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Projects financed by the EDB

Heat Pipeline on the Kola Peninsula

Many towns and smaller settlements in Russia were built during the Soviet era and based around the industries for which the country had pressing economic need. Very often the villages were erected by prisoners or displaced persons and the need to provide comfortable living conditions was simply disregarded, eclipsed by the need to produce metal, coal, ores and other commodities in high demand in Russia .

The history of these settlements is challenging and complicated and it obviously influenced their appearance. They are mainly dreary commuter towns with blackened chimneys and grey buildings in the highly industrial zones they were built to serve.

One of these towns is Kirovsk, located on the Kola Peninsula inside the Arctic Circle .

In the 1920s the world’s largest deposit of apatite-nepheline ore, which is used to produce phosphate fertilizers, phosphorus and phosphoric acid, was discovered in Khibiny, one of the two main mountain ranges of the Kola Peninsula, Russia. Development of the deposit began in 1929. The town was built simultaneously with the mine and the processing plant.

Kirovsk is home to Apatit, a major mining and chemical concern, which produces and processes phosphates and has four mines (open-cast and underground) and two concentration plants. The enterprise is the economic mainstay of the town.

One of Kirovsk’s most acute problems is a lack of domestic heating supply. At present the town, which has a population of less than 30,000, is heated by Apatit’s oil-fired boiler houses and heating networks. The cost of producing heat is high and heating tariffs are much higher here than in neighbouring Apatity, a town with its own combined heat and power plant (CHP).

In order to improve this situation a heat pipeline is being built to connect Apatity and Kirovsk in Murmansk Region.

The Khibiny Heating Company (KHC) was set up in 2007 to construct the pipeline. Its founders are TGC-1 and Apatit, holding equal shares.

Eurasian Development Bank (EDB) is providing finance for the project. In February 2013 it opened a RUB 2 billion loan facility for the Khibiny Heating Company (KHC) for six years. The overall value of the project exceeds RUB 3.3 billion.

The project comprises construction of an 18 km heat pipeline from the Apatity CHP plant to the central heat distribution station in Kirovsk, which supplies heating to domestic consumers. The pipeline will enable Apatit to stop producing heat (a non-core business). The pipeline will also improve the reliability of heating for Kirovsk’s businesses and residents, reducing their heating bills and improving the environmental situation in the town by closing obsolete boiler houses.

The project is a good fit with EDB’s Strategy for 2011-2013. It is in the power sector, which is one of the Bank’s investment priorities, and it aligns with the Bank’s strategic objective to improve energy efficiency in its member states.

EDB Member States

  • Russian Federation


  • Republic of Kazakhstan

    of Kazakhstan

  • Republic of Armenia

    of Armenia

  • Republic of Tajikistan

    of Tajikistan

  • Republic of Belarus

    of Belarus

  • Kyrgyz Republic