A senior unsecured loan of up to EUR 15 million to the City to finance the procurement of 100 CNG buses including (i) 30 accordion-type and (ii) 70 solo-type buses for the purpose of renewing the City's aging public transport fleet and to expand urban transport services in the City. The EBRD loan will be co-financed by a Shareholder Special Fund ("SSF") grant for a total amount of EUR 7.0 million, which will be utilised from the Community Resilience Window ("CRW") of the SSF.
The proceeds of the loan and the capex grants will be utilised to finance the procurement of 100 new CNG powered buses (Euro 6 standard). The fleet involves 70 solo and 30 articulated-style buses. The proposed Project will expand the urban transport capacity in this refugee host community and relieve pressure on existing municipal services by providing extra capacity and better quality services. The existing transport infrastructure is providing inferior services given an aging bus fleet (average life is 9.9 years, and economic useful life of a bus is 10 years). By virtue of this investment, the average vehicle age of the bus fleet of the City will drop to 5.5 years and the total public transportation capacity will be increased, by: (i) replacing 44 old diesel buses (Euro 1 standard, 1990-99 model) experiencing frequent breakdowns; and (ii) adding 56 new CNG buses to the fleet to relieve the burden on Mersin public transportation networks and improve service quality.
ETI score: 60
Under the MR3 Framework, transition impact is primarily based on enhanced resilience through asset expansion or rehabilitation and specific cost reduction to contribute to the financial sustainability of operations. Additionally, the framework supports the "well-governed" quality through the introduction of higher standards of service quality monitoring.
- Resilient: The Project supports the resilience of the sector by virtue of infrastructure capacity expansion, which will alleviate stress on transport services exacerbated by the refugee crisis. This will allow the residents to have access to improved transportation services through a younger, enhanced, and more reliable bus fleet. Modern CNG buses displacing aging diesel buses will bring the City financial, economic, and environmental gains due to (i) fuel efficiency (ii) lower maintenance costs (iii) lower rates of vehicle breakdowns, and (iv) lower carbon footprint.
- Well-governed: The Project supports the well-governed transition quality through the implementation of a Corporate Development Programme including Key Performance Indicators ("KPIs"). Technical assistance will assist the City in the development of the KPIs, and improving transparency and monitoring of service improvements.
MUNICIPALITY OF MERSIN
Mersin Metropolitan Municipality ("MMM", or the "City") is a municipal entity located in southern Turkey, and governed under the Turkish Municipal Code. Mersin is the 11th largest city in Turkey in terms of population (1.9 million) and is considered a large refugee host community with a total of 262,270 Syrian refugees residing in the city (14% of the total population), which is placing additional strain on access to public and infrastructure services.
EBRD Finance Summary
Total Project Cost
(excluding technical assistance)
Financing Structure: The EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a longer grace period that is rarely available in the market, restricted foreign currency financing etc. Such financing is necessary to structure the project.
Risk Mitigation: The EBRD helps the client to mitigate environmental, social and governance (ESG) risks through identification of risks related to the depletion of natural capital assets, raw materials and water availability, etc., and to manage these risks.
Standard-setting: helping projects and clients achieve higher standards
- Gender SMART: Client seeks/makes use of EBRD expertise for the adoption of gender standards and/or equal opportunities action plans (e.g. improving women's access to safe transport and/or women-led businesses participation in the client supply chain).
- Client seeks/makes use of EBRD expertise on best international procurement standards.
- Client seeks/makes use of EBRD expertise on higher financial standards, including through financial covenants.
- 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
Environmental and Social Summary
Categorised B (ESP 2019). The Environmental and Social Due Diligence ("ESDD") for the Project has been undertaken by an independent consultant and included an environmental and social ("E&S") assessment of the project, review of the current operations (including a survey of existing bus users), as well as the E&S management systems and the capacity of MMM as it relates to bus operations.
The ESDD confirmed that benefits associated with the purchase of the CNG buses reaching EURO 6 emission standards include contribution to improving accessibility and mobility for all user groups and the safety and efficiency of urban transportation. The project will bring an average annual reduction in CO2 emissions estimated of 20,468 tons compared with the continued use of existing diesel buses. The specifications of the new CNG buses have incorporated E&S requirements such as accessibility including for persons with disabilities, provision of CCTV monitoring, safety and emergency response and audio and visual passenger communication systems. In support of the Project a new operational control centre campus will be constructed to provide maintenance, repair and refuelling stations for both CNG and diesel buses.
ESDD has reviewed E&S arrangements of MMM operations and the proposed construction of the new campus. The review confirmed that the MMM are managed through a certified integrated management system (ISO 14001, ISO 45001 and ISO 39001). Hazardous waste generated from the vehicle fleets is segregated, stored and then sent to licensed disposal/recovery facilities. The project will replace older diesel buses where they will be scrapped with a small number being retain to support non-operational activities such as driver simulation training.
A formal risk assessment process has been implemented to evaluate risks of all workplaces and Covid19 rules defined by the Ministry of Health are applied with mitigations measures implemented for both employees and service users. Accidents and incidents are recorded, classified and investigated and OHS training is organised and managed in line with the rules defined by Department of Transportation. Training on the technical characteristics of the buses will be delivered to repair and maintenance workers. MMM carries out analysis of all traffic collisions and all new bus drivers receive training which includes general rules regarding driving, safe and defensive driving techniques, safety distances, traffic collisions and their effects.
MMM identified good social performance on engagement and inclusion of vulnerable groups including the refugee community and NGOs, with a recently adopted Local Equality Plan implementing measures for prevention and awareness of Gender Based Violence and Harassment ("GBVH"). MMM already incorporates gender sensitive provisions into its bus operations and provides training on GBVH to bus drivers, this will continue. Further measures will be needed to create specific processes to manage GBVH grievances and increase awareness amongst service users. Current bus fares have been assessed as affordable and no direct change is anticipated due to the project.
MMM complies with national legislation related to labour and working conditions which are generally aligned with Performance Requirement 2 ("PR2"). Some updates (to existing procedures are needed to ensure cascading of both requirements to contractors including the grievance mechanism. Although MMM has certified management systems, implementation requires some further development so that follow-up of the non-compliances and audit findings related environmental, health and safety are fully closed out.
The above requirements have been included in the Environmental and Social Action Plan ("ESAP") which has been developed and will be agreed with the MMM prior to the signing of the loan agreement. The Stakeholder Engagement Plan ("SEP") and the Non-Technical Summary ("NTS") for the project will also be publicised on MMM's website. Additional support for ESAP implementation will be provided through a Technical Cooperation assignment. The Bank will monitor MMM's activities through annual E&S monitoring reports and site visits if necessary.
Technical Cooperation and Grant Financing
It is envisaged that the technical cooperation (TC) support will provide assistance with the following:
Co-investment Grants: EUR 7 million investment grant to be utilised from CRW of EBRD's SSF.
- TC1: Technical Due Diligence (TCRS 100319)(ongoing): Consultancy support including performing cost and return estimates, assessment of electric bus alternative, e-mobility assessment and reviewing tender documents to ensure compatibility with relevant standards and requirements of the EBRD. The cost of the assignment is EUR 73,785 and is financed by the SSF.
- TC2: Pre-signing Procurement Support (TCRS 100320)(ongoing): Consultancy support to support Mersin for the tender preparation and application of the EBRD Procurement Policies and Rules ("PP&Rs") for the )contracts proposed for financing by the EBRD. The estimated cost of the assignment is EUR 64,950 and is financed by the SSF.
- TC3: Environmental and Social Due Diligence (TCRS 100324)(ongoing): Consultancy support including identifying and assessing potential existing and future environmental and social impacts, assess compliance with applicable laws and EBRD ESP and PRs. The cost of the assignment is EUR 59,750 and is financed by the SSF.
- TC4: Corporate Development Programme (TCRS 111572) (post-signing): To assist the City with the development of KPIs and monitoring plan for such KPIs to improve the transparency of service improvements in the City. The estimated cost of the assignment is EUR 70,000; to be financed by the SSF.
- TC5: ESAP Implementation Support (TCRS 111577) (post-signing): The estimated cost of the assignment is EUR 70,000; to be financed by the SSF.
- TC6: Supporting the Implementation of Local Equality Commitments by Mersin's Public Transportation Branch: The estimated cost of the assignment is EUR 50,000, financed by the Inclusion Technical Assistance Framework.
Company Contact Information
Çankaya Mahallesi, Atatürk Caddesi No:19 MERSİN
PSD last updated
10 Nov 2021
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