GrCF2 W2 Khmelnytskyi Solid Waste Project

Location:

Ukraine

Project number:

50729

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

A

Approval date:

02 Sep 2020

Status:

Signed

PSD disclosed:

09 Apr 2020

Project Description

The provision of a senior loan of up to € 28.5 million to Communal Enterprise "Spetskomuntrans" (the "Company") to finance the rehabilitation and modernisation of solid waste infrastructure in the City of Khmelnytskyi. The Project is a part of the Green Cities Framework 2. The facility is designed to serve as a sector-wide catalyst for addressing environmental challenges at the city level.

Project Objectives

The phase I of the Project will address the City's urgent investment needs with respect to (i) the rehabilitation of the existing landfill, (ii) the construction of a new engineered sanitary landfill in compliance with the EU standards adjacent to the old one, (iii) the acquisition of new landfill equipment to ensure sustainable operation of the new landfill, and (iv) improvements of the solid waste collection and transportation systems co-financed from the City's budget.

The phase II of the Project includes the construction of a new Material Recovery Facility ("MRF") for non-organic waste and a separate composting facility for pre-sorted organic waste that will reduce the share of solid waste going to the landfill by promoting recycling and providing a modern solid waste management infrastructure with respect to sorting and composting. The Project will ensure that a long-term, sustainable solid waste management strategy is properly implemented.

Transition Impact

ETI score: 70

The Project is part of the Green City Framework 2 ("GrCF2"). The GrCF2 is a strategic and multi-project approach targeting environmental issues in selected large cities in our countries of operation.

The primary goal is to achieve significant environmental improvements and promote the green transition quality within the relevant cities. The GrCF2 also aims to build necessary capacity and facilitate better coordination among various stakeholders within the relevant cities in order improve the governance, operational efficiency and financial sustainability of the targeted investments and initiatives. These objectives are supported by the development and implementation of a city-specific Green City Action Plan ("GCAP") identifying and prioritising environmental challenges and ways to address them through targeted investments, services and policy instruments. The Project will pursue Green and Well-governed TI objectives consistent with the GrCF2 transition impact.

Client Information

SPETSKOMUNTRANS

Communal Enterprise "Spetskomuntrans", a municipal company wholly owned by the City of Khmelnytskyi, is responsible for collection, treatment and disposal of municipal solid waste. The Company has contracts with more than 92,000 households and almost 3,000 commercial and public organizations for waste removal and disposal.  The Company is also an operator of the existing landfill located at the territory of the City.

EBRD Finance Summary

EUR 28,500,000.00

Senior loan including committed and uncommitted tranches.

Total Project Cost

EUR 36,500,000.00

€ 28.5 million senior loan split into several tranches co-financed by up to EUR 5.0 million investment grant from the EU Neighbourhood Investment Platform ("EU NIP") and up to EUR 3.0 million local contribution.

Additionality

The Bank is uniquely positioned to assist the City in addressing environmental challenges through the preparation and implementation of a GCAP.

Environmental and Social Summary

Categorised A (2014 ESP). A comprehensive Environmental and Social Impact Assessment (ESIA) has been carried out and an information disclosure package in accordance with the Bank's Performance Requirements (PRs) was prepared and included (i) Environmental and Social Impact Assessment Report, (ii) Non-Technical Summary (NTS), (iii) Stakeholder Engagement Plan (SEP), (iv) Livelihood Restoration Framework, and (v) an Environmental and Social Action Plan (ESAP). All documents have been disclosed in English and Ukrainian on the Bank's website and locally by the Client (SKT) on 28 February 2020. To date, no significant issues have been raised by any affected people, Civil Society Organisation or the general public. The ESAP has been agreed with the Client to structure the Project to meet EBRD Performance Requirements (PRs). The ESIA confirmed that no significant negative environmental or social impacts are expected from the Project. Local EIA has been also developed, disclosed and is subject to approval by the national authorities.

SKT with the help of an independent environmental and social consultant has had a number of stakeholder meetings, social survey and scoping consultation activities with potentially affected and interested stakeholders including members of the adjacent community since June 2019. Due to COVID-19 restrictions for public gatherings, SKT and the City revised the stakeholder engagement activities for the disclosure period and alternative engagement approaches have been identified and implemented. Details of these additional measures have been disclosed by SKT and the Bank to ensure meaningful stakeholder engagement and public consultations in line with EBRD requirements.   

As part of the ESIA preparation, several alternatives have been considered, including designs and location alternatives and the 'no project scenario'. Following the detailed analysis, the ESIA confirmed that the Project will provide significant environmental and social benefits to the City and surrounding communities through construction of a new engineered sanitary landfill in compliance with the EU standards; closing and rehabilitating of the existing landfill; improvements of the solid waste collection and transportation systems. Phase 2 of the Project will include the establishment of a MRF with a separate composting facility for pre-sorted organic waste that will reduce the share of Municipal Solid Waste (MSW) going to the landfill by promoting recycling and providing a modern Solid Waste Management infrastructure. Additionally opportunities for waste management improvement and introduction of circular economy principles on the regional level in Khmelnytska Oblast (region) will be assessed as part of an on-going separate Technical Cooperation project supported by the EU.

The ESIA confirmed that the majority of the potential negative environmental and social impacts will be during the construction phase, but following the implementation of the mitigation measures specified in the ESAP and good construction practice, the construction effects will be temporary and are not considered to be significant.

The Project is located outside the urban area of the City and is bound by agricultural land and/or villages on all sides. There are residential properties from these villages located in the vicinity of the existing landfill (which will be closed and rehabilitated as part of the Project), with the closest being 70m to the south. The proposed remediation and capping of the existing landfill will reduce the current dust risk including particulates, volatile organic compounds, airborne micro-organisms (bio-aerosols) to human health and will eliminate the odour nuisance at residential dwellings located close to the existing landfill.

The ESIA confirmed that no sensitive ecological receptors are located in the vicinity of the Site. The site is not considered to support any important populations of plant or animal species that are of increased conservation value.

Landscape and visual impact will be minimised through spatial planning of the closed existing landfill to be planted with grass, shrubs and trees also on the boundaries.

The closest surface water features to the Site are the wetland pond associated with the existing landfill and an unnamed stream adjacent to the existing landfill. These features are all located downhill of the Project and neither are utilised by the local villagers for water supply nor used for any agricultural activities. Analysis of water samples showed that some parameters exceed Ukrainian surface water standards and some additional negative impact is expected during the construction activities, when the excavated material will be temporarily stockpiled. This has the potential to migrate to the un-named stream and wetland, effecting the quality of surface waters at and downstream of the Project via runoff. However, with the identified mitigation measures in place, the construction effects to surface waters, due to the Project, will not be significant. To mitigate potential impact on the surface and groundwater during operation, provision of leachate extraction management system and treatment plant (leachate management plan) is provided as part of the Project. The Hydrological Risk Assessment (HRA) confirmed that the operational effects on hydrogeology and hydrology will not be significant, following the implementation of the mitigation measures.

The Project will also have a positive impact on the climate change mitigation thanks to GHG emissions reduction of up to 150k tons of CO2 equivalent per year during the post-implementation period compared to the 'no project' scenario.

The land acquisition programme for the landfill and MRF has been completed on the principle of "willing seller-willing buyer" in compliance with the national and the EBRD requirements. The Project has a Sanitary Protection Zone (SPZ) of 500m for the existing landfill, and currently indicative SPZs for the proposed landfill extension and MRF. As the Project includes the closure and rehabilitation of the existing landfill, impacts that the existing landfill is currently having on residential properties currently located within its SPZ will be significantly reduced and SPZ will be cancelled for the closed landfill.

The ESIA identified that the current landfill is being used by approximately 20 - 60 waste pickers, the majority of whom work on a seasonal basis, and a closure of this landfill as part of the project may mean a significant loss of their livelihoods. In addition the waste pickers reside in poor quality accommodation which they have established immediately adjacent to the landfill, on areas of land provided by their employers (sub-contractors engaged by the City). A Livelihood Restoration Framework ("LRF") has been prepared in accordance with EBRD PR 5 addressing the economic displacement issues for waste pickers and the ESIA includes mitigation for the potential loss of accommodation linked to waste pickers employment. The City is proactively looking to provide job opportunities at a new MRF facility and within the City municipal service companies including the option for accommodation linked to these jobs. Accommodation provided by the City or their Contractors working on the new landfill or MRF will need to comply with PR2. A Livelihood Restoration Plan will be further developed with a help of international consultants under a Technical Cooperation support. 

All measures to address the potential environment and social impacts and to bring the Company's operations into compliance with the EBRD's PRs have been incorporated into the ESAP. A number of Post-signing TCs are included as part of the Project which include: support with Project preparation; EHSS capacity building; Stakeholder Engagement and ESAP implementation including the Livelihood Restoration Plan development and implementation.

SKT 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.

Technical Cooperation and Grant Financing

Pre-signing: Comprehensive Environmental and Social Impact Assessment along with the Feasibility Study Review funded by Government of Sweden and Regional Solid Waste Management Plan funded by the EU NIP.

Post-signing: Project Implementation Support Consultant will support the Company in all aspects of project implementation, including preparation of conceptual design, technical specifications, tender documentation, tender evaluation and contract finalisation reporting to the Bank. The assignment will be co-financed from the loan proceeds.  Tariff Policy TC funded by the EU NIP will support the development of proposals on amendment of the tariff setting guidelines for landfilling and solid waste processing on the basis of full cost recovery principles, and the corresponding capacity building at the City level. Green City Action Plan TC funded by Government of Sweden will support the development and implementation of a GCAP for the City of Khmelnytskyi.

Company Contact Information

Ms Ksenia Kosiuk
smart.env.khm@gmail.com
+380 96 838 4476
29008, 2/1 Bandery Street, Office 323, City of Khmelnytskyi, Ukraine

Implementation summary


PSD last updated

29 Jul 2020

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

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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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