Sarajevo Urban Roads Development Project

Project Description

The EBRD is considering providing a sovereign loan for the benefit of Sarajevo Canton to co-finance the construction of road infrastructure works on sections of the 12th Transversal Road (0.9km) and Southern Longitudinal Road (2.4 km).

This is the first phase, estimated to cost €16.5 million, of a broader capital investment plan for the urban road infrastructure which also includes construction of the 1st Transversal Road (3.8 km).

The project will be implemented through the Sarajevo Canton Roads Directorate.

Transition Impact

The main transition impact potential in the proposed project, when approved by the EBRD’s Board of Directors, will derive from assistance provided for the introduction of performance based management and maintenance road (PMMR) contracts, and from assistance with transformation of the current ministerial department into a separate roads administration (e.g. fund or agency).

The Client

The Borrower is Bosnia and Herzegovina.

Sarajevo Canton is the Beneficiary.

The Sarajevo Canton Roads Directorate, currently a department in the Sarajevo Canton Ministry of Transport, will manage and implement the project.

EBRD Finance

The EBRD is considering providing a €16.5 million sovereign loan.

Project Cost

€25.5 million.

Environmental Impact

Categorisation and justification

The Project has been categorised A. An ESIA is required in accordance with Appendix 1 of the 2008 EBRD Environmental and Social Policy.

Information reviewed

Independent consultants undertook a review of the existing project documentation including the EIAs, land acquisition plans, permitting and design documentation for each road section. As a Social Impact Assessment (SIA) is not required under national regulatory requirements, the Consultant carried out a census and socio-economic survey in the Project affected areas.

Environmental and Social issues

Air quality, noise and vibration and social issues were not adequately assessed in the existing project documentation so an ESIA Addenda (ESIAA) has been provided including additional information on these issues. The non technical summary, ESIAA and supporting local EIA’s have been disclosed to the public as part of the ESIA package of information available on the Project website

The main impacts of the project are expected to be:

• changes to noise and air quality during construction and operations;
• traffic disturbance, diversions and nuisance during construction;
• worker and public health and safety during construction; and
• involuntary resettlement.

Proposed mitigation measures have been included in the ESIAA. Also a separate Stakeholder Engagement Plan (SEP) with a grievance mechanism has been prepared and a number of public meetings will be organised as part of a consultation programme.

Land Acquisition, Involuntary Resettlement and Economic Displacement

The project shall require in total the resettlement of 175 households and 42 businesses.
The main gaps between local legislation and EBRD requirements which are addressed through the Resettlement and Compensation Framework are:

• Compensation and resettlement assistance for informal owners and occupants of residential structures;
• Livelihoods restoration assistance for owners of businesses who will lose their informal business structures / suffer loss of income;
• Other resettlement assistance, including specific assistance for vulnerable groups;
• Provision of compensation at replacement value (market value plus transaction costs).

Environmental or social opportunities

The project is expected to decrease traffic congestion; improve of living conditions by achieving the optimal traffic flow reducing noise and air emissions; reduce fuel use and improve accessibility with Sarajevo.

Environmental and Social Action Plan

An Environmental and Social Action Plan (ESAP) has been developed and disclosed for the Project to address issues identified during the due diligence.

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

Pre-signing

• €200,000 for traffic demand modeling, engineering design review and cost-benefit analyses.

• €150,000 for Environmental and Social Impact Assesment Study.

Post-signing

• €500,000 for institutional strengthening (assistance with procurement, with introduction of performance based maintenance contracts and transformation of the directorate into a public agency).

Implementation Summary

The Project financed the widening of two key road sections and the Stup interchange and on the Southern Longitudinal Road, thereby contributing to improving the traffic through Sarajevo city centre. Works were carried out under three construction contracts awarded under a fully open and competitive tendering procedure, and were supervised by a loan funded engineer. Despite some delay and cost overrun, project completion took place in November 2018 and has since then contributed actively to improved traffic flows.

The project ensured adherence to strict environmental and social standards. The Company fully implemented the Environmental and Social Action Plan, following a donor-funded Environmental and Social Impact Assessment. A Stakeholder Engagement Plan (SEP) with a grievance mechanism was also prepared and a number of public meetings were organised as part of a consultation programme. Actions were taken to resolve issues raised during the project implementation relating to resettlement and nuisance impacts as a result of the works.

As part of Transition Impact, the Project intended to introduce Performance-based Management and Maintenance of Roads (PMMR) contracts with the aim to improve incentives, cost efficiency and budget management whilst introducing the private sector in the provision of road maintenance services. It was also intended to further enhance management of the sector by transforming the Sarajevo Canton Road Directorate into a Road Agency. The Project achieved some of these objectives with the first pilot PMMR being signed in 2013, whereas further progress with regards sector reform remains subject to ongoing discussions with the Sarajevo Canton authorities.

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