LATVENERGO GREEN BOND FRAMEWORK (GBPP)

• Energy - Electricity, gas, steam and air conditioning supply

Purchase by the EIB of Green Bond instruments issued by Latvenergo under European Green Bond Factsheet, the proceeds of which will finance new investments in projects promoting the climate neutrality and sustainability of Latvia's energy supply.

The aim of the project is to contribute to climate action and environmental sustainability (CA&ES) objectives, to climate mitigation, and pollution prevention and control. The operation is in line with Article 309 point (c) common interest of the Treaty on the functioning of the European Union.

The green bonds will mostly co-finance renewable energy generation projects (onshore wind, battery storage systems, hydro power refurbishment, and solar PV) primarily in Latvia. Electricity distribution projects as well as infrastructure projects enabling low-carbon road transport and public transport are permitted as well as per the issuer's EU Green Bond Factsheet. Thereby the operation contributes to Latvia's Long-Term Climate 2050 Strategy set out in the National Energy and Climate Plan, as well as EU policies on energy and climate, by scaling up decarbonisation technologies and the rapid deployment of renewable technologies in the region, which are essential to advance the European energy transition and to contribute to energy affordability in the EU, as highlighted in the "EU Clean Industrial Deal" and the "EU Affordable Energy Action Plan". The project addresses negative climate and environmental externalities and contributes to the provision of public goods such as security of supply. This financing contributes to the Bank's lending priority objectives on energy and is deemed to have very high contribution to its Green Finance objectives. The project's overall economic viability is expected to be excellent and the broader social benefit is expected to be rated as excellent as well. The Promoter is an experienced operator of electricity distribution infrastructure and generation assets in Latvia and has the necessary capacity to manage the implementation and operation of the underlying project schemes. The EIB's involvement in the bond process is expected to help diversify Latvenergo's green investor base. The project will support the Promoter in attracting long-term financing from public debt markets for its investment plans.

Some schemes covered by the operation may be subject to an Environmental Impact Assessment (EIA). These schemes will fall under Annex I or II of the EIA Directive 2011/92/EU as amended by Directive 2014/52/EU, requiring either an EIA including public consultation, or screening by the national competent authority based on Annex III of the same Directive, to determine the need for an EIA. The promoter will need to comply with sustainability-related disclosure requirements under national and EU legislation, which is applicable to its activities, e.g. publication of EIAs. If EIAs of the underlying schemes are not published by the competent authorities, the promoter will need to ensure the EIAs are made public, to ensure compliance with the Bank's Transparency Policy. In any case, the promoter will need to keep the EIAs on file and ensure that the environmental permit requirements are adequately implemented. Environmental and social due diligence will focus on the capacity of the promoter to identify, assess, manage, and monitor environmental, climate and social effects, and to ensure that underlying schemes comply with national and EU legislation, as applicable, and with EIB Environmental and Social Standards and relevant guidelines. This due diligence will be based on public and non-public information.

The Bank will require the promoter to ensure that contracts for implementation of the project will be tendered in accordance with the applicable National legislation and where applicable, EU procurement legislation, Directive 2014/25/EU as well as Directive 92/13/EEC or Directive 89/665/EEC as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required.