Ukraine Road Corridors

Location:

Ukraine

Project number:

50831

Business sector:

Transport

Notice type:

State

Environmental category:

A

Approval date:

16 Dec 2020

Status:

Signed

PSD disclosed:

09 Oct 2020

Project Description

Provision of a sovereign loan of up to EUR 450 million to Ukraine to be on-lent to Ukravtodor, the State Road Agency of Ukraine, consisting of three tranches (the "project"):

  • Tranche 1 of up to EUR 100 million to finance the rehabilitation of the M-05 Kyiv-Odesa road section in Cherkasy region,
  • Tranche 2 of up to EUR 160 million to finance the construction of a northern section of the bypass around the city of Lviv,
  • Tranche 3 of up to EUR 190 million to finance the rehabilitation of the M-05 Kyiv-Odesa road sections in Kirovohrad, Mykolaiv and Odesa regions.

Project Objectives

Tranches 1 and 3 aim to support the rehabilitation of strategically important sections of the M05 Kyiv-Odesa road, which is part of Corridor IX of the Trans-European Transport Network ("TEN-T") and one of the busiest roads in the country connecting the capital to the biggest city in the south and the Black Sea ports, which are a vital logistical hub for freight transport.

Tranche 2 will support the completion of the ring-road around the city of Lviv, which is located at the intersection of TEN-T Corridors III and V, and will enable through traffic to bypass the city more effectively improving travel times and reducing congestion in the city.

The project will also support legal and regulatory reform objectives aimed at developing a competitive and transparent road construction and maintenance sector.

Transition Impact

ETI score: 67

Primary Quality - Well-Governed. The Project will support the following objectives:

  • In accordance with the Memorandum of Understanding between the Government of Ukraine and the Bank on Prevention of Corruption and Fostering Transparent and Efficient Management in the Public Sector dated 7th October 2020: (i) development and implementation of a comprehensive anti-corruption programme for Ukravtodor involving the strengthening of procurement, anti-bribery and anti-corruption internal controls, policies and procedures; and (ii) review of procurement procedures at Ukravtodor and introduction of procurement certification by Chartered Institute of Procurement and Supply ("CIPS");
  • Adoption of new standardised tender documents, qualification and evaluation criteria and internationally recognised forms of contract for road maintenance / construction contracts procured by Ukravtodor in accordance with the national legislation;
  • Development of legal and regulatory reforms to support road safety objectives.

Secondary Quality - Integrated. The project will support the completion of the rehabilitation of the M-05 Kyiv-Odesa road and construction of the Lviv Northern Bypass, which are strategic road sections making part of the TEN-T corridor network. In addition, the Project will also support the introduction of weigh-in-motion systems to manage the impact of overweight vehicles and implementation of a strategic road safety risk assessment across the national road network to identify and prioritise high risk segments.

Client Information

UKRAINE SOVEREIGN

The borrower is Ukraine. The loan proceeds will be on-lent to Ukravtodor, the State Road Agency of Ukraine.

EBRD Finance Summary

EUR 450,000,000.00

A sovereign loan of up to EUR 450 million.

Total Project Cost

EUR 1,147,000,064.00

EBRD Loan:    EUR 450 million

  Tranche 1    EUR 100 million

  Tranche 2    EUR 160 million

  Tranche 3    EUR 190 million

EIB Loan:     EUR 450 million

Client's contribution: EUR 247 million

Additionality

The Bank provides support to strengthen the Ukravtodor's capacity with respect to procurement, project implementation, environmental and social issues, and anti-corruption reforms.

Environmental and Social Summary

Tranche 1 (rehabilitation of the M05 Kyiv-Odesa road section km 152-237) and Tranche 3 (rehabilitation of the M05 Kyiv-Odesa road section in Kirovohrad, Mykolaiv and Odesa regions) are categorised B, Tranche 2 (24 km northern section of the Lviv bypass) is categorised A under the 2014 ESP. At this time, Board approval is sought for Tranche 1 only. The Environmental and Social Impact Assessment (ESIA) for Tranche 2 and independent environmental and social due diligence (ESDD) for Tranche 3 are still under preparation and will be submitted to Board for consideration after the ESIA and ESDD has been completed and ESIA for Tranche 2 is disclosed to public for review and comments for a minimum of 120 days. 

The independent ESDD of the Company and the Tranche 1 project has confirmed that the rehabilitation of the existing road will result in environmental and social benefits and safety improvements. Any adverse environmental and social impacts are expected to be temporary in nature, primarily limited to the construction activities and are readily addressed through appropriate mitigation measures. Potential cumulative environmental and social impacts for the whole Tranche 1 road section have been characterised and assessed within the scope of ESDD and no material negative cumulative impacts were identified.  The ESDD has confirmed that the Borrower's overall capacity, and related EHSS management systems, are generally aligned with the Bank's Performance Requirements (PRs). Furthermore, the Borrower is an existing client of the Bank and has demonstrated satisfactory performance to date on the previous projects.

Local EIAs (OVOS) have been undertaken in accordance with national requirements to evaluate the risks and impacts associated with the Tranche 1 road section. Findings from the ESDD and Road Safety Audit have been taken into account by the designers and integrated into the project design and are expected to be approved by the State expertise. Disclosure of OVOS and project related information and public engagement was organised and completed in accordance to the national requirements. 

Whilst the project is generally found to be structured to meet EBRD PRs, the ESDD has identified a number of gaps to be further addressed through the implementation of an Environmental and Social Action Plan ("ESAP").  Particular focus is needed on management systems, labour, stakeholder engagement and health and safety. 

The ESDD  identified that stakeholder engagement and public consultations have been limited and not all Project details regarding the benefits and impacts of the Project were sufficiently communicated to the stakeholders. Stakeholder engagement activities will need to be improved and in line with the developed Stakeholder Engagement Plan ("SEP").  Additional stakeholder consultation activities (considering COVID-19 related restrictions) are required in parallel with the project development. Consultations will be undertaken with the local communities, local businesses and road users and will focus specifically on road safety benefits of U-turns closure, final U-turns solutions, additional road safety measures and alternative connection routes. Feedback from these consultation activities will inform the final detailed design of the Project. Engagement will continue prior to and during construction and during operation, with a focus on road safety in adjacent communities.

Occupational health and safety ("OHS") risks are related mainly to the construction phase and will be further elaborated and included into Construction Environmental and Social Management Plan to be provided by the contractors. The construction contractors will be required to comply with the relevant requirements in PR2 including preparation of an HR policy; recruitment procedures and workforce code of conduct; and accommodation standards.  If any on-site accommodation is required for workforce it will need to be sited appropriately to minimise E&S impacts.

There is no physical resettlement associated with the Project. Very small-scale land acquisition limited to one location with the total area of up to 0.30 ha is expected and temporary economic displacement has been further limited due to the retention of existing access points to official businesses or provision of alternative access. Alternative arrangements will also be provided during the construction phase or any temporary access restrictions agreed in advance with businesses. Two informal businesses could be subject to permanent economic displacement and measures will be put in place to provide alternative, safe locations for these business activities or provision of alternative access arrangements.  The Client has prepared a Resettlement Policy Framework (RPF) in line with both national and MDB (EIB and EBRD) requirements, which covers the Project.  The Client is required to prepare a Land Acquisition and Livelihood Restoration Plan proportionate to the predicted Project impacts.

No negative biodiversity impacts are expected. Additional noise and air quality analysis identified areas where installation of noise screens and additional monitoring are required and these requirements have been incorporated  into the project.

A road safety audit has been completed and confirmed significant improvements in relation to the baseline scenario with a number of good international road safety practice measures introduced. Possibly the most important improvement is that all at-grade pedestrian crossings have been replaced by footbridges or underpasses and 21 out of 23 U-turns have been closed. The Bank also will continue broader involvement into policy dialogue and Road Safety reforms under related Transition Impact support which among others will include: completion of the Strategic Road Safety Risk Assessment; improved coordination and establishment of a Road Safety Department within Ukravtodor; improvement in data collection and analysis system of the road safety data and mandatory implementation of post-construction road safety audits and road accidents monitoring and analysis after completion.

The ESAP has been developed to address the issues raised above, and also to include further improvements to the environmental and social management at all stages of the project implementation. Among others the ESAP includes: inclusion of E&S provisions in the construction contracts and preparation and implementation of a Construction Environmental and Social Management Plan; integration of climate adaptation measures, improvements in noise and air monitoring; formalising and developing improved labour and OHS procedures and practices; traffic management plans and safety and emergency response procedures during construction in accordance with PR2 and PR4. In addition, a workers' grievance mechanism will be implemented by both the Client and the Construction contractor.

The ESAP will need to be agreed with the Client before the Board.

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 and ESAP. The environmental and social performance of the project and implementation of the ESAP will be monitored through annual E&S reports and site visits when deemed necessary.

Technical Cooperation and Grant Financing

TC1: Environmental and social due diligence

TC2: Economic and technical due diligence

TC3: Road safety audits of the road infrastructure to be rehabilitated under the Project

TC4: Assessment of the climate vulnerability context and potential structural and non-structural measures to improve climate resilience

TC5: Reform implementation support including strategic risk assessment, road safety inspections for high risk sections, road safety management capacity review and training

TC6: Procurement Practices Reform including the review and preparation of new standard procurement documents, qualification and evaluation criteria and forms of contract for the road construction sector

TC7: Procurement benchmarking and corporate certification by CIPS

TC8: Development of a targeted anti-corruption action plan for Ukravtodor and support in its implementation

Company Contact Information

Oleksandr Kubrakov
loans@ukravtodor.gov.ua
+38 (044) 287 74 08
+38 (044) 287 41 18
https://ukravtodor.gov.ua/
9 Fizkultury Str. Kyiv, 03150

PSD last updated

19 Nov 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 more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

Share this page: