A sovereign loan of up to EUR 10 million to the Republic of Azerbaijan (the "Borrower") for the benefit of the Housing and Communal Services Production Union (the "Company"), a municipal services company under the Ganja City Executive Power (the "City" or the "Ganja EP"). The Bank will support the upgrade of the municipal solid waste collection infrastructure (waste collection and street cleaning vehicles and containers) in the city of Ganja, as well as improvements in operational and financial efficiencies.
Azerbaijan has a National Solid Waste Management Strategy (the "NSWMS"), among others including construction of new landfills, closure of old dumpsites, construction of transfer stations and support to recycling and recovery systems. The Project will address some urgent needs identified in the NSWMS applicable to Ganja city area. The Government of Azerbaijan is committed to implementing the improvements in solid waste management as identified in the NSWMS.
The proposed investment will improve the solid waste collection infrastructure and introduce operational and financial efficiencies through the introduction of smart waste collection and route optimisation systems, new vehicle and container types and better maintenance solutions. Furthermore, the existing vehicle fleet will be enhanced for the purpose of the smart waste collection system. The Project will also aim to improve working conditions of staff in the maintenance bay and at the dumpsite, minimise uncontrolled burning in the dumpsite and other locations, improve public health and general environment due to the full coverage of the city area by the waste collection services.
ETI score: 70
The Project is part of the Bank's initial engagement with the City through the EBRD Green Cities. As such is considered as a trigger investment under the Green Cities Framework 2 Window II ("GrCF2 W2").
The Project will help to promote the Green transition quality by improving solid waste management and reducing the negative impacts of waste collection on the environment. The Project will also support the Competitive objective through the development of a Corporate Development Programme ("CDP"), and introduction of smart optimisation measures for the solid waste collection routes.
Borrower: The Republic of Azerbaijan, represented by the Ministry of Finance.
Beneficiaries: The Housing and Communal Services Production Union and the Ganja City.
EBRD Finance Summary
Total Project Cost
The Project will also benefit from the technical cooperation assignments to support project preparation and implementation.
The EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, which are necessary to structure the Project.
The 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 Company.
The EBRD supports the Company to achieve higher standards by relying on the best international procurement standards.
Environmental and Social Summary
Categorised B in accordance with the 2019 Environmental and Social Policy.
An independent Environmental and Social Due Diligence ("ESDD") for the Project (considered as Phase 1 investments) was undertaken by external consultants as part of the Feasibility Study, including the Environmental and Social ("E&S") audit of the Company, existing operations and E&S review of the proposed investments, taking account of the Covid-19 impacts. The Project includes the acquisition of about 30 new Euro V emission standard compliant vehicles and equipment for waste collection and street cleaning, as well as improvements of the existing maintenance bay.
ESDD identified that the Company's overall environmental and social management capacity is generally low and will need to be enhanced to facilitate the implementation of and the compliance of the Project with the EBRD Performance Requirements. An environmental and social management system ("ESMS") will be developed in line with ISO 14001 for environmental management, ISO 45001 for managing occupational health and safety, and ISO 39001 for managing road traffic safety, and the respective provisions have been included in the Environmental and Social Action Plan ("ESAP").
The Company is required to improve its human resources policy and procedures. Although the Project does not have any major labour risks, the Company will be required to put in place a labour management system. The Project will need to develop Contractor Management procedures to ensure that transportation and maintenance and other services contractors adhere to the Bank's Performance Requirements. The Company will also need to develop and implement a worker grievance mechanism in line with the Bank's requirements. The drivers of the new vehicles will be required to undergo occupational road safety and driver training, and all these requirements have been added to the ESAP.
ESDD confirmed that the Project would not involve any land acquisition, involuntary resettlement or economic displacement. The Project will also not affect any sensitive locations, protected areas or cultural heritage sites. The investments into Euro V diesel vehicles and the associated solid waste equipment, and subsequent route optimisation are expected to result in the overall improvement of the air quality in the city and in the annual reduction of GHG emissions of over 172 tonnes CO2eq (25.6 per cent reduction), 2.75 tonnes of NOx (56 per cent reduction) and 0.1 tonnes of PM2.5 (86 per cent reduction) from the current levels. Furthermore, air emissions, dust and noise during the implementation phase will be avoided and mitigated by taking appropriate measures such as limiting vehicles' speed, regular maintenance of equipment, minimising passage of heavy vehicles from residential areas during quiet hours.
The existing dumpsite in Ganja is an associated facility. Currently there are no EU-compliant landfills in Azerbaijan, and existing waste disposal sites are dumpsites with no leachate collection or landfill gas abatement measures and control system. Azerbaijan's NSWMS, envisages the closure of existing dumpsites, construction of eight new regional sanitary landfills, increasing recycling and waste segregation in phases by the year 2036. In line with the NSWMS, the Bank will provide further support to Ganja EP as part of a follow-on project (Phase 2) which will include improvements to waste management and disposal in line with EU requirements by introducing a Material Recovery Facility. Accordingly, it is covenanted that the Client will select the general contractor and commence works to construct a new EU-compliant sanitary landfill by end 2025, as well as close and rehabilitate the existing dumpsites located in the proximity of Ganja within 18 months of the new landfill becoming operational. Ganja EP is fully committed to Phase 2 investments, which will be subject to a separate Feasibility Study and ESDD exercise, and the respective requirements have been added in the legal documentation. The Project is structured to comply with the EBRD PRs through the implementation of Phase 2, which will enable the waste management operations in Ganja to comply with EU requirements.
Until a new landfill is available, the existing dumpsite for Ganja will have to remain in use. In order to enable safe operation of the purchased vehicles, some improvements are needed and will be carried out on the dumpsite, including fencing the area off, eliminating unauthorised access, ensuring daily waste cover, improving the health and safety conditions by designating an area for waste-picking and providing personal protective equipment.
A Stakeholder Engagement Plan ("SEP") and a Non-Technical Summary ("NTS") have been developed for the Project and disclosed by the City on their website (http://ganja-ih.gov.az/news/1231.html; http://ganja-ih.gov.az/news/1232.html). The ESAP has been prepared and agreed for the Project.
The Company will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank may also conduct monitoring visits, as required.
Technical Cooperation and Grant Financing
The following technical co-operation ("TC") assignments are envisaged as part of this Project: project due diligence and implementation support; assistance in the areas of the corporate development and stakeholder participation programme and anti-corruption action plan; the preparation of green city action plan.
Company Contact Information
Heydar Aliyev square Administrative Building Ganja city, AZ2000 Azerbaijan
PSD last updated
08 Feb 2022
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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).
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