Kyrgyzstan Climate Resilience Water Supply Project

Location:

Kyrgyz Republic

Project number:

49793

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

A

Approval date:

02 Dec 2020

Status:

Passed Final Review, Pending Approval

PSD disclosed:

17 Jun 2020

Project Description

The provision of a sovereign loan of up to €50 million in favour of the Kyrgyz Republic to rehabilitate the irrigation water conveyance infrastructure in the country ("the Project"). The loan will consist of four tranches: Tranche 1 (committed) of up to  €3.72 million, Tranche 2 (committed) of up to  €12.73 million, Tranche 3 (uncommitted) of up to  €24.68 million and Tranche 4 (uncommitted) of up to €8.87 million.

The Tranche 2 is expected to be co-financed by a capital grant from the EBRD Shareholder Special Fund ("SSF") in the amount of up to  €5 million, the Tranche 3 and Tranche 4 are expected to be co-financed by a capital grant from the EU Investment Facility for Central Asia ("IFCA") in the amount of up to €15 million.

The Project will be implemented by the State Water Resources Agency ("SWRA" or "Client") under the government of the Kyrgyz Republic .

Project Objectives

The proposed Project will finance the rehabilitation of the irrigation water conveyance infrastructure, including on-farm canals, intake structures and pumping stations in Jalalabad, Naryn and Osh regions of the Kyrgyz Republic.

The Project will include the construction and/or rehabilitation of water intakes, pumping stations, main canals and a distribution network with a view to deliver water from rivers to a farm land. As a result of the Project, approximately 8,700 hectares of new irrigated land will be available for farmers creating additional jobs for more than 14,300 rural residents.

Transition Impact

The project's transition impact includes: 

  • Green: The Project is expected to enhance resilience to climate change and enable sustainable and efficient use of water by financing the modernisation of the IWCI in the KR;
  • Well-governed: The Project will contribute to developing the long-term irrigation tariff policy for the KR and, as the next step, implementing this policy. The Tariff Reform Programme for the SWRA will focus on developing a tariff setting methodology (which is not currently in place in the KR) aiming to gradually transit to operating and maintenance cost recovery.

ETI score is 61.

Client Information

KYRGYZ REPUBLIC SOVEREIGN

The Project will be implemented by the Project Imlementation Unit (PIU) to be established by the State Water Resources Agency. SWRA is responsible for abstraction, transportation and supply of irrigation water to Water Union Associations and other water consumers.

EBRD Finance Summary

EUR 50,000,000.00

A sovereign loan of up to €50 million to the Kyrgyz Republic.

Total Project Cost

EUR 70,000,000.00

Additionality

  • 15-year loans are not currently available from commercial banks;
  • The Bank's involvement will be additional because of the imposition of a set of conditionalities (e.g. applying the EBRD PP&R, implementing ESAP), which will allow for the Project's more efficient implementation;
  • The Project will covenant a policy change through implementing the tariff reform;
  • The SWRA will make use of the EBRD expertise in higher inclusion and gender standards through a dedicated component enhancing women's economic opportunities.

Environmental and Social Summary

Tranche 1, 2 and 3 of the project have been categorised B and Tranche 4 has been categorised A under the EBRD's 2014 E&S Policy. At this time, Board approval is sought for Tranches 1, 2 and 3 only. The Environmental and Social Impact Assessment (ESIA) of Tranche 4 is still on-going and it will be submitted to Board for consideration after the ESIA has been completed and disclosed to public for review and comments for a minimum 120 days.

The Project involves priority investments in the irrigation infrastructure (the Project) in Jalal-Abad, Osh, Batken and Naryn regions, including construction of new main and secondary canals and intake facilities, ensuring that the new infrastructure is resilient to climate change. Tranche 1 of the Project involves financing organisational settings and establishment of a Project Implementation Unit. Tranches 2 and 3 involve irrigation schemes: Scheme 3 Verkhney Akkup; Scheme 4 Nichke Sai; Scheme 5 Ala-Buga; Scheme 7 Aravan-Ak-Bura, and Tranche 4 - Scheme 9 Shor-Tola. The Project will provide farming opportunities to 40,000 households and inclusion opportunities for women and young people. It will also contribute to the expansion of arable irrigated lands and thereby help strengthen country's food security. The ESDD has confirmed that the environmental and social risks and impacts of the schemes 3,4,5,7 are readily identified and addressed through appropriate mitigation measures.

An independent consultant was commissioned to undertake Environmental and Social Due Diligence (ESDD) for the Category B Tranches 2 and 3 (Schemes 3,4,5,7) and to prepare an Environmental and Social Impact Assessment for the Category A Tranche 4 (Scheme 9).

The ESDD included a review of data relating to the investment programme,  visits to all schemes, assessment of  the Borrower's capability and capacity to implement the Project. The ESDD also involved additional data collection and field surveys, including the following:

  • Water flow surveys
  • Water quality surveys
  • Soil surveys
  • Ecology surveys
  • Social surveys and stakeholder engagement

Also in order to ensure that all cumulative E&S impacts from the whole irrigation programme are properly addressed at a national level, the Bank commissioned the preparation of Strategic Environmental and Social Assessment to start in 2020 to ensure that all other irrigation schemes are developed with full consideration of key E&S impacts.

Transboundary impactsfrom the Project and water allocations for the countries (Kyrgyz Republic, Uzbekistan and Tajikistan) were considered. It was confirmed that no significant transboundary impacts are anticipated and that no transboundary agreements will not be breached under different baseline and climate change scenarios.

Water Usage.  The ESDD showed that, overall, there is sufficient water predicted to be available to irrigate the lands while leaving adequate supporting flow, even in a drought year, and considering future climate change scenarios. However, the Scheme 7 assessment showed that flows could fall below the ecological flow requirements under baseline, drought and climate scenarios, and even fall so low that acute ecological impacts could occur. Based on the analysis, a significant adverse impact at this scheme is predicted for the future, depending on actual climate change. Measures proposed to mitigate this potential effect include optimising the operational rules of Papan reservoir to maximise its yield for irrigation, potable water supply, ecological flow and transboundary requirements. The impacts will need to be monitored and responsive, adaptive management applied.

Socio-economic impacts are anticipated to be positive due to the improvements to existing irrigation and expanding the area of land under irrigation available to local farmers. This is expected to; reduce the threat to, and increase the sustainability of the existing agrarian livelihoods; increase local employment and income generating opportunities; improve local food security; and raise agricultural earnings and expenditures.

Construction Related risks are of limited duration and readily mitigated; however they may be associated with the following risks: contractor management; noise, emissions and discharges; waste and dust; occupational health and community safety; and labour conditions. To mitigate these risks, contractors will be required to develop scheme-specific detailed management plans based on the Project Environmental and Social Management and Monitoring Plan ("ESMMP").

Associated Facilities:  In addition to the upgrades/construction to the infrastructure network, the schemes require a series of associated facilities such as transmission lines, pumping stations, reservoir improvements, etc., which have been reviewed during ESDD.  Through appropriate commitment to E&S stewardship the risks can be appropriately identified and mitigated.

Downstream Issues: The Client has limited leverage over some of the E&S risks associated with the Project, such as: responsible use of pesticides and fertilisers; efficient use of resources; and labour and working practices of the project Beneficiaries.  The institutional framework of the Client will need to be strengthened to address these issues.

The ESDD has concluded that the Client needs to strengthen its E&S capacity to implement the project in accordance with the Performance Requirements.  Furthermore, due to the nature and scale of the investment programme, a coordinated response between various stakeholders will be required to appropriately manage the E&S risks and impacts, and to deliver the anticipated benefits.

The project envisages conversions of large areas of land, which will involve re-classification of the land plots (stricter tenure regime will be enforced). These changes in land use will result in economic displacement especially on privately owned and currently used land plots. To address the displacement impacts, the Land Acquisition and Resettlement Framework (LARF) will be prepared. The LARF will also include a de-selection checklist that will help the client and Contractors to avoid or minimise temporary or permanent land acquisition, where feasible, and avoid locating the project components in proximity to the state border areas and enclaves.

To address the findings of the ESDD, an Environmental and Social Action Plan (ESAP) has been developed to structure the Project to meet the EBRD's Performance Requirements. The ESAP requires, among others, the following:

  • Develop and implement an integrated Environmental and Social Management System ("ESMS") and designate clear responsibilities for E&S matters associated with the investment programme. Appropriate resources, staffing and budget will be made available for the E&S department.  This element of the ESAP will be loan financed and included in the capacity building component.
  • Develop appropriate policies, procedures and systems so that all subprojects, are implemented in accordance with the EBRDs PRs.
  • Detailed project design will be fully integrated with E&S considerations, especially in relation to canal liners, drainage and geohazards;
  • Undertake spring surveys at Schemes 4 and 9 to develop Biodiversity Management Plans;
  • Prepare detailed Construction ESMMPs and associated management documents;
  • Conduct an external labour risk assessment of the client and particularly all contractors and sub-contractors involved in the implementation of the project and its separate schemes;
  • Develop O&M Plan, covering measures identified in the Site-Specific ESDD Reports;
  • Assign a social expert to support the implementation of the SEP. Each Contractor involved in project schemes need to assign a Community Liaison Officer (CLO) prior to the start of the construction works; 
  • Carry out long-term monitoring of hydrological parameters at all sites, in particular at Scheme 7, and apply adaptive management.

The EBRD has engaged with the Client at an early stage to establish practical measures for ESAP delivery, including provision of capacity building support and ensuring that adequate budget within the financing agreement for ESAP implementation is provided.

Stakeholder engagement has been undertaken during the Feasibility Study and ESDD, including

  • Consultations and meetings with the head and employees of Basin Water Management Units of Osh, Jalal-Abad, and Naryn provinces (regional branches of the Client);
  • Consultations and meetings with the heads of district and village administrations;
  • Meetings with representatives of selected Water Users Associations; and
  • Focus-group discussions with representatives of local communities.

A Stakeholder Engagement Plan (SEP) has been developed and will require a staged approach for each scheme as the Project is developed, in line with the Kyrgyz Republic legislation and the EBRD requirements. The SEP include alternative measures for engaging with various stakeholders and disclosing the project related information as per the government's requirements regarding COVID 19 and good international practices. A Grievance Mechanism for local community grievances will be set up for the Project, to be managed by the Client or their Construction Contractors.

Following project approval the Bank will support the Client through assistance with capacity building and developing the institutional capacity to implement the project in accordance with the PRs.

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 Environmental and Social Impact Assessment and Hydrology for amount of EUR 1,399,000, funded by the Infrastructure Project Preparation Facility and the EBRD Shareholder Special Fund; 
  • Strategic Environmental and Social Assessment Scoping Study for amount of €68,668, financed by the SSF.

Post Loan Signing:

  • Tariff Reform and Capacity Building Programme for the SWRA to include, among others developing a tariff setting methodology and building the SWRA's capacity. The estimated cost of this assignment is EUR 0.8 million, to be financed by an international donor or SSF; 
  • Promoting gender equality  to support woman's employment, skills training, and entrepreneurship opportunities, as well as enhanced and equitable access to water services. The estimated cost of this assignment is up to EUR 300,000, expected to be financed by an international donor or the SSF under the Gender Advisory Services Framework.

Company Contact Information

Mrs. Ashimbaeva Jyldyz Kalkanovna
tehinvest17@mail.ru
+996 772 040 471; +996 312 549 098
+996 312 549 094
www.water.gov.kg
Kyrgyz Republic, City of Bishkek, Toktonaliev Street, 4A

PSD last updated

17 Jun 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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