The EBRD is considering extending a loan of up to €20 million to the Mersin Water and Sewerage Administration ("Meski") to finance the construction of the greenfield Mezitli Wastewater Treatment Plant (the "Project"). The loan will be guaranteed by the City of Mersin (the "City").
ETI score: 75
The Project will support environmental improvements and continued commercialisation of Meski. It will also have the potential demonstration effect of a direct loan to a Turkish water utility by an international financial institution without a sovereign guarantee.
Performance improvements and further commercialisation of Meski are expected via a public service contract which will bring greater transparency on financial management, investment planning, unaccounted-for water, organisational efficiency, and customer relations. The preparation of a draft public service contract and recommendations for corporate restructuring to help achieve the objectives of such a contract will be supported by a TC.
Furthermore, the Project will enable the City, which is located directly on the Mediterranean Sea, to treat all municipal wastewater in accordance with EU and Turkish standards. Encouraging investment in new technology (e.g. biogas capture for power and heat co-generation) that exceeds national requirements is also intended to have a demonstration effect.
WATER AND SEWAGE COMPANY OF THECITY OF MERSIN
Meski is the water and wastewater utility owned by and serving the City of Mersin. It will be the borrower of the proposed loan and the owner and operator of the Mezitli Wastewater Treatment Plant.
EBRD Finance Summary
Up to €20 million for the construction of the Mezitli Wastewater Treatment Plant.
Total Project Cost
The total project cost is estimated at approximately €25 million including taxes, duties and technical co-operation support.
Environmental and Social Summary
The Project was originally categorised as B in accordance with the 2008 E&S Policy of the Bank. After the signing of the loan agreement in 2012, the design was revised by MESKI to significantly increase the treatment plant capacity (from servicing 150,000 population equivalent (p.e.) to 385,000 p.e.). As a result, the Project was re-categorised as Category A by the EBRD.
In order to meet the Category A requirements, a gap analysis was carried out and a Supplementary Information Package (SIP) was prepared to provide supplementary information to complement the national EIA as required by the EBRD's Environmental and Social Policy and Performance Requirements (PRs). Within the Category A Project Disclosure Package a Stakeholder Engagement Plan (SEP), an Environmental and Social Action Plan and a Non-Technical Summary were prepared and disclosed on 15 December 2017.
Considering the capacity increase from 150,000 p.e. to 356,000 p.e. and the residential buildings that have been built closer to the WWTP since 2012, a further odour assessment study including odour modelling and hydrogen sulfide (H2S) assessment was required to supplement the assessment in the local EIA. A detailed dispersion modelling and odour survey were undertaken to determine potential odour concentrations in the vicinity of the WWTP. Given the scenarios and the results of the modelling study it has been agreed to enclose the most odorous open sources on the site, i.e. the Aerated Grit Chamber and Primary Sedimentation Tanks (PSTs), prior to the site starting to accept wastewater. Close monitoring will be undertaken during the first year of operations while the WWTP is being tested to determine odour emission rates from the Aeration Tanks and Bio-Phosphorus Tanks. These rates will be compared to the values used within this odour modelling study. In case the emission rates used in the modelling are consistently exceeded and odour is detectable beyond the site boundary, the Aeration Tanks and Bio-Phosphorus Tanks will also be enclosed. An odour complaints log will be maintained on site to record any odour complaints that are made by local residents. This data will be reviewed at the end of the monitoring period and an odour mitigation plan prepared for the site detailing any additional measures that need to be implemented to minimize off-site odour nuisance.
There will be no chlorine or fuel (natural gas, LPG) storage at site. There will be a gas storage tank with 3,500 m3 capacity for the storage of methane gas generated during sludge treatment process, which will be used for energy generation. The products used and stored on site are not in volumes that could cause major accidents or trigger EU Seveso III Directive on the control of major-accident hazards involving dangerous substances. Still, as a precautionary approach, an operation phase risk analysis will be performed to address any potential risks associated with methane or any other potentially dangerous chemicals that might occur at site.
Within the scope of the local EIA study a baseline biodiversity assessment in line with the Turkish EIA legislative requirements was carried out. This has been complemented by a biodiversity baseline assessment in line with EBRD PR6 which did not identify any significant biodiversity features within the range of the project's impacts.
Project land has been acquired by means of transfer of ownership from state-owned land. No involuntary resettlement is triggered by the Project. The land was rented to 8 local people who had planted citrus orchards. Compensation of the economic displacement of the land users is in progress and will be monitored by the EBRD.
To ensure adequate stakeholder engagement, a revised SEP has been prepared for the project and will be implemented by MESKI. Implementation of the SEP will ensure proactive engagement of MESKI with both the primary stakeholders (the residents) and the authorities to monitor any potential issues during operations and discuss possible solutions to the issues identified.
To mitigate the E&S impacts associated with the Project and ensure good practices are maintained and implemented, a revised Environmental and Social Action Plan (ESAP) has been developed for the Project. Key actions in the ESAP cover attainment of ISO 14001, OHSAS 18001 certificates and development of SA 8000 management system; development of an asset management plan (PAS55, IS055001 or equivalent); improvements to the HR Management System; enhancement of the internal grievance mechanism; development of a Contractor Monitoring Programme; conducting a safety risk assessment for all operational activities of the project including risks associated with the storage of methane, occurrence of hydrogen-sulfide, etc., and implement any identified risk mitigation actions and controls, regularly update the risk register and review the effectiveness of the control measures; enclosure of and connection of the Aerated Grit Chamber and PSTs to odour removal unit; odour monitoring and in case the odour rates used in the modelling are consistently exceeded and odour is detectable beyond the site boundary, the Aeration Tanks and Bio-Phosphorus Tanks will also be enclosed; maintenance of an odour complaints log on site to record any odour complaints that are made by local residents; noise monitoring; improvements to waste management; monitoring of the livelihood restoration of affected households after the compensation payments; implementation of the SEP; establishment of a participatory monitoring mechanism and sharing of information on ES issues/ monitoring results with the community members, representatives (this is critical to avoid future complaints from the residents).
The project will be monitored through the annual E&S reports as well as regular site visits by the EBRD.
Technical Cooperation and Grant Financing
Full financial, technical, environmental and social due diligence is being carried out for the proposed project. This includes an audit and restatement of Meski's accounts and a full technical, environmental and social review. This technical co-operation was funded from the EBRD's internal resources.
In the post signing stage two technical co-operation assignments are foreseen:
Project Implementation Support Services
A team of international experts to provide comprehensive support for engineering, design, procurement, and supervision of works.
City and Corporate Advisory Services
This will include assistance to the City and Meski to
(i) update the Business Plan to help improve the financial and operational performance of Meski;
(ii) help prepare key performance indicators for Meski;
(iii) assist the City and Meski to prepare a Public Service Contract;
(iv) improve Mersin's financial and capital investment planning capacity; and
(v) prepare and implement a Stakeholder Participation Programme to promote awareness of the objectives of the proposed Project.
The Project introduced the first WWTP funded by a direct loan to a Turkish water utility was from an international financial institution. Despite delays in the project design and construction, due to increased treatment plant capacity, the construction was completed with no cost overrun and WWTP has been operational since April 2019.
The Project ensured adherence to strict environmental and social standards. The Company has implemented the Environmental and Social Action Plan developed under the Project.
The Project included Technical Cooperation to support institutional capacity building as well as to assist MESKI with the design, procurement and implementation of the Mezitli WWTP. Capacity building is supported through the development of key performance indicators as part of the Corporate Development Programme.
PSD last updated
05 Jan 2021
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Independent Project Accountability Mechanism (IPAM)
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