Provision of a tranched sovereign loan of up to EUR 550 million to the Republic of Serbia for the benefit of the company for management of the public railways infrastructure Serbian Railways Infrastructure ("SRI") to finance the rehabilitation and upgrade of the rail infrastructure of Rail Corridor X, the railway line connecting Belgrade to Nis (c. 230 km-long), with the aim to increase speed to up to 200 km/h while enhancing quality of passenger and freight rail services. The Project is envisaged to be co-financed by European Investment Bank ("EIB") and the EU through the Western Balkans Investment Framework ("WBIF").
The Project will support the development of rail infrastructure, safety will be improved, as will the capacity and comfort of the passenger and freight services. This will in turn support Serbia's economic development, contribute to its local and regional connectivity and integration, and enhance competitiveness of rail transport, especially for international and transit freight traffic, allowing significant modal shift to rail as a low carbon intensity sector.
ETI score: 78
Transition impact will target the following transition qualities:
- Primary quality: Well-governed - the Project will support the transition of the Rail Directorate into an independent economic regulator and the implementation of the Transport Community Treaty (for implementation of the 4th Railway Package). It will also promote the improvement of the Company's corporate governance, operational efficiency, procurement expertise and asset management standards via the implementation of a gender responsive Corporate Governance Action Plan ("CGAP") and Corporate Development Plan ("CDP").
- Secondary quality: Inclusive - the Project will promote the development of initiatives for gender equality at national and local governance levels and improved skills and human capital development.
SERBIAN RAILWAYS PE
The Borrower is the Republic of Serbia. The implementing agency is SRI, a joint stock company established as the sole national railway infrastructure asset management company of Serbia.
EBRD Finance Summary
Up to EUR 550 million, a tranched sovereign loan to the Republic of Serbia.
Total Project Cost
The Loan is a subsequent transaction with the same client in Serbia. Additionality sources include the following components: (i) financing structure; (ii) risk mitigation; (iii) policy, sector, institutional, or regulatory change; (iv) Gender SMART and (v) knowledge, innovation and capacity building.
Environmental and Social Summary
Categorised A (2019 ESP). The Bank's ESDD for the Project was conducted with the support of several independent consultants and included documentation reviews and site visits. The Corridor based E&S disclosure package includes all sections from Belgrade to Niš based on the conceptual design and more detailed information on the Stalac-Djunis section for which the preliminary design was available. The disclosure package for Stalac-Djunis section includes the ESIA, a Supplementary package (including an ESMP), a RP, a NTS, a SEP and an ESAP. For the Corridor, the disclosure package includes an E&S Scoping report, an Inception Report, a Corridor E&S Assessment (high level ESIA), a Resettlement Policy Framework, a SEP, a NTS and an ESAP. Both components of the Project's disclosure package were disclosed in English and in Serbian on SRI's website on 29 July 2022. Hardcopies have been made available in local communities and no material issues have been raised during the public disclosure period that would require revision of the ESIA.
The first tranche of the loan is committed to finance the works of the Stalac-Djunis section, for which a detailed ESIA has been carried out to date. Tranches to finance other subsections of Corridor X (230 km long railway) will be committed after completion of an ESDD (and revision of the ESAP) and preparation of an ESIA for each tranche (in parallel to completion of the preliminary design), before Board.
According to the Corridor E&S assessment findings, the E&S risks and impacts can be managed and mitigated through the implementation of the ESAP. The ESIAs are considered as a complement to the Corridor E&S assessment that was disclosed during 120 days. On the Stalac-Djunis section, the alignment will be significantly changed and the Stalac and Djunis railway stations will be fully reconstructed. The national EIA Study for the Stalac-Djunis section was approved by the Ministry of Environmental Protection in 2018, and the environmental permit (Location Conditions) was renewed in 2021.
SRI will develop and implement a Project framework E&S management system. The ESAP requires the Contractor to prepare a CESMP and issue specific sub plans. The main negative impact in the construction phase is generation of larger amounts of inert, non-hazardous and hazardous waste such as excavated material and dismantled railways tracks and sleepers. An asbestos survey will be conducted to identify the presence of any asbestos-containing materials in station buildings that are subject to reconstruction. During Operation, SRI will conduct annual noise monitoring in zones of residential and other sensitive buildings located in the immediate vicinity of the railway as well as technical and visual control of noise barriers in accordance with relevant standards. In case of excessive values, SRI shall take additional passive protection measures. For the Stalac-Djunis section, noise barriers are planned on both sides of the railway line in the total length of 748m and will be defined for other sections in the specific ESIAs.
Four protected areas are identified within the project area of influence (500m on each side of the planned railway). The railway will pass through three proposed Special Protection Areas. Considering the conservation values of these areas based on which they were designated (the majority for woodland value), it is very unlikely the project will have any impact on the functioning of the areas and their status since there will be no vegetation clearings in those areas. Biodiversity assessment included desktop and field surveys and according to the Critical Habitat Assessment, a total of 40 features meet the criteria for Priority Biodiversity Features and 27 for Critical Habitat along the Corridor. The most sensitive receptors during construction phase are waterbodies, wetland and riparian habitats. In the pre-construction phase, detailed surveys of biodiversity will be done by biodiversity experts engaged by the Contractors; following which the Project design should then be reviewed and revised if necessary. As confirmed in the ESAP, the Contractors will develop and implement a Construction Biodiversity Management Plan (including measures such as: clear demarcation of vegetation clearance areas, adjust timing of works to minimise impact on fauna, etc.). For the Stalac-Djunis section, the proposed railway route is partly located within a part of the ecological network of Serbia - Mojsinje Mountains and Stalac Gorge of the Juzna Morava River. An Appropriate Assessment was conducted and disclosed and identified a number of mitigation measures that were captured in the ESMP.
Worker accommodation will need to be provided by the contractors in line with national legislation and the applicable EBRD/IFC Guidance Note. Worker influx and gender-based violence and harassment GBVH risks are not expected to be significant as the majority of the areas where construction works will be undertaken are areas distant from settlements. No cultural heritage sites have been identified on the route itself but there are some sites in the vicinity of the railway line. For the Stalac-Djunis section, five cultural heritage sites have been identified in the Project area; the Institute for Protection of Cultural Monuments in Kraljevo provided its official including the measures needed to protect cultural heritage sites.
As the final route is not defined yet, the magnitude of impacts associated to land acquisition for the complete alignment is still unknown. For this reason, a Corridor-level Resettlement Framework was developed to define the key resettlement approach in line with national regulation and PR5. After detailed land requirements of the Project are known (once the final designs and detailed expropriation studies have been prepared), a RP will be prepared for each section and approved by the EBRD, as confirmed in the ESAP. Only the RP for the Stalac-Djunis section has been developed to date and disclosed. This section requires the acquisition of approx. 79 ha of land, of which approx. 43% is privately owned. The total number of land plots which will be affected is 877 but a significant number of land plots are planned to be only partially acquired. The project will result in the physical displacement of a total of 13 households and one business. SRI will ensure that the Stalac-Djunis RP is implemented prior to any construction activities, as required in the ESAP.
The SEP includes a summary of previous stakeholder engagement activities and requirements for public engagement during the pre-construction and construction period, including a grievance mechanism plus the appointment of Community Liaison Officers. In addition, the ESAP requires SRI to ensure that, during the final design stage, the municipal authorities on each section are consulted on the issues of closure/upgrading of level crossings and underpasses and overpasses and safety considerations. The ESAP requires that, in order to mitigate the impacts of closure of stations/halts on the residents in settlements with no other organised means of public transportation, SRI liaise with the local authorities to agree on and organise alternative transport options.
The Lenders independent consultants will undertake regular audits of the Project to assess EHSS performance during construction. For the uncommitted tranches, conditions precedent to commitment include preparation and disclosure of an ESIA, RP, updated ESAP and updated SEP agreed between the Bank and the Company.
Technical Cooperation and Grant Financing
- TC 1: Environmental and Social Due diligence
- TC2: Support to SRI for implementation of Corporate Governance Action Plan ("CGAP")
- TC3: Support to the Ministry of Construction, Transport and Infrastructure for the implementation of gender equality measures
- TC4: Corporate Development Programme ("CDP") for the Company
- TC5: Capacity building of the Rail Directorate
- TC6: Lenders E&S Monitoring
Company Contact Information
+381 11 3618 212
Nemanjina St. 6 11000 Belgrade
PSD last updated
31 Oct 2022
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