GrCF2 W2 - Shymkent WWTP Capacity Extension Project

Location:

Kazakhstan

Project number:

53239

Business sector:

Municipal and environmental infrastructure

Notice type:

Private

Environmental category:

B

Approval date:

20 Sep 2022

Status:

Signed

PSD disclosed:

14 Sep 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 provision of a loan of up to KZT 3.3 billion (EUR 6.9 million) to Vodnye Resoursy Marketing LLP, a privately owned utility in the city of Shymkent, to finance the Priority Investment Programme consisting of the Wastewater Treatment Plant ("WWTP") capacity extension and the wastewater network rehabilitation. The project is expected to be a 'trigger' investment for the city under the Green Cities Framework 2 Window II (GrCF2 W2). 

 

 

Project Objectives

The Project will further improve the company's wastewater treatment services via the expansion of its WWTP capacity and the service area, a reduction in accidents and breakdowns in the wastewater network, and manage the increasing volume of wastewater.

Transition Impact

ETI score: 70

  • Green (Primary): the Project (i) will generate substantive environmental benefits through reduction of local pollution and employment of the EU environmental standards; (ii) will lead to climate mitigation benefits through elimination of GHG emissions via generating electricity through the company's existing combined heat and power (CHP) units from biogas collected from wastewater sludge.
  • Inclusive (Secondary): the Project will support (i) mapping of skills in demand in the technical and greener wastewater management sector; (ii) introducing an improved learning programme for young specialists; and (iii) developing closer partnerships between the Company's training centre and local education institutions for skills strengthening.

 

Client Information

VODNYE RESURSY-MARKETING TOO

Vodnye Resoursy Marketing LLP (the Company), a private water supply and wastewater management utility incorporated in the city of Shymkent (the City), Kazakhstan with population of over 1.1 million. The Company is the sole provider of centralized water supply and wastewater services to 98 per cent and 55 per cent of the City residents respectively.

 

 

EBRD Finance Summary

EUR 7,157,785.47

A senior loan of up to KZT 3.3 billion (€6.9 million), denominated in € (the Loan).

Total Project Cost

EUR 13,936,558.12

The proposed investment is expected to be co-financed by the Government of Kazakhstan (the GoK) for up to KZT 3.3 billion (€ 6.9 million equivalent) in a form of a capex grant.

Additionality

The Bank's additionally includes the following components:

  • Financing Structure;
  • Standard-setting: helping projects and clients achieve higher standards;
  • Knowledge, innovation, and capacity building.

Environmental and Social Summary

The Project is categorised B in accordance with the Bank's 2019 Environmental and Social Policy. The Project will improve the quality and efficiency of wastewater treatment for the city, thus preventing pollution of the watercourses, improving public health and facilitating development of energy efficient wastewater infrastructure. Environmental and social due diligence ("ESDD") was undertaken by independent consultants as part of the Project due diligence and confirmed that the Company has adequate capacity in place to manage its environmental, health and safety ("EHS") issues associated with the Project in line with the EBRD PRs.

The Borrower made good progress in implementing earlier projects and its associated ESAPs. The ESDD established that the E&S impacts associated with the proposed investment will be mainly positive, resulting in improved efficiency and quality of wastewater collection and treatment services in relation to responding to an increasing demand and overall further improvements to public health and safety. The treated effluent will be discharged into the Burzhar artificial reservoir (i.e. not into the sensitive environment) and the reservoir water will be used for irrigation of the technical crops. The wastewater treatment technology used will be aligned with the relevant EU BAT and BREF for the wastewater treatment industry. Current sludge management arrangements including sludge treatment/ biogas facilities to reduce the quantity of sludge and enhance quality of the treated sludge will provide sufficient capacity to cover the additional volume of sludge from the WWTP extension. An updated ESAP will be implemented by the Company during the Project.

The Company currently operates a modern WWTP with an existing capacity of around 1 million population equivalent ("P.E.") treating on average 150,000 m3/day. Extension of the WWTP's capacity by additional 50,000 m3/day, as part of PIP, is anticipated to be in the range of 237,500 P.E. Local EIA ("OVOS") was prepared in August 2021 under the national legislation for the proposed WWTP capacity extension and indicates that the Project is unlikely to have significant actual physical impact and disturbance will be limited compared with what is there already at the current site. Approval has been obtained from the Ministry of Environment, Geology and Natural Resources of Kazakhstan. The Company will be required to obtain the necessary permits prior to start of any construction activities. This has been included into to the updated ESAP for the Project. As the proposed investment will be implemented on the current facilities of the Company, no additional land acquisition will be required for the WWTP extension.

The project involves a current and a well performing Borrower, whose previous annual E&S reporting has been satisfactory. The Company has an integrated management system in place at the corporate level that involves an Environmental Management System certified in line with ISO 14001 and an Occupational Health and Safety Management System in accordance with OHSAS 18001. The effluent discharges from the current WWTP prior to the capacity extension are compliant with the national and EU standards. The ongoing expansion of the population of the City requires further improvements and expansion of the facilities to maintain these high standards.

Potential future adverse impacts of the project will be limited and site specific. They will be associated mainly with the construction components and will be addressed through appropriate mitigation measures already included in the updated ESAP. This includes contractor management improvements; noise, emissions and discharges; further odour management planning and procedures, including provision of cover for emission points, where possible; waste and dust management; occupational health and community safety; and updated Human Resources Policy to align with the EBRD requirements. Although no major impacts related to physical and/or economic displacement are anticipated following ESDD, this will be confirmed by the Borrower following completion of the detailed designs for the proposed facilities and routing of the collector pipe. No significant affordability constraints are expected from this project for the most vulnerable groups of the population.

The company also needs to finalize and implement a Stakeholder Engagement Plan ("SEP"), including a grievance mechanism, to ensure adequate information disclosure to affected stakeholders locally prior to the commencement of works. The respective corrective actions have been included into the updated ESAP to address the above issues and to structure the Project to meet the Bank's PRs. 

The Project implementation and the Company's performance will be closely monitored by the Bank through annual monitoring reports, implementation of the updated ESAP and monitoring visits as and when deemed necessary. 

 

 

Technical Cooperation and Grant Financing

 Pre-signing:

TC 1: Project Feasibility Assesment to identify the PIP for capacity extension of the current WWTP and reconstruction of the Company's wastewater network, including financial analysis, preparation of procurement and project implementation plans, ESAP as well as Green assesment and Gender consideration. The cost of the assignment was USD 150,000; financed by the EBRD-Kazakhstan Joint TC Account (US$ 130,000) and the Borrower (US$ 20,000).

Post-signing:

TC 2: Green Cities Action Plan preparation to identify and prioritise the City's most pressing environmental challenges and provide a plan of targeted investment and policy actions to address those challenges over the next five years. It will cover inclusion and gender considerations. The estimated cost of the assignment is up to EUR 350,000; expected to be financed by an international donor and/or the EBRD Shareholder Special Fund.

TC 3: Gender and Economic Inclusion to support the Company to introduce a nationally accredited training programme. The estimated cost of the assignment is up to € 35,000; to be co-financed by the Japan Donor Fund (€ 28,000) and the Borrower (€ 7,000).

Company Contact Information

Mr. Zhanatbek Turdaliev
tju63@mail.ru
+7 (7252) 321-275
https://www.wrm.kz
17 Ormanov street, Shymkent city, Republic of Kazakhstan, 160013

PSD last updated

14 Sep 2022

Understanding Transition

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

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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.

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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.

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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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