Notice

Category B project supported: Five Substations Project, Iraq

Published 28 May 2025

1. Project description

UK Export Finance has agreed to provide support to the Ministry of Finance Iraq in respect of the supply of design, supply, construction, installation, testing and commissioning by UK Grid Solutions Limited, a UK subsidiary of GE Vernova for the construction of electrical substations across five different sites in Iraq.

A key aim of the Project is to provide reliable electricity to communities across Iraq as part of a broader national grid development plan being undertaken by the Ministry of Electricity (MoE).

The Project includes:

• Construction of five new substations: New Al Rifai, Al Rumaitha, North Kirkuk, Al Khalidiya South and Al Sawada.
• Associated Facilities comprise the final connections from existing Overhead transmission lines to the substation and from the substation to the local communities which are under the responsibility of MoE.

2. Project sector

The Project is in the power sector.

3. Project sponsors

The Project is being developed by MoE.

4. UK exporters

UK Grid Solutions Limited, a UK subsidiary of GE Vernova.

5.  Export Credit Agent Bank

Standard Chartered Bank (SCB).

6. Amount of UK Export Finance Support

The Maximum Liability of the support is approximately £98.5 million.

7. ECD common approaches and Equator Principles

UK Export Finance categorised the Project as Category B i.e. having environmental, social and human rights (ESHR) impacts that are few in number, site-specific, few (if any) of which are irreversible, and for which mitigation measures are more readily available in accordance with the definition in the 2012 (Revised 2024) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”) and the Equator Principles (2020).

8. Environmental, social and human rights standards

Project related ESHR documentation was reviewed for its alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines.

The applicable IFC PS were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts;
• PS2: Labour and Working Conditions;
• PS3: Resource Efficiency and Pollution Prevention;
• PS4: Community Health, Safety and Security;
• PS5: Land Acquisition and Involuntary Resettlement;
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources; and
• PS8: Cultural Heritage.

The applicable World Bank Group EHS Guidelines were:

• General EHS Guidelines (2007); and
• EHS Guidelines for Electric Power Transmission and Distribution (2007).

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• occupational health and safety;
• infrastructure and equipment design and safety;
• wastewater treatment;
• waste and hazardous material management;
• emergency planning and response;
• grievance mechanisms;
• worker conditions; and
• community engagement.

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the OECD Common Approaches and Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

The review included:

• Desk-based review of Project-related documentation: Environmental and Social Impact Assessment, Environmental and Social Management Plans, and Stakeholder Engagement Plan; and
• Follow-up meetings and interviews with relevant Project representatives.

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

Taking account of the review, the Project was deemed to have potential to cause a number of adverse environmental and social impacts both during construction and operation. However, a proposed suite of controls as part of the Project’s environmental and social management systems should facilitate the management of these impacts.

11. Climate change considerations

UKEF considered the potential direct and indirect greenhouse gas (GHG) emissions of the Project and the effects of climate change factors on the Project as part of its ESHR review.

The Project is not considered to be a carbon intensive undertaking (such as fossil fuels or petrochemical) and so “high” GHG emissions in excess of relevant thresholds for quantification and reporting set by international standards were not reasonably envisaged.

The review revealed that the Project design has considered potential physical impacts of climate change.

12. Decision

Various actions have been agreed between the Project developer, operator, and parties involved in the financing, which are necessary to ensure the Project’s ongoing alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the Project cycle. UKEF has therefore decided to provide its support in respect of the supply of goods and services by UK exporters to the Project.

A condition of support is that the Project will be subject to monitoring and reporting in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.