GrCF2 W2 - Belgrade Water Phase 2

Location:

Serbia

Project number:

53745

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

19 Jul 2022

Status:

Signed

PSD disclosed:

25 Jul 2022

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

The EBRD is considering the provision of a senior loan of up to EUR 13 million to the Public Utility Company Belgrade Waterworks and Sewerage (the "Company" or "BVK"), to finance the refurbishment of the Jezero Water Treatment Plant ("WTP"), which forms part of the Belgrade's main water treatment complex "Makis", comprised of Makis 1, Makis 2, and Jezero WTPs (the "Project"). In addition, the Project involves construction of facilities for the collection and treatment of waste and process waters and sludge treatment to be financed with a Western Balkans Investment Framework ("WBIF") investment grant of EUR 2.9 million, approved in December 2017.

The Project forms part of the Bank's engagement with the City under EBRD Green Cities, and is the second follow-on Green Cities investment with the City of Belgrade with the Project falling under the Green Cities Framework 2 - Window II ("GrCF2 W2").

Project Objectives

The Project is expected to provide substantial environmental and public health benefits by improving accessibility to high quality drinking water and upgrading water supply infrastructure in line with the EU Directives. The refurbishment will also improve the energy efficiency of water treatment at the facilities.

The Project will address priority environmental challenges of climate mitigation and water quality, identified by the City's Green City Action Plan (the "GCAP"), which was duly approved by Belgrade's City Assembly in June 2021.

Transition Impact

ETI score: 70

ETI: 70

The Project contributes to the "green" transition impact quality (primary quality) through environmental benefits arising from the substantial reduction in the amount of harmful wastewater and chemicals being leaked into water systems near Belgrade. The Project is the second follow-on investment following the approval of the Belgrade GCAP in June 2021.

The Project also contributes to the "competitive" transition impact quality (secondary quality) by supporting a leak detection technical cooperation. Through the use of inovative satellite technology, leaks will be identified and addressed by the Company, contributing to savings and the long-term competitiveness of the Company.

Client Information

WATER AND SEWAGE COMPANY OF THE CITY OF BELGRADE

Public Utility Company Belgrade Waterworks and Sewerage

("Beogradski vodovod i kanalizacija" - BVK)

Kneza Milosa 27

11000 Belgrade

 

 

EBRD Finance Summary

EUR 13,000,000.00

EUR 13,000,000.00

A loan to the Company of up to EUR 13 million.

Total Project Cost

EUR 15,925,000.00

Total capex is estimated at EUR 15.9 million and will be financed as follows:

- EBRD Loan     up to EUR 13 million

- WBIF Grant     EUR 2.9 million

Additionality

Financing Structure:

EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a longer grace period. Such financing is necessary to structure the project.

EBRD offers a tenor, which is above the market average and is necessary to structure the project.

Risk Mitigation:

EBRD helps the client to mitigate physical transition risks and take climate action, such as to identify and manage physical climate risks and build resilience to them.

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.

Gender Smart:

The Project contributes to encouraging women in science, technology, engineering and mathematics jobs, by supporting the Company's collaboration with schools and universities to enhance internship and enrolment opportunities for women.

Environmental and Social Summary

Categorised B (2019 ESP).

Categorised B (2019 ESP). The Project will provide substantial environmental and health benefits for the City of Belgrade by strengthening the accessibility to high quality drinking water supply in accordance with the EU standards. The Environmental and Social Due Diligence ("ESDD") has been undertaken by independent consultants and included a gap assessment following previous studies for Belgrade Water, additional GET assessment and climate change risks review, and preparation of Environmental and Social Action Plan ("ESAP"), stakeholder engagement plan ("SEP") and non-technical summary ("NTS"). The ESDD reviewed an Environmental Impact Assessment ("EIA") which had been prepared for the wider project (Extension of Drinking Water Treatment Plant Makis) in 2005, subsequent assessments carried out in 2014 and 2016 for the refurbishment of Jezero WTP. ESDD concluded that the Phase 2 project would result in significant environmental and social benefits, and that any adverse impacts would not be significant and would be limited mainly to the construction period, and that these can be effectively mitigated by adhering to good Environmental Health Safety ("EHS") construction practices. An Environmental and Social Action Plan ("ESAP") has been developed to ensure full alignment of the Project with EBRD's Performance Requirements ("PRs") and will be agreed with the client prior to signing.

ESDD has not identified any significant or insurmountable issues in terms of compliance with national, EU and EBRD requirements which cannot be readily mitigated using standard mitigation measures. The Project Implementation Plan ("PIP") components will not affect any sensitive or designated nature conservation areas. The Project will not involve any involuntary resettlement or displacement.

To date the Company has provided annual environmental and social ("E&S") reports that show overall compliance with E&S requirements and good progress with the implementation of the previous ESAP commitments. The Company has good capacity to implement EBRD PRs. The Company has completed certification for its internal Integrated Management System (IMS) that also covers environmental and occupational health and safety management in line with ISO 14001 and ISO 45001 respectively, Information Security Management System in lined with ISO 27001, HACCP management system and is currently in the process of introducing Energy Management System in line with ISO 50001.

The Company will need to make sure the contractors carry out local EIA, if confirmed to be required by the authorities, and obtain the necessary permits prior to commencement of works on the Project. The Company will also require contractors to prepare and implement a Project-specific Construction Environmental and Social Management Plan ("CESMP") in line with ESAP requirements and share copies of these plans with the Bank. The Tender Documents and the construction contract will meet the EBRD Standard Tender Document requirements and include relevant E&S requirements in line with the ESAP.

The project is Paris aligned for mitigation due to being on the joint MDB list. ESDD has also confirmed that while potential adaptation risks exist in relation to extreme heat, drought and flooding, the Project activities and facilities are aligned with climate resilient development and do not undermine it in operating context. ESDD has also confirmed that the Company's facilities are being protected from high water levels with an embankment and appropriate planning of a flood zone on the right bank of the watercourse. The riverbed and hinterland of the Sava River have been regulated by the construction of earth embankments for flood protection, as well as a wide inundation belt.

The Company will implement the corrective ESAP, and the Bank will continue to monitor the project through review of Annual Environmental and Social Reports ("AESR") and site visits as required.

Technical Cooperation and Grant Financing

Technical Cooperation:

  • TC1: Project implementation support to include assistance to the PIU covering preparation of tender documents, procurement and construction supervision;
  • TC2: Updated Technical and Environmental and Social due diligence;
  • TC3: Water leak detection using satellite leak detection for improved operational and financial performance.

Co-Investment Grants:

  • WBIF Investment grant for the construction of facilities at the Makis water treatment complex (EUR 2.9 million)

Company Contact Information

Filip Lukic
filip.lukic@bvk.rs
Kneza Milosa 27 11000 Belgrade Republic of Serbia

PSD last updated

26 Jul 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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