Lukavac and Velika Kladusa Water Project

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

Provision of a sovereign loan in the amount of up to €15.5 million to Bosnia and Herzegovina ("BiH") to be on-lent to the City of Lukavac (the "City") and Municipality of Velika Kladusa (the "Municipality") through the Federation of Bosnia and Herzegovina ("FBiH") to finance water and wastewater sector improvements in each of the two local authorities (the "Project").

The Project comprises the following components:

Component 1- Lukavac: €7 million for (i) Construction of a water treatment plant, (ii) Reconstruction of the existing water distribution network, (iii) Construction of the transmission main from the Bokavici water source; and (iv) Construction of a new water reservoir Dolezal;
Component 2 - Velika Kladusa: €8.5 million for (i) Regulation of the Kladusnica River to prevent flooding, (ii) Construction of main wastewater collector A and (iii) Construction of wastewater collection and stormwater network in zone E.

The Project is expected to benefit from a €15.7 investment grant from the European Union ("EU") through the Western Balkans Investment Framework ("WBIF").

Project ID 56992

Status In Exploratory, Pending Concept Review

Location

Bosnia and Herzegovina

Industry Sector

Municipal Infrastructure

Notice Type

State

Company Contact Information

Eldar Cajic (City of Lukavac); Osman Causevic (Municipality of Velika Kladusa)
eldar.cajic@lukavac.ba; kabinet.nacelnika@velikakladusa.gov.ba
+387 35 366 700. +387 37 770 025

Project ID 56992

Status In Exploratory, Pending Concept Review

Location

Bosnia and Herzegovina

Industry Sector

Municipal Infrastructure

Notice Type

State

Approval Date

02 Dec 2026

Disclosure date

29 Sep 2026

Project Description

The Project comprises the following components:

Component 1- Lukavac: €7 million for (i) Construction of a water treatment plant, (ii) Reconstruction of the existing water distribution network, (iii) Construction of the transmission main from the Bokavici water source; and (iv) Construction of a new water reservoir Dolezal;
Component 2 - Velika Kladusa: €8.5 million for (i) Regulation of the Kladusnica River to prevent flooding, (ii) Construction of main wastewater collector A and (iii) Construction of wastewater collection and stormwater network in zone E.

The Project is expected to benefit from a €15.7 investment grant from the European Union ("EU") through the Western Balkans Investment Framework ("WBIF").

Project Objectives

The Project aims to improve the quality, reliability and operational efficiency of water and sanitation services in the City of Lukavac and the Municipality of Velika Kladusa, while strengthening climate resilience through sustainable water management, reduced water losses and enhanced flood protection. In Lukavac, it will support the provision of safe drinking water through a new water treatment plant, rehabilitation of the distribution network, development of the Bokavici water source and increased storage capacity. In Velika Kladusa, it will reduce flood risks through regulation of the Kladusnica River and improve wastewater and stormwater management through new collection infrastructure. The Project will also strengthen the institutional and operational capacity of the respective project implementation units ("PIUs")and water utilities of Lukavac and Velika Kladusa through project management support, technical assistance and capacity-building activities, helping ensure the long-term sustainability of the investments.

Transition Impact

ETI score: 64

The Project's transition impact will be derived from the following transition qualities:

Green: The Project will strengthen climate resilience and promote the sustainable use of water resources in the City of Lukavac and the Municipality of Velika Kladusa. In Lukavac, the rehabilitation of the water distribution network is expected to reduce non-revenue water to approximately 30 per cent, thereby improving water and energy efficiency and reducing associated greenhouse gas emissions. In Velika Kladusa, regulation of the Kladusnica River will improve flood protection, while the construction of wastewater and stormwater infrastructure will strengthen urban drainage, reduce uncontrolled wastewater discharges and improve environmental and public health conditions.

The Project is preliminarily expected to achieve a 100 per cent green finance share through its climate mitigation, adaptation and wider environmental objectives.

Well-Governed: The Project will strengthen the institutional, operational and project-management capacity of the City of Lukavac, the Municipality of Velika Kladusa, their respective PIUs and water utilities. A dedicated policy technical cooperation assignment will support the preparation of a Corporate Development Plan ("CDP"), aimed at improving the operational, financial and organisational performance of the participating utilities and supporting the long-term sustainability of water and sanitation services.

Client Information

BOSNIA AND HERZEGOVINA SOVEREIGN

The borrower is Bosnia and Herzegovina. The clients are the City of Lukavac and the Municipality of Velika Kladusa.

EBRD Finance Summary

EUR 15,500,000.00

A sovereign loan in the amount of up to €15.5 million.

Total Project Cost

EUR 31,172,500.00

The total estimated Project cost is €31,172,500.

Additionality

The Bank's additionality is derived from: (i) providing financing with a long tenor, not available in the market from commercial sources on reasonable terms and conditions; (ii) closing the funding gap for public sector investments without crowding out other sources such as international financial institutions ("IFIs"), government or commercial banks; (iii) capacity strengthening of the Clients; (iv) helping the Clients to mitigate physical transition risks and taking climate action, and (v) providing best international procurement standards.

Environmental and Social Summary

Categorised B (ESP 2024). The Project comprises investments in water and wastewater infrastructure in the municipalities of Lukavac and Velika Kladusa. In Lukavac, investments include construction of a new water treatment plant, transmission pipeline, reservoir and rehabilitation of the water distribution network to improve water security and reduce non-revenue water (Component 1). In Velika Kladusa, the Project comprises river Kladusnica regulation works, flood protection measures, wastewater and stormwater collection infrastructure and a pumping station (Component 2).

Environmental and social due diligence ("ESDD") has been undertaken by an independent consultant for both components of the Project. The environmental and social ("E&S") impacts associated with the proposed investments are expected to be site-specific and can be effectively mitigated through established measures. The Project is expected to generate significant environmental and public health benefits through improved drinking water supply, flood resilience and wastewater management. The E&S assessment is being finalised, and E&S action plans ("ESAPs"), E&S management plans ("ESMP") and stakeholder engagement plans ("SEP") have been prepared for both Project components. The ESAP will be discussed and agreed with the two implementing agencies prior to the Project's approval by the EBRD. No environmental permit or environmental impact assessment ("EIA") is required for any of the Project components under the FBiH legislation. An additional Bokavici well (IEB-5), which is considered an associated facility in relation to Project's Component 1, will require an EIA screening decision based on a preliminary EIA. The Project's ESAP stipulates obtaining water-related permits prior to construction and operation for both components. The PIUs have been established within the municipalities of Lukavac and Velika Kladusa; however, additional organisational strengthening is required.

Labour risks relate to contractor workforce management and worker welfare. Contractors will be required to comply with labour legislation and implement worker grievance mechanisms, while utility operators will establish labour procedures and grievance mechanisms prior to operation. Supply-chain measures will also be applied to any photovoltaic equipment to be procured for the Component 1.

Construction-related impacts include dust, noise, waste generation, health and safety risks, and potential pollution of watercourses, which will be mitigated through the measures set out in the ESMPs. In Lukavac, attention will be given to groundwater abstraction from the Bokavici source, management of water treatment sludge, asbestos-containing pipes, and energy consumption. Component 1-Lukavac is aligned with the principles defined by the two key EU directives aimed at protecting water quality and human health - (i) Water Framework Directive, and (ii) Drinking Water Directive. Component 2-Velika Kladusa is aligned with the EU Floods Directive. It also establishes the essential infrastructure required to enable future compliance with the Water Framework Directive and the Urban Wastewater Treatment Directive. The inlet pumping station will include coarse and fine screening to provide initial wastewater pre-treatment, while the future wastewater treatment plant ("WWTP") remains a priority for achieving adequate treatment. Component 2, therefore, represents the initial phase of the Velika Kladusa Municipality's long-term wastewater management strategy, focusing on the development of the core infrastructure required to support future wastewater treatment facilities. Full achievement of wastewater-related EU objectives will depend on the future construction and operation of the planned WWTP i to be constructed in line with the Spatial Plan for the Una-Sana Canton (2023). Emergency response procedures and operational safety systems will be adopted by the utility operators.

No physical or economic displacement is expected. In Lukavac, the Project infrastructure is largely planned on public land or within existing utility corridors. However, the three new wells 'Bokavici' are on private land, and sanitary protection zones around the Bokavici groundwater source may introduce restrictions on land use and agricultural activities. Judicial proceedings have been heard regarding declaration of the public interest for Bokavici and was found in favour of the Project proponent. Community concerns remain related primarily to potential impacts of groundwater abstraction on private wells rather than expropriation.

The final extent of any impacts will be determined through ongoing hydrogeological and sanitary protection studies, and any additional ESR 5 requirements will be agreed with the EBRD as part of the Livelihood Restoration Action Plan before implementation of the relevant component. In Velika Kladusa, parts of the wastewater and stormwater network will be constructed on privately owned land, requiring partial expropriation (easement). At this stage, the exact scope of incomplete land take, the number of affected plots and the identity of affected landowners and users have not yet been confirmed. For the pumping station component, the Municipality has identified that full expropriation of 11 privately owned land plots will be needed, therefore a land acquisition framework ("LAF") has been prepared as part of the ESDD and will be disclosed for the Component 2. Furthermore, ESAP requires preparation of the Land Acquisition Plan in line with ESR 5, once all the necessary expropriation studies are completed and the exact scope of land take and impacts is confirmed.

Biodiversity data collection and assessments confirmed that neither component affects critical habitats or protected areas. The Velika Kladusa biodiversity survey identified modified habitats of generally low ecological sensitivity, while the Lukavac Project area is predominantly urban and industrial with limited biodiversity value. The regulation of the Kladusnica River will result in permanent alteration of the riverbed and banks, including channel straightening and concrete lining, which is expected to reduce habitat heterogeneity and further simplify aquatic habitats within the regulated river section. A screening of Priority Biodiversity Features ("PBFs") and Critical Habitat ("CH") was undertaken in accordance with ESR6 for the Kladusnica River (Component 2). No representative threatened or unique ecosystems were identified within the Project area. Potential Annex I habitat types (3270, 6510 and 91E0*) were recorded only in degraded, fragmented or scattered form and were not considered representative. No threatened or protected vascular plant species were recorded. Most fish species recorded are of Least Concern globally and nationally. Several fish species including the EN Danube gudgeon (Romanogobio carpathorossicus) were assessed as Priority Biodiversity Features (PBFs). Although nationally Endangered and protected, only a single individual of Danube gudgeon was recorded at one of the three surveyed localities (L3 - Rudnicki Bridge, Miljkovici). This confirms species presence but does not support CH designation, as there is no evidence of important population of the species. The other fish species are all least concern and widespread in the Project area, but listed on Habitats Directive Annex II, therefore PBF. The magnitude of the impacts is expected to be minimised through the implementation of nature-based solutions, such as prioritising naturalised finishes and riparian vegetation, incorporated during Kladusnica River regulation. Further analysis is required to confirm materiality of impacts and any required compensation to achieve no net loss and net gain, although any offset measures are considered readily achievable, following the incorporation of nature-based solutions during the detailed design.

No direct impacts on cultural heritage assets are expected; only temporary, localised disturbance near cultural and religious sites. The contractor will be required to maintain safe access and apply a Chance Finds Procedure. The SEP, the Non-Technical Summary ("NTS") and the ESMP will be disclosed for each of the two Project components. The implementation of the Project and ESAPs will be facilitated by the PIU support consultant. The EBRD will monitor the implementation of the Project through review of annual monitoring reports and visits as required. The PSD will be updated following the completion of the ESDD and the agreement of the ESAP.

Technical Cooperation and Grant Financing

It is envisaged that post-signing TC support for this transaction will be provided to assist the Clients with the: (i) implementation and supervision of the Project and related works; (ii) development of a CDP that will include amongst other matters (a) the development of FOPIP addressing the water utility companies' operational, financial and organization weaknesses as well as (b) the development and implementation of a public service contract ("PSC") between the water utility companies and the clients to establish clear responsibilities in terms of management and maintenance of the network and performance indicators as well as a defined tariff and compensation methodology.

Company Contact Information

Eldar Cajic (City of Lukavac); Osman Causevic (Municipality of Velika Kladusa)
eldar.cajic@lukavac.ba; kabinet.nacelnika@velikakladusa.gov.ba
+387 35 366 700. +387 37 770 025

PSD Last Updated

29 Sep 2026

Understanding transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with the EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD also requires its clients to disclose information, as appropriate, about the risks and impacts of projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all of the Bank's activities in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. OCCO will follow-up all matters reported. It will review all matters reported. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (for example, through the client’s project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the mechanism is: to support dialogue between project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or the project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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Lukavac and Velika Kladusa Water Project

Overview

Company Contact Information

Project Description

Project Objectives

Transition Impact

Client Information

EBRD Finance Summary

Total Project Cost

Additionality

Technical Cooperation and Grant Financing

Company Contact Information

PSD Last Updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)