The Programme includes financing the construction and rehabilitatation of critical irrigation infrastructure in three distinct regions of Serbia: Negotin (Eastern Serbia), Svilajnac (Central Serbia) and Vojvodina (Northern Serbia). The investments will be financed from a loan to the Republic of Serbia in the amount of up to EUR 30 million. Financing of the Programme is split into two phases: Loan I (for investments in Negotin and Svilajnac) of up to EUR 15 million was signed in December 2019, and Loan II (for investments in Vojvodina) of up to EUR 15 million expected to be signed in 2021. The Programme also entails continuation of policy dialogue with the Ministry of Agriculture, Forestry and Water Management ("MAFWM") by assisting in preparation of the country's first Irrigation Strategy and a five-year Action Plan.
Agriculture plays an important economic role in Serbia, representing 6 per cent of the GDP. However, irrigation infrastructure is obsolete and irrigated areas remain constrained through a lack of sustainable water resources.
Moreover, the country's climate related vulnerability is increasing (according to recent estimates, 30 per cent of the total country area and 52 per cent of agricultural land is vulnerable to rainwater related flooding or water logging).
Therefore, the Government of Serbia has decided to engage in upgrading, expanding and modernising its irrigation infrastructure to sustain Serbia's climate resilience and support its agricultural sector, including a shift towards higher yield-crops. Additionally, the rehabilitation of Serbia's aged irrigation and water infrastructure is expected to contribute to water and energy savings.
The Project will be implemented by Public Water Management Companies "Srbijavode" (Loan I) and "Vode Vojvodine" (Loan II), in coordination with the MAFWM, and respective municipalities.
ETI score: 72
The Bank's involvement in the Project carries transition impact potential both in terms of increased resource efficiency and climate resilience, as well as through the creation of new opportunities for local farmers in the region, while promoting gender-responsive policies and services provisions.
- Improved resource efficiency and climate resilience: The Project is expected to reduce Serbia's vulnerability to the impact of climate change risks. Serbia is facing continuing temperature increases and more frequent and prolonged drought. Additionally, its outdated and inefficient water supply system is a major barrier to efficiency and sustainability of irrigation system. Upgrading the irrigation system will contribute to increase the efficient use of valuable resources as well as enhance the country's climate resilience.
- Increased economic opportunities and promotion of gender-responsive policies and service provisions: Upgrade of the irrigation system is expected to create a moderate number of new economic opportunities (including higher agricultural yields and increased revenues from higher value crops), introduce a new training programme to local farmers in the target area and enhance women's leadership and participation in agricultural strategy development with a view to promote gender-responsive policies and service provisions.
Government of Serbia, represented by MAFWM as the body responsible for agriculture and water management.
EBRD Finance Summary
Two consecutive sovereign loans in a total amount of up to EUR 30 million.
Total Project Cost
- Financing structure: EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions;
- Standard-setting: The client seeks/makes use of EBRD expertise on best international procurement standards and higher environmental standards above 'business as usual'.
- Knowledge, innovation, and capacity building: EBRD provides expertise, innovation, knowledge and/or capabilities that are material to the timely realisation of the project's objectives, including support to strengthen the capacity of the client.
- Risk Mitigation: (i) EBRD helps the client to mitigate physical transition risks and take climate action, such as to identify and manage physical climate risks and build resilience to them; (ii) EBRD helps the client to mitigate climate governance risks and take climate action, such as to improve its internal corporate governance for managing climate risks.
Environmental and Social Summary
The Project has been categorised B in accordance with the Bank's 2014 Environmental and Social Policy. Environmental and Social Due Diligence ("ESDD") has confirmed that the project's environmental and social ("E&S") risks and impacts are readily identifiable and can be mitigated by way of a commitment to implementation of suitable mitigation measures. Overall, the programme is expected to have positive socio-economic impacts during the operation period by improving access to irrigation water, and increased crop yields and value. Both loans have been subject to ESDD which has been carried out by an independent consultant.
The components of Loan I include the Negotin irrigation system which will convey around 4.6 million m3 of water per year, with an abstraction rate of 1.089 m3/s. ESDD concluded that for Component 1 water abstraction represents 0.008 per cent of the Q95 mean annual flow of the Danube and will therefore have an insignificant environmental impact on water availability or upon aquatic species and habitats. This component may be subject to an Environmental Impact Assessment ("EIA") under national law once the design is further developed.
Total water abstraction in Svilajnac is estimated at 1.916 million m3/year. Sustainability tests
indicated that abstraction from the shallow aquifer at the indicated rates would not have significant impacts on groundwater availability, including abstraction for drinking water. Abstraction from the Resavska River at a rate of 0.343 m3/s, will be approximately 20 per cent of the monthly average during summer. A review of the environmental flow prescribed within the local water permit has established that an increase from the current figure of 0.399 m3/s to 0.5 m3/s is recommended to ensure habitat continuity of the river for aquatic species. The revised environmental flow is within the natural variation of the river flow during the irrigation season and water will not be abstracted during fish spawning season. As further mitigation the weirs will be designed to allow unimpeded fish passage upstream and downstream. Effectiveness of the mitigations measures will be reviewed during monitoring in the first year of operation. An EIA under the national law is not required for this component.
In Loan II water will be abstracted from a yet to be constructed Jaraika Jariina canal, supplied with water from the Sava river, which is estimated at less than 0.07% of the river average annual minimum flow and hence no significant impacts are expected. No impacts on the functioning of the existing reservoirs which will receive the water are anticipated. The reservoirs do not provide any high value habitat or species. Entrapment of fish at the abstraction point will be mitigated through the use of screens. Non-native fish species were found in the river and the reservoirs, and possible risk of transfer of non-native/invasive species, will be evaluated through additional field surveys informing the need for any additional mitigations. This component may be subject to an EIA under national law once the design is further developed.
Construction phase impacts for Loan I and II mainly relates to land acquisition, the majority being temporary acquisition for the right of way of the pipelines with some permanent acquisition for fixed facilities. No physical displacement is anticipated and economic displacement will be minimised through location of pipelines along existing infrastructure routes e.g. road, field boundaries where possible. A Livelihood Restoration Framework has been developed and Livelihood Restoration Plans, appropriate for the scale of the land acquisition will be developed to comply with Performance Requirement PR5.
Construction contractors will be required to develop an Environmental and Social Management
Plan to manage impacts of construction including pollution prevention, traffic management and occupational and community health and safety. The infrastructure for both Loan I components avoids any sensitive biodiversity areas and is located on modified or agricultural land and associated biodiversity impacts are therefore expected to be minimal. For Loan II, the biodiversity assessment concluded that impacts on Priority Biodiversity Features and Critical Habitat are not anticipated to be significant since terrestrial habitats will be reinstated post-pipeline construction and additional habitat created along the pipeline route to create a net gain for these habitats. The final parts of the pipeline are within the National Park Fruška gora, in the area under the lowest degree of protection. Measures to comply with PR6 are considered sufficient to mitigate impacts, however upon securing approval for the Project any additional conditions from the appropriate authorities will need to be implemented by the Client.
Srbijavode and Vode Vojvodine as the implementing entities will develop and implement an E&S Policy and E&S Management and Monitoring Plan for the operation phase. In addition, a Stakeholder Engagement Plan and community grievance mechanism in accordance with PR10 will be implemented by the Company. Support is being provided by EBRD through TC through provision of training to farmers on new irrigation techniques, which will also include water use efficiency and pollution prevention measures.
Environmental and Social Action Plans have been developed to ensure the Project is structured to meet the PRs agreed with Srbijavode and Vode Vojvodine .
Non-Technical Summaries and Stakeholder Engagement Plans are available for this project.
Technical Cooperation and Grant Financing
The Project will benefit from the following TC of up to EUR 1.2 million.
- EBRD-FAO Framework agreement - Irrigation and Drainage improvements (USD 44,000, financed at 70 per cent by the EBRD Shareholders Special Fund ("SSF") and 30 per cent by the FAO). Key objectives of the assignment were identification of the country's investment needs in irrigation and drainage infrastructure, understanding of national capacity to implement irrigation and drainage projects, and definition of priority areas for irrigation and drainage investment. The assignment was implemented by FAO.
- Technical, financial, environmental and social due diligence for Loan I (EUR 290,000, financed by the Government of Austria). The assignment includes a review of technical designs and the present and planned irrigated agricultural activities in the Project areas, environmental and social audit of the facilities to be financed from an EBRD loan, climate risk analysis, assessment of the economic, social, environmental water-/energy-efficiency and climate resilience benefits of the Project.
- Project preparation for Loan II (EUR 350,000, financed by the Government of Austria). The assignment includes preparation of a Feasibility Study, designs, climate risk analysis and climate resilience benefits from the infrastructure to be financed from the an EBRD loan.
- Environmental and social due diligence for Loan II (EUR 74,200), financed by the SSF. The assignment includes the environmental and social audit of the project to be financed from the Loan II and the biodiversity study in the relevant region.
- Preparation of the Irrigation Strategy for Serbia (estimated at USD 905,860, financed by Israel, Central European Initiative, SSF and FAO, and implemented by FAO). The assignment will result in development and adoption of a national strategy on irrigation, including the Action Plan for implementation of the Strategy and methodology for prioritisation of investments and financing strategy.
- Serbian Irrigation Training and Gender-Responsive Service Provision Capacity-building for the Agricultural Advisory and Professional Services of Serbia to deliver quality training on irrigation and ensure gender-sensitive service provision (estimated costs of EUR 75,000 to be funded under the Gender Advisory Services Framework).
Company Contact Information
+381 21 48 81 433
PWMC Vode Vojvodine Novi Sad Boulevard of Mihajlo Pupin 25 Novi Sad 21101 Serbia
PSD last updated
30 Jul 2021
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