RF - City of Zagreb Resilience Support

Location:

Croatia

Project number:

53289

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

12 Jan 2022

Status:

Disbursing

PSD disclosed:

01 Apr 2022

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

A senior unsecured loan of up to EUR 50 million to provide emergency liquidity support to the City of Zagreb (the "City") and its critical infrastructure providers (together "Recipients") in order to mitigate the effect of the COVID-19 crisis (the "Project").

The Recipients of the liquidity support from the City are:

-          Zagrebaiki Holding d.o.o. ("ZGH"), the municipal holding entity responsible for water supply and wastewater collection services, waste management, management and maintenance of public areas and public roads in the City.

-          Zagrebacki Elektricni Tramvaj d.o.o. ("ZET"), the public transport provider in Zagreb and surrounding municipalities.

Project Objectives

The proceeds of the Bank's investment will be used as liquidity support for the City, which will provide needed working capital to critical infrastructure providers (Recipients) to compensate for temporary revenue losses due to COVID-19 crisis and the earthquakes that hit the Zagreb area in 2020. 

Transition Impact

ETI score: 60

The proposed liquidity facility at the City of Zagreb level will preserve the transition impact achieved under the Zagreb Holding Bond Project (BDS16-087), by ensuring provision of critical infrastructure services.

The operation contributes to the "Resilient" quality as it addresses the Recipients' current liquidity shortages resulting from a sudden, significant decrease in revenues and receivables collection due to COVID-19 pandemic and the earthquakes that hit the Zagreb area in 2020. Thanks to the successful activities in GET eligible municipal areas, performed by the Recipients during 2020 and 2021, the Project benefits from a 38% GET share.

Client Information

CITY OF ZAGREB

The Borrower is the City of Zagreb, the capital of Croatia and the country's largest municipality. The City of Zagreb is an existing client of the Bank as guarantor under the Zagreb Holding Bond Project (BDS16-087).   

EBRD Finance Summary

EUR 50,000,000.00

Total Project Cost

EUR 50,000,000.00

Additionality

The proposed liquidity facility at the City of Zagreb level will preserve the transition impact achieved under the Zagreb Holding Bond Project (BDS16-087), by ensuring provision of critical infrastructure services.

The operation contributes to the "Resilient" quality as it addresses the Recipients' current liquidity shortages resulting from a sudden, significant decrease in revenues and receivables collection due to COVID-19 pandemic and the earthquakes that hit the Zagreb area in 2020. Thanks to the successful activities in GET eligible municipal areas, performed by the Recipients during 2020 and 2021, the Project benefits from a 38% GET share.

Environmental and Social Summary

Category B (2019 ESP). The environmental and social due diligence ("ESDD") was carried out by the EBRD Environmental and Social Department ("ESD") and encompassed the City of Zagreb as well as beneficiary companies ZGH and ZET.

The short-term liquidity finance for COVID-19 and earthquake affected public service providers will be used as working capital and is not associated with any new environmental or social risks or impacts.

The City and two beneficiary companies have organisational capacities for management of E&S aspects including EHS, human resources, contractor management, supply chain management and stakeholder engagement. The operations of the City and two beneficiary companies are fully compliant with local legal and permitting E&S requirements. ESDD has identified a small number of areas for improvement to structure the project to align with the Banks 2019 Performance Requirements, which is included in the Environmental and Social Action Plan ("ESAP").

The City and beneficiary companies operate in line with national requirements for labour and working conditions. Collective agreement, Code of Conduct and Code of Ethics are in place, and EHS requirements are also cascaded down to supply chain through standard requirements during procurement process.

The ESAP stipulates that in case of a retrenchment taking place, the City shall develop and implement a Retrenchment Plan in line with PR2 requirements. At the City of Zagreb, requirements regarding the resource efficiency and pollution prevention and control have been implemented from the level of strategic and planning documents to implementation. The City and the two beneficiary companies are undertaking adequate resource efficiency and Green House Gas ("GHG") reduction measures. The central wastewater treatment plant provides secondary treatment and will become fully compliant with EU legislation with the introduction of tertiary treatment by 2028. There is a good solid waste collection, recycling and disposal system in place. The current rate of waste reuse and recycling is below the targets set by the EU Waste Framework Directive and EU Landfill Directive. However, there is a goal and plans to improve recovery by recycling and preparing for re-use, and reduce landfilled waste. The two beneficiary companies are implementing adequate Occupational Health and Safety ("OHS") mitigation measures. COVID-19 measures in place are in line with EU and WHO recommendations. An area of improvement is traffic safety performance of the drivers of all three legal entities; therefore, ESAP stipulates the need to implement traffic safety campaigns among their employees, focusing on the drivers.

No issues related to land acquisition or any impact to physical environment, biodiversity or cultural heritage are envisaged by the Project. All maintenance works are well understood by the City and two beneficiary companies due to existing experience in implementation of public services. The Bank will monitor the implementation of the Project through review of annual report.

Technical Cooperation and Grant Financing

None

Company Contact Information

Daniela Juros Pecnik
danijela.juros-pecnik@zagreb.hr
+385 1 610-1339
+385 1 610-1399
www.zagreb.hr
Trg Stjepana Radica 1/III 10000 Zagreb, Croatia

PSD last updated

01 Apr 2022

Understanding Transition

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

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

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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