Road Corridor VIII - Phase I

Location:

North Macedonia

Project number:

49119

Business sector:

Transport

Notice type:

State

Environmental category:

A

Approval date:

08 Sep 2021

Status:

Approved

PSD disclosed:

21 Jun 2021

Project Description

Provision of a sovereign-guaranteed loan in favour of the Public Enterprise for State Roads (the "Company" or "PESR"), a state-owned company incorporated in the Republic of North Macedonia, at the amount of up to EUR 110 million. The operation will enable PESR to finance: i) capex and supervision related to the construction of a 10.7 kilometres-long section running from Bukojchani to Kichevo, and ii) detailed design of a subsection (the "project"). The project will be co-financed with a EUR 19.8 million investment grant provided by the European Union (EU) through the Western Balkans Investment Framework ("WBIF").

Project Objectives

The development of Corridor VIII is a strategic priority for North Macedonia identified as an extension of the Trans-European Transport Networks (TEN-T) to the Core Network of the Western Balkans. The project will support North Macedonia's economic development and contribute to the regional integration of the country by improving connectivity within the western region as well as with neighbouring countries and EU markets.

Transition Impact

ETI score: 65

Primary Quality: Resilient - the project will facilitate the participation of the private sector in operations & maintenance through tendering out a build-and-maintain contract, which incorporates the requirements addressing climate risk during the construction and operation & maintenance stages of the project and inclusive procurement.

Secondary Quality: Inclusive - the project will introduce on-site training opportunities for young people through the application of inclusive procurement principles.

Client Information

PUBLIC ENTERPRISE FOR STATE ROADS

The client and the borrower is PESR. The guarantor is the Republic of North Macedonia.

EBRD Finance Summary

EUR 110,000,000.00

A sovereign loan of up to EUR 110,000,000.

Total Project Cost

EUR 129,800,000.00

EBRD loan - EUR 110,000,000

WBIF Grant - EUR 19,800,000

Additionality

The Bank's additionality is derived from i) provision of missing  long-term financing in the country to match the life of infrastructure investments; ii) the Bank's further support of the commercialisation of the road sector in North Macedonia; iii) promotion of inclusiion in the road sector.

Environmental and Social Summary

Category A (2014) and rated high-medium risk. The Project consists of a 10.7 km long section of new motorway running from Bukojchani to Kichevo, and will extend the existing Corridor VIII motorway in North Macedonia. The Environmental and Social Impact Assessment ("ESIA") for this project was completed by a local company and reviewed by an international consultant on behalf of EBRD for this project. The international consultant worked with the local consultant and prepared the following documents for disclosure:

  • ESIA (English, Macedonian)
  • Non-technical summary ("NTS") (English, Macedonian, Albanian)
  • Stakeholder Engagement Plan ("SEP") (English, Macedonian, Albanian)
  • Environmental and Social Action Plan ("ESAP") (English, Macedonian, Albanian)
  • Land Acquisition Framework ("LAF") (English, Macedonian, Albanian)
  • Framework Biodiversity Management Plan ("FBMP") (English, Macedonian, Albanian).

These documents were disclosed on 11 December 2020. Following this disclosure and based on additional consultations during January 2021, it was decided to adjust the route to avoid residential areas and a cemetery resulting in a micro realignment near village Dolno Strogomiste. This work is being completed in accordance with the Design Change Management Procedure as required in the ESAP. An addendum is being prepared as a result of these changes including a revised SEP. The national Environmental Impact Assessment ("EIA") preparation, consultation and submission process is underway, utilising the ESIA documentation and to reflect the alternatives considered for the Project and the recent design change. PESR has already proven a commitment to the ESIA and ESAP in the recent hiring of an environmental specialist to oversee implementation of the project and in increasing its stakeholder engagement.

The Project is located approximately 50 kilometres southwest of Skopje. The majority of the alignment is situated in an intermountain valley with agricultural and urban development with the settlements surrounding the Project alignment including Bukojchani, Gorno Strogomishte, Dolno Strogomishte, Oslomej, Osoj, Trapchin Dol, Rashtani, Crvivci, Kolibari, and Zajas. The mountainous areas include habitats of typical Italian and Turkish oak forest, and the Riparian habitats (adjacent to the Zajaska River and its tributaries) include riparian black alder woodland and willow belts. Most of the local habitats, especially those in the valleys, have experienced anthropogenic degradation associated with agricultural and urban development. The Project design includes a tunnel to avoid the main forested area along the alignment. The ESIA includes details of the alternatives considered for the alignment and supplementary information will be included in the Addendum.

PESR and their designers are seeking to minimise physical resettlement as part of the finalisation of the detailed design, which is anticipated to be completed by August 2021. A Land Acquisition Plan ("LAP") is required to be prepared based on the alignment selected to take into account the impacts to people living and working in the 40m safety buffer zone, informal land users (potentially requiring the displacement 8 Roma households) in Pevci and economic displacement to directly affected farmers and businesses. Given the potential vulnerability of some of the project affected people additional targeted stakeholder engagement and support will be provided as part of the LAP preparation and implementation.

The main risks posed by this Project relate to the construction activities to be performed by contractors and therefore contractor management is of paramount importance. The main risks relate to potential impacts to local water quality, habitats and biodiversity, nuisances caused to the local population during construction and possible impacts to local community and their livelihood associated with land acquisition. The Environmental and Social Management Plan ("ESMP") for the project requires a range of plans with defined mitigation measures to be implemented during the construction and operational phases. A road safety audit will be required with design amendments and mitigation measures incorporated into the project as appropriate.

This Project has been structured to be compliant with the Performance Requirements through the implementation of the commitment contained in the ESIA, ESAP, SEP and FBMP. This Project is adopting the application of the mitigation hierarchy with a preference of avoidance. This is demonstrated through the use of an expensive tunnel to avoid a stretch of forested natural habitat immediately north of the village of Kolibari.

Some of the mitigation measures included in the ESAP as follows: develop and implement a comprehensive Environmental and Social Management System along with adequate resources; implement labour, health and safety and social standards/procedures compliant with EBRD PRs into the project Human Resources policies and standards; appoint a safety specialist to interact with local communities during construction on items relating to community safety, especially temporary road and rail crossings; implement a road safety audit; develop and implement a Land Acquisition Plan consistent with the Land Acquisition Framework and PR 5; implement the Biodiversity Management Plan to ensure no net loss to sensitive habitats including the oak forests and riparian habitats; and, implement and regular updates to the Stakeholder Engagement Plan and community engagement. The Bank will monitor the Project's environmental and social performance and implementation of the ESAP through active monitoring during the construction phase including monitoring site visits when necessary.

Technical Cooperation and Grant Financing

TC1: Environmental and Social Impact Assessment.

TC2: Environmental and Social Impact Assessment (ESIA) Addendum.

TC3: Climate Resilience Assessment.

TC4: Youth inclusion through inclusive procurement in North Macedonia-Road Corridor VIII, Phase I.

TC5: PIU Assistance.

TC6: Support with Land Acquisition Plan and Stakeholder Engagement with Vulnerable Groups.

Company Contact Information

Shkelqim Miftari
s.miftari@roads.org.mk
+389 (0) 2 3118-044
+389 (0) 2 3220-535
www.roads.org.mk
Dame Gruev 14 1000 Skopje

PSD last updated

22 Jun 2021

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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