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.
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.
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.
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
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
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
+996 555 989 421
PSD last updated
24 Sep 2020
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Independent Project Accountability Mechanism (IPAM)
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