEFCO in 2011 was EUR 540 million, a significant increase from EUR 450 million in 2010.

NEFCO signed new project agreements worth EUR 84 million during the period. These projects included renewable energy, the installation of energy efficiency technologies, cleantech investments, modernization of industrial production facilities and upgrades of wastewater treatment plants. 
After reserving EUR 1.9 million for the Nordic Environment Development Fund, which finances cleaner production technologies and energy saving projects in Eastern Europe, NEFCO’s financial accounts for 2011 indicate a healthy surplus of EUR 831,000.

Despite declining carbon market transactions, NEFCO’s carbon procurement activities recorded impressive gains with new investments agreements being concluded in Asia, Africa and Latin America. The NEFCO Carbon Fund had its first issuances and distributions of credits to its investors. And together with the Nordic Council of Ministers, NEFCO continued its commitment to developing Nationally Appropriate Mitigation Actions (NAMAs).  The Nordic Partnership Initiative programme, which includes sectoral pilot projects in Peru and Vietnam, was launched at the COP17 meeting in Durban.

During the period, the Russian Federation announced that it would invest EUR 10 million in the Project Support Instrument (PSI), a fund which is administered by NEFCO on behalf of the Arctic Council. This financial input means that the fund is now operational and new environmental projects can be started in the Russian Arctic.

NEFCO also signed a cooperation agreement with China Development Bank and the Chinese Ministry of the Environment in 2011. The Baltic Sea Action Plan Fund, which is jointly administered jointly by NEFCO and the Nordic Investment Bank, also recorded an impressive performance, disbursing close to 50 per cent of the capital invested in the fund.

”Our expanded project portfolio and the increase in the value of funds we administer is an indication of our growing presence in the international financial markets , and we are, of course, naturally, pleased by this development,”  says NEFCO’s Managing Director, Magnus Rystedt.

Read the article above in Russian

In addition, NEFCO’s Carbon Finance and Funds Department has made progress on its technical assistance and market readiness activities, notably in the area of Nationally Appropriate Mitigation Actions with programmes launched in Peru and Viet Nam. 

The NEFCO Carbon Fund (NeCF), which closed with financial resources of EUR 165 million, has been active in sustainable energy investments in Eastern Europe, Asia and Latin America. New projects have been signed in India, Southeast Asia and China. The Nordic Climate Facility (NCF) supporting mitigation and adaptation actions for the poorest countries operated jointly with the Nordic Development Fund (NDF), finalised 8 agreements for interventions in Asia, Africa and Latin America, and launched a third round of requests for proposals. 

In total, approximately EUR 230 million of climate funds are currently managed by the CFF Department of NEFCO. 

Read the CFF Operational Review 2011

Learn more about carbon finance

Read more about the Nordic Partnership Initiative

Furthermore, a plan will be outlined for continuing the investigation, if needed, together with the plant, international financial institutions and the Russian authorities. HELCOM’s BALTHAZAR project, under which the samplings were taken, will remain a platform for further work to address this significant pollution.   

For the visit, the EuroChem management has invited representatives of HELCOM’s BALTHAZAR Project, NEFCO and the Ministries of Environment of Finland and Russia, accompanied by other Russian experts and authorities. 
“It’s encouraging that the plant’s management is ready to jointly assess the reasons behind the recent findings on high phosphorus loads in the River Luga. The main responsibility to manage the situation lies within the plant and the Russian authorities. I’d also like to stress that the reliability of environmental and pollution load data is the foundation for effective actions in the protection of the Baltic Sea,” explains NEFCO’s Board Member, Director Kristiina Isokallio from the Ministry of the Environment of Finland. 

“The industrial area related to fertiliser production, including the waste deposits, will be jointly assessed and further samplings taken so that more light will be shed on the source of the high phosphorus loads. Clarity will be indispensable for identifying the necessary measures to control the situation swiftly,” says Kaj Forsius, BALTHAZAR Project Manager from HELCOM. 

“There are techniques and solutions available to mitigate pollution from fertiliser production which can be offered for fast track implementation in order to significantly reduce the discharges of nutrients,” says Senior Manager Karl-Johan Lehtinen, Head of the environmental unit at NEFCO. 

The recent findings that revealed a significant load of phosphorus in the River Luga flowing into the Gulf of Finland is the result of the collaboration within the BALTHAZAR project, funded by the EU and led by the Finnish Environment Institute (SYKE). The project’s Steering Group meeting on 18 January, chaired by a representative from the Russian Ministry of Natural Resources and the Environment, supported the plans to use BALTHAZAR as a platform to continue the investigation immediately. It was decided to carry out this investigation together with the responsible authorities and other project stakeholders in order to obtain a more complete picture of the nutrient inputs and help take the necessary measures.

The process is being closely followed up and the progress will be reviewed at the next annual HELCOM meeting on 6–7 March 2012.

Learn more about the BALTHAZAR project

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The meeting will address the recent samplings on high phosphorus loads in the Luga River flowing to the Gulf of Finland, reports HELCOM in a press release today.The fact finding mission is a follow up to the HELCOM BALTHAZAR Project Steering Group Meeting, convened in St Petersburg last Wednesday on 18 January, which considered the consultant’s report on the high loads of up to 1,000 tonnes per year from an area close to the city of Kingisepp.

“The Steering Group supported the plans of the BALTHAZAR project to immediately continue the investigation on the sources of the phosphorus load together with the responsible Russian authorities. The visit to the plant gives a good opportunity to learn about the situation and inform the public accordingly,” says the Russian Project Director, Dr. Leonid Korovin.

The visit will be followed by meetings between the Russian regional and local authorities, experts of the BALTHAZAR project as well as a representative of the Ministry of Environment of Finland. NEFCO has also expressed preparedness to solve the environmental challenge at hand in Kingisepp. 

“There are techniques and solutions available to mitigate pollution from fertiliser production which can be offered for a fast track implementation to significantly reduce the discharges of nutrients”, says Senior Manager Karl-Johan Lehtinen who heads the environmental unit at NEFCO.

Eutrophication is regarded as the biggest environmental problem of the Baltic Sea which is due to the long-lasting high nitrogen and phosphorus load to the sea. The Gulf of Finland is a highly eutrophicated part of the Baltic Sea. The most visible sign of eutrophication are the blue-green algae blooms, which have increased both in the Gulf of Finland and in the main basin of the Baltic Sea since the early 1990s. The excess of phosphorus is the key trigger of blue-green algal blooms.

Learn more about HELCOM

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Learn more about the Baltic Sea Action Plan Fund