Uzbekistan Water Supply Energy Efficiency Project

Location:

Uzbekistan

Project number:

50996

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

21 Sep 2022

Status:

Approved

PSD disclosed:

20 Sep 2019

Project Description

The provision of a sovereign loan of up to US$ 200 million (€187 million) to the Republic of Uzbekistan ("RoU") to finance the modernisation of pumping stations used for irrigation water conveyance ("IWC") and other related infrastructure across three regions of Fergana valley (the "Project").

Project Objectives

The Project is expected to enhance the resilience to climate change by improving energy and water efficiency in the national IWC system.

Transition Impact

ETI score: 71

Primary Quality: Green. The Project will promote climate change mitigation through substantial energy efficiency savings and GHG emission reductions. The Project's GET share is 100%.

Secondary Quality: Well Governed. The Bank will support and contribute to developing the RoU's long-term policies in the sector and transition from an administrative approach of state regulation to market-based principles through institutional set up and governance improvements.

Client Information

UZBEKISTAN SOVEREIGN

Ministry of Water Resources of the Republic of Uzbekistan

EBRD Finance Summary

USD 200,000,000.00

Total Project Cost

USD 230,000,000.00

Additionality

EBRD offers a tenor and/or a grace period above the market average, which is necessary to structure the project. EBRD investment is needed to close the funding gap. At the same time, EBRD does not crowd out other sources, such as from IFIs, government, commercial banks and/or complements them.

The Bank will support the Ministry in achieving higher standards through its conditionalities (e.g. Procurement Policies and Rules, ESAP).

EBRD involvement in the Project will contribute to developing the RoU's long-term IWC sector reform.

Environmental and Social Summary

Categorised B (2019 ESP). The environmental and social ("E&S") risks and impacts associated with the rehabilitation of 118 pumping stations ("PS") used for IWC in three regions of Fergana valley have been identified. These will be managed by the implementation of an Environmental and Social Action Plan ("ESAP"). The environmental and social due diligence ("ESDD") for the Project was carried out by an independent consultant; it included an audit of the existing client's operations and site visits to selected PS. The project is expected to result in positive impacts on the irrigation coverage, sustainability and reliability, which, in turn, will provide additional opportunities for individual farmers/farming organizations engaged in agriculture.

The results of the ESDD indicate that the client has limited capacity and E&S system in place, and that requirements of national environmental legislation are not fully implemented. The client has no E&S Policy and no functional E&S management system in place, nor are any dedicated staff for managing E&S activities. Some permits (e.g. air emissions, waste disposal) were not available during the ESDD. To address these concerns, the ESAP requires appointment of E&S specialists at the Ministry of Water Resources of Uzbekistan, introduction of an E&S and OHS management system, and obtaining the water and waste permits. All the HR practices are in line with the stipulations of national legislation and ILO fundamental conventions ratified by the RoU. Still, there is not a formalised Human Resources Policy, or a grievance mechanism for workers at the regional Ministry's regional Pump Stations and Energy ("PS&E") units; this is requested in the ESAP.

The main E&S risks during the rehabilitation works are related to hazardous waste generation and soil contamination, as well as potential disturbance of nearby population by noise and air emissions. There are no signed contracts with specialised/licensed waste disposal companies. The management of hazardous substances and materials should be improved (e.g. leakages and spills on the ground, inappropriate storage of oil). Necessary improvements have been included in the ESAP. The requirements of the national occupational health and safety legislation are mostly implemented. However, some gaps in implementation of the national fire and electrical safety as well as sanitary-hygienic provisions were identified during the site visit. Community health and safety risks such as accidental fall into the water and electrocution were also identified during the field visit. Corrective actions are required in the ESAP (fencing or barriers along the open canals in sections passing through the settlements and fencing around the power transformers).

The land plots of the PS facilities are state-owned land. As some minor land take will be necessary (for the installation of fencing and in some locations for construction of a PS building) the Ministry is required to develop a procedure for formalising land tenure and identifying any land users (having farming activities / pasture land) around the pumping stations, investigating the extent of the Project-induced impact on their livelihood; and paying compensation to adversely affected people.

Some of PS are equipped with fish protection structures, however the majority are not. The ESAP requires installation of fish protection devices at water intakes and bird surveys at transformer substations (and if / where necessary, installation of protective devices to prevent the death of birds). The implementation of the Project components does not envision any significant excavation and earthworks, nor dredging. No impact on cultural heritage is anticipated. The mechanism of disclosing information and addressing external stakeholders' grievances is not in place. Therefore, a Stakeholder Engagement Plan and grievance mechanism observing Covid19 measures, have been developed for the Project.

Replacing pumps to their initial design capacity may lead to a water abstraction increase. At the same time, the introduction of automation will allow better demand-based water delivery to water consumers associations and farmers. In combination with auxiliary measures to reduce water delivery losses and strengthening on-farm water application (as envisioned under the Long Term Investment Program of the Government of Uzbekistan, for which this Project is an initial step), the de-facto per-hectare water volume supplied is envisioned to be reduced, as more precise flow control in volume and time will be provided.

The proposed mitigation measures have been summarized in the Environmental and Social Management and Monitoring Plan ("ESMMP"). The ESMMP is as a standalone document will be attached to tender documentation for selection of the Project's contractors and its implementation has been captured in the ESAP. The ESAP has been developed to ensure the Project is structured to meet the PRs, which will be agreed with the Client before Board. The Bank will monitor implementation of the ESAP through review of Annual Environmental and Social Reports ("AESR"), communications with the Client and site visits as necessary.

Technical Cooperation and Grant Financing

Pre-signing:

TC 1: Feasibility Study (technical, financial, environmental and social due diligence and institutional assessment). The assignment's cost is up to €475,000, funded by the EBRD Shareholder Special Fund ("SSF").

 

Post-signing:

TC 2: Institutional, Governance and Digitalisation Improvements Programme to support the Ministry of Water Resources in implementation of the ongoing sector reforms. The assignment's cost is up to €700,000, to be financed by an international donor or the SSF.

Company Contact Information

Jasur Kasimov
nasos@minwater.uz
+99899-572-09-23
+99871-202-47-22
http://water.gov.uz
1a Labzak street, Tashkent City, 100000, Uzbekistan

PSD last updated

21 Jun 2022

Understanding Transition

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

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General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social 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 additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from 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 activities of the Bank 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 Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both 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. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. 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 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 following its entry into force on 1 January 2020. 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 (e.g. 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 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; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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