KR Water Framework - Nookat Water sub-project

Location:

Kyrgyz Republic

Project number:

49420

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

06 Oct 2020

Status:

Approved

PSD disclosed:

24 Sep 2020

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

The provision of a sovereign loan of up to €2.2 million to the Kyrgyz Republic to be on-lent to the city of Nookat for the benefit of the Nookat Water Company. The Company provides water services in the City of Nookat and neighbouring villages of Frunze, Chapaev and Noigut.

The Project will finance water improvements in the City of Nookat and neighboring villages of Frunze, Chapaev, Noigut and Aral, including the rehabilitation of the water supply system, introducing household metering and modernising operational and maintenance equipment. The investments are expected to significantly improve access to clean water, reduce water losses, improve resilience to climate change and optimise operating costs for the company.

Project Objectives

1. The rehabilitation of the water system in the City and neighboring villages of Frunze, Chapaev, Noigut and Aral; and
2. The improvement of the Company's financial and operational management.

Transition Impact

ETI score: 70

In line with the Kyrgyz Water Sector Resilience Framework, the project will contribute:
 

  • Well-governed: introducing of a standardised Public Service Contract ("PSC") and Stakeholder Participation Programme ("SPP"); and
  • Competitive: introduction of Corporate Development Programme ("CDP"), tariff increases, enhanced metering and improved collection rates, and water supply network's resilience.


The sub-project will also support the Framework institutional reform, which includes the introduction of a standardized tariff methodology and standardized PSCs, as well as development of recommendations for a targeted social support mechanism. Project specific CDPs will support the commercialisation through the implementation of this standardized approach.

Expected Transition Impact is 70 in line with the framework approach.

Client Information

KYRGYZ REPUBLIC SOVEREIGN

The Company provides water supply services in the City of Nookat and neighbouring villages of Frunze, Chapaev and Noygut (Aral village is currently not covered) with population around 47,000 people. 

EBRD Finance Summary

EUR 2,200,000.00

A sovereign loan of up to €R 2.2 million to the Kyrgyz Republic to be on-lent to the City for benefit of the Company.

Total Project Cost

EUR 4,200,000.00

Additionality

The Bank will provide long-term financing, which is presently not available from commercial banks. The Bank will support the Company in achieving higher standards through its conditionalities (e.g. PP&R, ESAP, tariff increase and other covenants). CDP TC will improve the Company's institutional, operational and financial capacity. As part of the CDP TC, the client will also make use of the EBRD expertise on higher inclusion and gender standards, enhancing women's economic opportunities as part of the project.

Environmental and Social Summary

The Project has been categorised B in accordance with the 2014 Environmental and Social Policy. Environmental and Social (E&S) due diligence for the proposed Priority Investment Programme (PIP) has been carried out as part of the Feasibility Study by independent consultants. The ESDD showed that the implementation of the Project will significantly increase access to safe drinking water by improving the efficiency and reliability of water supply services in the City. Any adverse impacts related to construction stage will be limited, localised and temporary, and it will be possible to prevent or mitigate them by adhering to good construction practice.
 
The Project will improve the current poor microbiological quality of drinking water in the City by rehabilitating existing networks and water systems, contributing to improved public health. The modernization of the water system will increase the total population benefitting from improved access to water services from current 10,000 to 26,000 people after the Project is implemented. Implementation of the Project and the ESAP will bring the water supply services into compliance with EU Drinking Water Directive (98/83/EC) through removal of sources of microbiological contamination and improvements to Company's water quality testing regime. The project will be carried out on existing infrastructure and will not require land acquisition. Affordability analysis have shown some concerns in regards to direct water connections for the poorest families, which will be mitigated through local use of local community and Nookat City Administration funds to subsidize connections for the poor.
 
The due diligence showed that the Company has overall weak EHSS management capabilities and underdeveloped EHSS management systems, and that its current occupational health and safety and stakeholder engagement practices require improvement to meet the EBRD's Performance Requirements (PRs).
 
The ESAP has been developed for the Project, and approved by the Company to ensure that it complies with both national regulations and EBRD PRs, where financially feasible. The ESAP requires the Company to obtain necessary regulatory permits related to its operations and approval of national environmental expertise for detailed design of the PIP. Further the ESAP addresses strengthening of Company's capacity and EHSS management systems, including among others environmental and social requirements in contracts; preparation and implementation of a Construction, Environmental and Social Management Plan by the contractor and improved oversight of contractors by the Company; development of a formal HR policy; strengthening of stakeholder engagements activities; improvements in monitoring of water losses and water quality, inclusive of training in regards to new laboratory equipment laboratory equipment, improvements in waste management and occupational H&S practices. Given current Client's current low EHS capacity assistance form the PIU Consultant will be key in implementation of the ESAP.
 
Stakeholder Engagement Plans (SEP) and a non-technical summary (NTS) have been developed for the project and will be disclosed. The EBRD will monitor the implementation of the Project and the ESAP, as well as the Company's environmental and social performance, by reviewing the Company's annual environmental and social reports and undertaking monitoring visits as needed.

Technical Cooperation and Grant Financing

The following technical cooperation (the "TC") assignments are envisaged as part of this project:

Pre Loan Signing

  • Feasibility Study including financial, technical, environmental and social due diligence. The assignment cost US 160,000, and was financed by the EBRD Shareholder Special Fund;

Post Loan Signing

  • Project Implementation Support. The TC will support the Project Implementation Unit with engineering design and approval, procurement, preparation and evaluation of tenders, contract award and administration, financial control, project management and reporting. The assignment's cost is estimated at up to € 400,000, to be financed by Government of Japan.
  • Corporate Development and Stakeholder Participation Programme. The assignment's cost is up to € 200,000, to be financed by Government of Japan.

Company Contact Information

Mr. Zamirbek Esenbaevich Kamalov
vodokanalnookat@mail.ru
+996 555 989 421

PSD last updated

24 Sep 2020

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 how to submit a Request for review through our confidential online form, by emailmail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requesters’ identities may be kept confidential, upon request.

 

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