Updated Project Information Document (PID) Report No: AB107 Project Name LITHUANIA-Vilnius Heat Demand Management Project Region Europe and Central Asia Region Sector District heating and energy efficiency services (100%) Theme Climate change (P); Municipal governance and institution building (S); Corporate governance (S) Project P073242 Borrower(s) VILNIAUS ENERGIJA, VILNIUS MUNICIPALITY Implementing Agency(ies) VILNIAUS ENERGIJA, VILNIUS MUNICIPALITY Address: Smolensko 12, LT-2600 Vilnius, Lithuania Contact Person: Mr. Jean Sacreste Tel: (+370 5) 213-1388 Fax: (+370 5) 213-0702 Email: info@dalkia.lt VILNIUS CITY MUNICIPALITY Address: Gedimino av. 9, LT-2600, Vilnius, Lithuania Contact Person: Mr. Vygintas Jakas Tel: (+370 5) 212 73 66 Fax: (+370 5) 212 61 23 Email: savivaldybe@vilnius.lt Environment Category B (Partial Assessment) Date PID Prepared May 30, 2003 Auth Appr/Negs Date December 1, 2000 Bank Approval Date June 10, 2003 1. Country and Sector Background The strategic development of the energy sector is largely driven by Lithuania's desire to accelerate its EU Accession program, requiring a liberalization of the gas and electricity markets. Government policy in the energy sector emphasizes economic pricing, the fostering of competitive markets and the commercialization of energy companies, in order to achieve both reliable supply and economy in the use of energy resources. Within this policy envelope, the district heating (DH) sub-sector has long been a source of concern since meeting district heating losses has been the largest single element of fiscal support to the energy sector. District heat prices have, until recently, not been cost-based. At the same time, the costs of supply have been unnecessarily high due to losses. In Vilnius, as much as 28% of heat produced by the district heating company is lost in the heat distribution network. The economic and environmental gains to be achieved through network modernization are massive. Vilnius, which is Lithuania's capital and largest city, has a population of 579,000, and a residential housing stock of 5,700 buildings, of which 85% are supplied with heat from the district heating system. The average year-round outdoor temperature is 6.4 degrees Celsius, making heat supply an essential service. However, the quality of district heating services in Vilnius has long needed substantial improvement. As in many other cities of the former Soviet Union, consumers, dissatisfied with the service provided by the district heating utility, have been turning to alternative forms of heat which are in many cases less desirable from the point of view of the national economy and the environment. Heat consumption in Vilnius' buildings is also high by western standards for similar climates. The outdated housing stock provides opportunities for substantial energy efficiency improvements through 2 PID measures such as better insulation, introduction of thermostatic valves and heat meters in apartments. The potentially high economic returns, however, do not guarantee that these measures will be delivered due to a number of barriers. To achieve the full set of desired improvements requires active promotion, attractive financing, and direct incentives to some customers. All but 7% of residences are privately owned. Legislation enacted during 2000 provides for the establishment of Home Owners' Associations (HOAs) in each apartment building or, in default of the establishment of such an association, the appointment of an Administrator by the Municipality to represent the residents. There are about 176,000 family apartments in Vilnius, of which some 50,000 belong to families organized into HOAs. Heat meters at the building level have been installed in virtually all residential buildings by 1999, which has allowed the Vilnius District Heating Company (VDHC) to switch to billing for heat based on metered data. The HOAs are the only group of heat consumers that are allowed to self-manage the heat supply to their buildings, however, the current technology seldom allows for customer-controlled operation. For the rest of the customers, the company maintains heat supply contracts on a family-by-family basis. At the apartment level, heat meters are typically not available. In recent years, VDHC sought support from the Municipality for the replacement of central heat exchanger substations ("block substations") with building-level substations (BLS). Under a recent VDHC initiative, the Vilnius City Council approved a raise in the fixed cost component of the heat tariff to cover VDHC's losses in the domestic hot water (DHW) network. This increase resulted in a net increase in the heating bill for about 60% of the DH customers (i.e., all customers currently served from block substations). Simultaneously, a 5% discount on the tariff was given to those households whose hot water is prepared inside the building, which is the case only when the building has a BLS. This has set the stage for replacement of block substations with BLS. With the introduction of BLS, the heat bill will be based on the full cost of heat supply incorporating the metered amount of heat used for DHW preparation. Thus, the majority of customers risk facing higher heating bills, unless energy efficiency measures at the consumer level (including in the apartments) are also implemented. In 2001, the Municipality conducted a tender for a 15-year lease of VDHC to a private operator, in an effort to bring the company to profitable operation. In November 2001, the French company Dalkia won the tender for the lease. The new management of VDHC, Vilniaus Energija (VE), owned by Dalkia, officially took charge of VDHC's operations on April 1, 2002. Under the lease agreement with the Municipality, most of the VDHC staff has been transferred to VE. VDHC continues to own the assets. 2. Objectives VE's investment program Vilniaus Energija (VE) is undertaking a long-term investment program aimed at modernizing the district heating system through a fundamental design change to the district heating network and introduction of new equipment. First and foremost, investments will be made in substation network decentralization designed to reduce losses and improve the quality of district heat supply. This includes such a fundamental feature of modem district heating technology as temperature control by the consumer. Such investments would reduce the cost of heat supply as well as fuel usage and emissions of greenhouse gases to the atmosphere. In the long run, the program will yield fiscal benefits to the Government by increasing the taxable profits of VE and by reducing the number of households which require the heat and hot water subsidies. Since the commercial viability of the district heating company will be improved, privatization of the VDHC assets may become possible in the future. The main components of VE's investment program are: 3 PID * Substation modernization including the replacement of all block substations with building-level substations in residential buildings; * New connections and network development; * Replacement of part of the network; * Rehabilitation of the HOBs; * Construction of a gas pipe interconnecting CHP-2 and CHP-3; * The rehabilitation of CHP-3 and the district heating pumping station at CHP-2. Moreover, VE would like to become part of the emerging energy efficiency market by launching a new activity directly at the customer's level - an Energy Efficiency Pilot Program which would consist of apartment-level demand-side management (AL DSM) measures. To facilitate the implementation of the program, VE has set aside an Energy Efficiency Fund (EEF) under the lease agreement with the Municipality and is prepared to contribute LTL 20 mnillion (about US $6 million) into a GEF-supported energy efficiency program and to pursue a further expansion of the program if the initial phase proves successful. The Vilnius City Municipality (VCM) has expressed a strong interest in implementing building-envelope improvements of the residential housing stock of the City. In combination with VE's energy efficiency program for the heating system, VCM's initiative allows to implement a comprehensive heat demand management program in the City of Vilnius. The GEF Project would support and supplement the programs pursued by both VE and VCM. Under the Project, the GEF would contribute US$ 6.5m to the establishment of a broader and more sustainable program to support the installation of energy efficiency equipment in residential buildings of Vilnius and engage VE and the VCM in the development of a market for energy efficiency products. GEF Project Objectives The GEF project's objective is to reduce the emissions of greenhouse gases (GHG) from the Vilnius District Heating System through a targeted effort to remove the existing barriers to energy conservation. This would be achieved by means of introducing demand-side management (DSM) measures such as thermostatically controlled radiator valves and heat meters in Vilnius households, as well as building-envelope improvements to reduce energy losses from the residential housing stock. Besides direct emission reductions from these measures, additional benefits are hoped to be achieved through avoided disconnections from the district heating system and possibly through accelerated implementation of VE's core program of modernizing the heat exchanger substation network. The downstream benefits may also be substantial. Part of the long-term agenda for GEF is to stimulate the creation of a market of DSM equipment in Lithuania so that, at the time when the initial seed money from GEF and EEF is spent, the ECP would continue on a largely commercial basis (although the need for targeted government support to the poor households is likely to remain). Achieving commercial viability of ECP would demonstrate its replicability. A powerful demonstration effect is expected from the implementation of the concept of a demand-side management program in the district heating sector, with the heat supplier itself playing an active part in supporting the demand-side conservation measures. 3. Rationale for Bank's Involvement The primary value of the Bank's involvement with the heating industry in Vilnius has been to ensure that the project is consistent with the broader economic reform agenda, to help focus the project and to ensure that issues of affordability and financial viability are adequately addressed. The early project preparation effort focused on improving the legal and regulatory (particularly pricing) framework and enabling a fair competitive environment among energy suppliers. 4 PID The Bank team has also helped the Vilnius Municipality to develop a program to make the district heating company financially viable without state support. Vinliaus Energija's investment program is largely following the same path with the notable addition of the DSM component. The latter is now supported by the Bank through GEF, which is well placed to introduce an environmental dimension into the decision making of a major Lithuanian energy utility. 4. Description The main components of the Vilnius Heat Demand Management GEF Project are as follows. A. Substation Modernization B. Apartment-level DSM (Subsidy Fund) C. ECP Commercial Fund D. ECP Commercial Fund Management Contract E. Administration of ECP by the Municipality F. Monitoring and Evaluation of Global Benefits Components A and B are implemented by VE, while Components C-F are implemented by the Vilnius City Municipality. Components B-F constitute the GEF-supported Energy Conservation Program (ECP). Substation Modernization (Component A) - US$ 26.1 million. This component of VE's investment program consists of substation modernization including the replacement of all block substations with building-level substations in residential buildings. VE plans to install 2,286 building-level substations (most of them over the next four or five years) in buildings currently served from block substations. The implementation of this component is of utmost importance to the transformation of the Vilnius DH system into a modem, customer friendly, and energy efficient system. This is also an essential technical prerequisite for the demand-side management measures at the apartment and building level and thus ties in most closely with the GEF-supported components. EnergYv Conservation Pro2ram Apartment-Level Demand-Side Management (AL DSM) component - US$ 10 million (Component B) would be a 5-year program covering some 500-600 apartment buildings in Vilnius, with the possibility of expanding the program to another similar number of buildings in the following years. The AL DSM investments would include the supply and installation services for thermostatically controlled valves (TCV) and heat cost allocators (HCA) on room radiators, remote readers for hot water meters, and works for balancing the heat flow in the risers connecting the substation to the radiators. These measures will allow VE to introduce billing based on the actual heat consumption by apartment. Thus, the incentives for the residents to conserve heat would be substantially enhanced. However, the potential level of acceptance of the AL DSM installation program by the Vilnius residents is uncertain. To increase the chances of successful market penetration, the GEF will participate in this component by financing a $2.5 million "subsidy fund" (to be disbursed in two tranches of $1.25 million each, the second tranche being contingent on the provision of co-financing for the expansion of the program by VE). The subsidy fund will allow VE to forgive the low-income inhabitants of the 500-600 buildings all or most of the cost of the downpayment (connection fee) on the AL DSM equipment, thus addressing the barrier of up-front cost affordability. During the years of the GEF project duration (2003-2007), the co-financing by VE is expected to equal at least LTL 20 million (roughly $6 million), with the homeowners contributing about $2.5 million through connection fees. ECP Commercial Fund - US$ 3 million (Component C). This component would capitalize a revolving fund (run by a firm contracted by the Municipality - see Component D) through $3 million worth of 5 PID demand-side management investments in 2003-2007. The fund would operate on a financially sustainable basis and would be used for energy efficiency investments as long as demand exists. The Municipality envisages that most of the investments will be made in the building-envelope improvements (including window replacement). However, the final decision on the type of the investments made by the Commercial Fund will be made upon the completion of the tender for the operation of the fund under the ECP Management Contract. The intent is to solicit the most effective and innovative proposals (business plans) from the firms competing for the Contract. The ECP Management Contract - $0.5 million (Component D) - would create an institutional and operational basis for the energy efficiency investment program pursued by the Municipality. A commercial firm - preferably, with credentials of an ESCO - would be selected by the Vilnius Municipality through a competitive tender. The firm would implement the business plan that it will have developed, including the operation of the ECP Commercial Fund in a financially sustainable manner through profitable investments in energy efficiency in the residential sector. Administration of ECP by the Municipality - up to $ 0.3 million - would cover some of the costs to Vilnius Municipality associated with the management of ECP during the five years of GEF project implementation. This allocation would cover Incremental Operating Costs (US$ 100,000) helping VCM to meet the expenditures for contractual staff, office supplies, transportation, advertising, marketing, public relations and other public outreach efforts, as well as training for financial staff. In addition, the costs of financial audits of the GEF project accounts will be covered by a consultant services allocation of $100,000, and an allowance of $100,000 for individual consultants will be made. Monitoring & Evaluation of Global Environmental Benefits and Information Dissemination for Replication - $0.2 million. The monitoring and evaluation of the achievement of the global environmental objective would focus on quantifying the GHG savings associated with energy savings and the performance of ECP. The M&E would include a mid-term review (planned for June 2006), which would place a special emphasis on the performance of the ECP from the perspective of GHG reduction impact as well as market penetration and financial sustainability of the Commercial Fund. In addition to the M&E of GHG reductions and the ECP performance, this component would include information dissemination activities aimed to realize the Project's replication potential to the maximum. Lithuania would be the initial target area for replication, where the information dissemination can be facilitated through the several existing Housing Advisory Centers which have experience with DSM programs including the Lithuania EEHP. Replication outside Lithuania would be achieved through disseminating the information through the existing networks of experts and agencies engaged in energy efficiency projects - e.g., the network of energy efficiency demonstration zones established within the framework of the Energy Efficiency 21 program of the United Nations Economic Commission for Europe (UNECE), which is coordinating activities among similar zones throughout Eastem Europe and the former Soviet Union. It is expected that both the Marketing Department of VE and the Vilnius City Municipality will be closely involved in the implementation of this component, contributing substantially to the efforts of the consultant that would be engaged. 5. Financing Source (Total ( US$m)) BORROWER/RECIPIENT ($33.60) GLOBAL ENVIRONMENT FACILITY ($6.50) Total Project Cost: $40.10 6 PID 6. Implementation The implementation responsibility for each component is specified in Section 4 above. Two separate GEF Grant Agreements will govern the VE-implemented and VCM-implemented parts of the Project, respectively. The management responsibility for the VE-implemented components will be mainly with the existing staff of VE. The VE department of Marketing and Business Development will play a key role. The Municipality, on the other hand, will use the assistance of a specially selected ECP Management Contractor (Fund Manager) to operate the Commercial Fund and some consulting services to implement the analytical and supervisory components of the ECP. The institutional/technical assistance components would have a total budget of $1.0 million. The remaining $5.5 million, earmarked for energy conservation investments, will be split between a $3 million commercial fund and a $2.5 million subsidy fund, managed by VCM and VE, respectively. The commercial fund - a revolving facility supported by repayments from customers for energy efficiency investments (the specific operational modalities of the facility would be defined in the business plan of the ECP Management Contractor) - would be supported through the purchase and installation of a $3 million worth of energy efficiency equipment and would be used for subsequent energy efficiency investments. The $2.5 million subsidy fund would be used as an incremental grant from the GEF to stimulate the introduction of AL DSM and consumption-based billing at the apartment level. One-half of the subsidy fund would be used as a contingent grant, released only if conditions for the expansion of the program are met by VE. The public oversight and decision making process with regard to the Commercial Fund's operations would be conducted through a Management Board (or "ECP Coordination Committee"). The Board would include representatives of the Vilnius City Municipality (Chair), VE, and other reputable representatives of the energy efficiency business as appropriate. The Board would hire, under a performance contract, a professional Fund Manager (ECP Management Contractor) who would be in charge of administering daily activity of the ECP Commercial Fund and identifying, evaluating, developing and financially structuring energy efficiency projects to be submitted to the Board. The Fund Manager would assure a sound project portfolio for the ECP Commercial Fund in terms of risks and returns. The qualified Manager would be selected competitively. Financing Plan The total project cost is estimated at $40.1 million - including the substation modernization component but excluding the repayments from the homeowners for the investments financed from the ECP Commercial Fund. VE is expected to fund about $33.6 million of project costs from its internal resources, commercial bank borrowings, and cost sharing contributions from the homeowners. The GEF is requested to provide $6.5 million. Of this, $5.5 million would finance heat demand management investments through the Energy Conservation Program. The remaining $1.0 million would finance the institutional components including M&E of global environmental benefits, information dissemination directed at replication, the ECP Management Contract, and incremental operating costs of ECP administration by the Municipality. 7 PID 7. Sustainability The Project supports a fundamental design change in the district heating system, including the installation of building-level substations and AL DSM equipment, which will increase consumers' control over their consumption of energy and make them more aware of options to reduce the cost of heat consumed. In this way the Project addresses the root cause of the past unsustainable operation of the district heating system. The devolution of responsibility for regulating heat supply to the customer and the introduction of billing based on metered consumption simplifies the incentives, increases "ownership" and thus is expected to increase sustainability. This is particularly apparent in the case of the AL DSM program which supports the introduction of billing for heat on an apartment-by-apartment basis. Further, under the VE-implemented AL DSM component including the introduction of consumption-based billing by apartment, the positive results achieved, combined with public outreach and dissemination efforts, will help VE strengthen the supplier-customer relations and consolidate the customer base. This may, in turn, accelerate the substation modemization program pursued by VE. As the new substations would enable the installation of AL DSM measures, it is expected that more demand for these measures in residential buildings would be generated, thus completing the self-reinforcing loop ("virtuous cycle"). The overall scheme is intended to "push" the market early on and then allow a transition to a commercial market as both the technical possibility and the incentives would be in place for both the homeowners and emerging ESCOs to implement further energy saving investments in buildings equipped with modern building-level substations and consumption-based billing of apartments for heat. Moreover, the project is expected to provide a sufficient impetus to the AL DSM market to bring the costs of the equipment down through creating more buyers and suppliers. Eventually, this will reduce the costs, alleviating the up-front cost barrier for many potential buyers of AL DSM equipment. This impact also has "virtuous cycle" qualities, reinforcing the positive results and making them more sustainable. The long-term sustainability of the overall Energy Conservation Program (ECP) would be supported through the creation of the ECP Commercial Fund ($3 million) that would operate on a revolving basis. The sustainability of the Commercial Fund itself would depend on its default rate and terms on which the DSM measures will be offered to the homeowners. The long-term sustainability of the impact made by the operation of the ECP commercial fund will depend on the effectiveness of the program in producing a leveraging effect in terms of attracting co-financing from the commercial banking sector. One of the goals is to stimulate commercial bank co-financing of energy efficiency investments under ECP and, eventually, make commercial banks and private investors the primary source of financing for such investments. Replicability. The modernization of the Vilnius District Heating System supported by VE promotes energy efficiency of both the supply and demand sides. The GEF support emphasizes the demand-side measures implemented by both VE and the Municipality on behalf of the Vilnius residents. Only with the inclusion of the demand-side efficiencies into the scope of the project, can its full economic and environmental benefits be achieved utilizing the synergy between the two sides of the process. This approach is highly replicable throughout Eastern Europe and the Former Soviet Union where many district heating systems as well as the housing stock are in need of a fundamental modernization to improve energy efficiency, and where investments in energy saving at the customer level have been lacking. Potentially, heat demand management and energy efficiency is an attractive market opportunity, and demonstrating its commercial viability is one of the objectives of the project. An initial grant injection is appropriate only for a specific application that removes a barrier and promotes a sustainable outcome 8 PID (such as the introduction of billing for heat based on actual apartment-level consumption). The replication is potentially possible without resort to GEF or other grants once it is established that demand-side improvements can eventually benefit the DH companies and/or other participants in the emerging energy efficiency market. This is due not only to the consolidating impact on the customer base, but also due to reduced losses and costs of supply - especially, during periods of peak demand. The replication potential for the introduction of apartment-level billing based on TCV and HCA technology is particularly large in the CIS countries. While this technology is not new in Eastem Europe, the capital of Lithuania will be first to introduce this technology in the Baltic States and the former Soviet Union. Thus, there is a large untapped market for this technology, which is the most essential pre-requisite for replication of this project. The replication potential for the ECP Commercial Fund is also large as there are many markets in the ECA countries where potential energy savings are large but commercial financing is not readily available due to a number of institutional, regulatory, and other barriers. While removing such barriers through regulatory reform is probably the best possible solution that will allow the commercial banks and private financiers to enter these markets, the provision of targeted financing can be an appropriate response in many cases. The practical experience of processing the transactions in a way consistent with market principles is an important capacity building exercise for both the borrowers and lenders, which can in turn result in increased mobilization of commercial capital - first, as co-financing, then as the primary source of financing. 8. Lessons learned from past operations in the country/sector The Bank's District Heating Projects in other countries have been, to a large extent, successful. Targets for reductions in energy consumption and system improvements have been achieved, or exceeded, giving confidence in the project design. Experience from Poland shows that conversion of a district heating system from constant to variable flow can be performed with good results, and without major operational problems. Any problems that have arisen were typically associated with instances when the project design has exceeded the implementation capacity of the borrower. The currently pursued self-standing GEF operation has a modest size and can be handled by a small group of VE staff. Heat demand forecasts have been too high in some of the past projects, many of which were designed at the beginning of the economic transition and making it difficult to anticipate the breadth and depth of market collapse. A social assessment undertaken during project preparation has helped deal with this issue by taking into account the limitations on affordability. As a result, the demand forecast for this project has been lowered and is believed to be realistic. Another essential lesson is that, by optimizing the district heating cycle from production to consumption, considerable energy savings can be achieved. Data collection from networks and customer plants results in more efficient operation for the producer and better service for the consumer. The application of remote metering integrated with an administrative system for debiting is a powerful comprehensive approach to district heating which represents the state-of-the-art in the industry. The Bank's Energy Efficiency and Housing Pilot (EEHP) Project in Lithuania was very helpful in guiding the design of the Energy Conservation Program. The EEHP project has demonstrated that homeowners are able and willing to invest in energy retrofitting in their buildings if provided with a support package addressing legal, institutional, technical and financial barriers. However, obtaining a permission from the homeowners is time-consuming when the decisions concem building-level improvements since this must be taken by a formal meeting of homeowners of each building. The EEHP demonstrated that significant educational and advisory support is required to bring homeowners to the decision-making point. VE's 9 PID energy efficiency program supported through ECP would focus on apartment-level improvements, and the decisions will be made on a consumer-by-consumer basis. The Municipality, which is better equipped to deal with the issues involved in the promotion of HOAs, will be in charge of building-level investments under the ECP Commercial Fund component. Valuable lessons are also available from the experience of Dalkia, the mother company of Vilniaus Energija. Dalkia is present in 30 countries and has 37,000 employees. Its business is to provide energy management services for industry, commercial customers, and large community facilities. Dalkia operates heating systems and has a long experience with Energy Service Companies (ESCOs). Under long-term contracts, the ESCO introduces efficiency measures to reduce energy costs. The savings are shared between the ESCO and the client. In Poland, Dalkia has taken over DH operations in several towns. After network modemization, the tariff remains the same, and savings are used to pay back the investment. In partnership with EBRD, Dalkia International, a leading multinational energy company, has made a commitment of E 100 million to raise energy efficiency. The investment aims to support Dalkia's work in Hungary, Lithuania, Poland, Romania and the Slovak Republic, and to help it expand to other countries such as Bulgaria, Croatia, Bosnia and Herzegovina, and Russia. Dalkia has already created ESCOs that operate district heating networks for municipalities and reduce energy consumption in buildings or facilities. The EBRD has already invested E50 million in projects developed by Dalkia over the past five years, resulting, for example, in success for the MSW Hospital in Krakow, Poland, which was able to cut its energy bill by 38 percent. With respect to individual heat control and metering, Bulgaria offers an instructive example of the role that the govemment may have in contributing to market transformation. After the Bulgarian Government mandated the introduction of individual billing in buildings connected to district heating, the development of a market for TCVs and HCAs proceeded rapidly and the forces of competition have rapidly reduced the market price of this equipment. Valuable experience in attracting private sector financing for energy efficiency is available from the International Finance Corporation (IFC). Lithuania is one of the five countries participating in the GEF-supported regional project entitled Commercializing Energy Efficiency Finance (CEEF), which is implemented by IFC. CEEF provides partial risk guarantees for financial intermediaries (FIs) financing energy efficiency investments in several sectors. Eligible transactions are investments in projects and equipment aimed at improving efficiency of energy use in buildings, industrial processes, municipal facilities and other energy end-use applications (e.g., lighting, boiler and cogeneration systems, energy management control systems, efficient and variable speed drive motors, power factor correction, waste heat recovery, etc). However, the Lithuanian residential sector is presently problematic for CEEF due to unfavorable regulatory framework and lack of guidelines which would facilitate rapid decision-making by cooperative owners as well as provide clear collateral security to enable borrowing. These regulatory issues are being addressed by the Bank through policy dialogue with the Government - particularly, through the Housing Strategy (National Strategy for Sustainable Housing), which is currently under discussion between the Lithuanian Government and the World Bank. 9. Environment Aspects (including any public consultation) Issues : The project is not expected to receive any IBRD or GEF financing for investments in the generation, transmission, or distribution facilities of the district heating system. These components, including the replacement of all block substations with building-level substations in residential buildings, have been absorbed by VE's own investment program. The Environmental Management Plan developed for these components earlier with the Bank's assistance is available to the public through the Bank's InfoShop. 10 PID The current GEF project deals with investments at the apartment and building level, including supply and installation services for thermostatic valves and cost allocators on room radiators, and heat flow balancing works for the risers connecting the substation to the radiators. Under the Municipality-implemented component, the measures will include building-envelope improvements such as installation of better insulation, new windows, etc. These improvements will take place inside the residential buildings, and their environmental impact will be negligible. The apartment owners and their associations (where available) will be the main stakeholders. Lithuania ratified the UNFCCC on March 24, 1995, signed the Kyoto Protocol of the UNFCCC on 21 September 1998 and ratified it on January 3, 2003. Under the Kyoto Protocol, the three Baltic states are obliged to reduce their GHG emissions by 8% from the 1990 level. Projects like this one are essential for helping Lithuania meet this target. The project is in full compliance with all environmental requirements of the Government of Lithuania, Vilnius City Municipality, World Bank policies and procedures (OP/BP/GP 4.01: Environmental Assessment), appropriate EU Directives concerning the environmental performance of boilers, and the Government of Lithuania's international commitments under the Montreal Protocol concerning Depletion of the Ozone Layer. 10. List of factual technical documents: Project Appraisal Document, May 15, 2003; GEF Project Document, May 5, 2003; Environmental Management Plan, March 21, 2001; Environmental Management Plan (Supplemental, AL DSM Component), May 22, 2003. 11. Contact Point: Task Manager Victor B. Loksha The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: (+1-202) 473-5807 Fax: (+1-202) 614-0692 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. Project Team Assistant: Larisa Marquez Telephone: (+1-202) 473-6578