Khatlon Water Rehabilitation



Project number:


Business sector:

Municipal and environmental infrastructure

Notice type:


Environmental category:


Approval date:

12 Dec 2012



PSD disclosed:

25 Sep 2012


Translated version of this PSD: Russian

Project Description

The EBRD is considering providing financing for a programme of priority capital investments, to improve the municipal water services in the cities of Isaev and Yovon in the Khatlon province. The overall objectives of this Project are to: (a) rehabilitate the water supply system, and, where applicable, allow selected wastewater improvements; (b) improve both billing and collection; and (c) improve financial and operational management.

Transition Impact

The transition impact of this project is expected to include:

  • Application of the new water tariff methodology within affordability limits including support to low income groups;
  • Increased collection rates;
  • Development and signing of public service agreements between the Cities and the respective water supply company;
  • Improvements to the operational and financial management of the participating water supply companies, together with enhanced transparency and corporate governance;
  • Commercialisation and capacity building of the water supply companies; and
  • Implementation of a stakeholder participation programme.

The Client

The client for this project is the State Unitary Enterprise Khojagii Manziliyu-Kommunali (“KMK”), which is the owner of the water supply companies in the two cities.

EBRD Finance

The EBRD will provide a sovereign guaranteed loan to KMK in an amount of up to USD 7 million. The proceeds of the loan will be on-lent to the respective water supply companies.

Project Cost

Up to USD 15 million including investment and technical cooperation grants. The project will be co-financed by an investment grant from an international donor.

Environmental Impact

The project has been categorised B under the EBRD Environmental and Social Policy. An Environmental and Social Audit/Review of the two participating Water Companies’ current Environmental Health and Safety, and Social (EHSS) management practices, operations and facilities, and an Environmental and Social Analysis of the proposed Priority Investment Programme (PIP) is currently underway as part of the Feasibility Study by independent consultants. Based on the initial findings of the Feasibility Study, the implementation of the proposed PIP is expected to significantly improve efficiency, reliability and quality of water supply and wastewater collection in the Khatlon province of Tajikistan, thus contributing to the provision of uninterrupted access to safe drinking water, prevention of ground and watercourses pollution and improvement of public health. PIP components will mostly involve renovation of the existing water production, supply and distribution in the cities of Isaev and Yovon. Any adverse future environmental and social impacts associated with the Project are expected to be site-specific and readily addressed through adequate mitigation measures. The implementation of the PIP involves construction works that will result in limited, localised and short-term adverse environmental impacts, which will be mitigated or prevented by adhering to good construction practice.

The initial results of due diligence investigations has shown that the participating Water Companies have weak EHSS management capabilities and underdeveloped EHSS management systems, and that their current occupational health and safety and stakeholder engagement practices require further improvement to meet EBRD's Performance Requirements (PRs).

The companies’ facilities are currently in poor operating condition resulting in unreliable and low quality water supply, high water losses and energy consumption. Wastewater collection networks are incomplete and wastewater treatment is absent in most cities. The initial results of the due diligence indicate that for both localities the reliability and quality of the drinking water supply will be significantly improved to meet local requirements, however additional further long-term investments into water networks and treatment would be required to bring it in full compliance with EU standards. Renovation of wastewater infrastructure needs to be included in the long term investment programme due to affordability reasons. At this time the financing for the long-term investment programme from the Companies’ own revenues cannot be confirmed and no potential sources of external funding has been identified. Therefore, on account of constraints arising from affordability and limited financial resources, derogation will be sought from the EBRD’s Environmental and Social Policy.

The early results of the due diligence shows that the project will have a significant positive impact on public health and the environment despite the project not being able to achieve full EU compliance in the short term. The human health implications of the shortfalls from EU standards are assessed to be minor compared to the benefits of the PIP implementation resulting in safer and more reliable water supply to the local population. However, untreated wastewater discharges will remain in the short term and continue to present health risks to the local communities. Awareness raising programmes to prevent risks of water borne diseases will be developed and implemented as part of mitigation plans.

Environmental and Social Action Plans (ESAPs) are being developed for the participating Water Companies to bring them into compliance with national regulations and to meet EBRD's PRs, where financially feasible. A Stakeholder Engagement Plan is also under development for the water Companies, including a grievance mechanism and information on environmental and social performance and a summary of the agreed Action Plan will need to be released to stakeholders.

This PSD will be updated when the results of due diligence are known.

Technical Cooperation

Project Implementation Support
International consultants to assist the project implementation group within KMK and the water companies with engineering design, procurement, preparation and evaluation of tenders, contract award administration, financial control, project management and reporting. (USD 0.8 million to be financed by an international donor, the Shareholder Special Fund or the ETC Fund).

Corporate Development Programme
International consultants to support operational and financial improvements to ensure the sustainability of the individual water supply companies. The TC would also include regulatory support as required, based on achievements of TCs for the South Tajik project (Project ID 37656), North Tajik project (Project ID 40717) and Central Tajik Project (Project ID 41642), which are under implementation. (USD 0.4 million to be financed by an international donor, the Shareholder Special Fund or the ETC Fund).

Stakeholder Participation Programme
International consultants to implement a Stakeholder Participation Programme in the participating cities. (USD 200,000 to be financed by an international donor, the Shareholder Special Fund or the ETC Fund). For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.


Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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