The provision of a loan of up to US$ 7 million (€ 6.26 million) to the state of Mongolia to be on-lent to the Province of Orkhon for the rehabilitation and expansion of the flood protection infrastructure and water networks in the city of Erdenet. The city is vulnerable to flooding and its inefficient water supply system provides services to less than half of Erdenet residents. The project will increase the city's climate resilience, and improve access to drinking quality water through the reduction of substantial losses within the water network. It is expected to be co-financed by a capital grant of up to US$ 7 million from bi-lateral or multilateral donors.
As a result of the Project, flooding frequency is expected to be reduced by 40-50 per cent. Almost 11,000 residents are expected to be connected to a more reliable and safe drinking water supply. Additional Measures under could result in the reduction of water loss in the system by 15 per cent.
ETI score: 61
The Project's expected transition impact is associated with the 'Green quality' through introducing a sustainable approach to environmental asset management and building climate change resilience. It is also associated with the 'Well-governed' through signing of a public service contract and corporate development programme for the benefit of the public utility company, Erdenet Water and Heat Distribution Network. Under the corporate development programme, long-term arrangements will be developed for the benefit of Province for the routine operation and maintenance of the flood protection infrastructure.
Province of Orkhon
EBRD Finance Summary
Total Project Cost
The EBRD offers a tenor, which is above the market average and is necessary to structure the project.
The EBRD's involvement in a project is considered additional when it is designed to trigger a change in the policy, sector, institutional or regulatory framework, or enhance practices at the sector or country level (e.g., an introduction of cost-reflective pricing of energy, water etc.).
Client seeks/makes use of the EBRD expertise on best international procurement standards.
EBRD provides expertise, innovation, knowledge and/or capabilities that are material to the timely realisation of the project's objectives, including support to strengthen the capacity of the client (e.g. insufficiently experienced PE fund managers or clients unexperienced in complex PPP-type arrangements).
Environmental and Social Summary
Categorised B (2014 ESP). The environmental and social due diligence ("ESDD"), has included an independent environmental and social audit/review of the current operations of the implementing entities and an analysis of potential environmental and social issues associated with the proposed priority investment programmes. The ESDD concluded that the project will reduce water losses from the existing network, improve the reliability and quality of the drinking water supply to the majority of water kiosks and in the city network to meet local and EU requirements. There will also be substantial social benefits from the reduced frequency of flood events as a result of the Project. Environmental and social (E&S) risks and adverse impacts are mainly associated with the construction works and assessed to be limited, localised and short-term as well as effectively mitigated by adhering to good construction practice as required by the ESAP and outlined in a construction E&S management plan, and through stakeholder engagement.
Construction works will generally take place within the urban/peri-urban area. No physical displacement or impacts on nationally or local protected areas or sensitive habitats are anticipated due to the location of proposed flood water storage areas. Economic displacement is expected to be limited as land plots needed for the project are undeveloped, mainly owned by the City and located adjacent to existing infrastructure. E&S impacts including noise generated by equipment, local short-term increases in traffic intensity and corresponding increases in air pollution levels, potential temporary access restrictions and occupational and community health and safety will be mitigated by adhering to good construction practice
The existing water supply network in the City was constructed during the Soviet period and is in generally in poor condition with high rates of water loss. Implementation and operation of the Project will be the responsibility of a number of different entities, namely the Governor's Office Engineering Department for construction, the Erdenet Water and Heat Distribution Network (EWHDN) for operation and maintenance of the drinking water supply system and the Provincial Service Office (PSO) for operation and maintenance of the flood protection system. ESDD included an assessment of the capacity of these entities and identified that the current Environmental Health and Safety ("EHS") management capabilities and underdeveloped EHS management systems require strengthening, and that the current occupational health and safety and stakeholder engagement practices require further improvement to meet EBRD's Performance Requirements (PRs).
Environmental and Social Action Plan (ESAP) has been developed to address the findings of the ESDD and it has been agreed with the Client. The ESAP requires, among others, the development of an E&S management system, contractor E&S management plans to manage construction impacts and inclusion of community health and safety measures in the design, construction and operation. A SEP has been developed and will be implemented by the Project entities and an emergency response plan including flood events is also required to be developed and implemented.
The Company will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank may also conduct monitoring visits, as required. The Bank will closely monitor the implementation of the post-signing Corporate Development Programme and PIU TCs to ensure compliance.
Technical Cooperation and Grant Financing
TC 1: Feasibility Study. The assignment's cost is estimated at up to € 314,900, financed by Infrastructure Project Preparation Facility ("IPPF"), funded by the EBRD Shareholder Special Fund (the "SSF").
Post signing TCs:
TC 2: Corporate Development Programme. The estimated cost of the assignment is up to € 350,000, proposed for financing by an international donor or the SSF.
TC 3: Project Implementation and Procurement Support. The estimated cost of the assignment is up to € 650,000, proposed for financing by an international donor or the SSF.
Company Contact Information
Governor's Office of Orkhon Province City Hall, Erdenet City Orkhon Province, Mongolia
PSD last updated
06 Apr 2020
Further information regarding the EBRD’s approach to measuring transition impact is available here.
For business opportunities or procurement, contact the client company.
For business opportunities with EBRD (not related to procurement) contact:
Tel: +44 20 7338 7168
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 email@example.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.
Project Complaint Mechanism (PCM)
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 accountability mechanism.
The accountability mechanism 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 our webpage to find out how to submit a complaint through the confidential online form, by email, mail or telephone. We are available to discuss your concerns and answer any questions you may have about the submission or handling of complaints. Complainants’ identities may be kept confidential upon request.