Project Description
Provision of a sovereign loan of up to EUR 450 million to Ukraine to be on-lent to the State Agency for Restoration and Development of Infrastructure of Ukraine, formerly known as the State Road Agency of Ukraine Ukravtodor (the "Agency" or the "Client"), consisting of three tranches (the "Project"):
- Tranche 1 of up to EUR 183 million to finance the capital repair of the M-09 Ternopil - Lviv - Rava-Ruska road section between Lviv and Rava-Ruska;
- 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 107 million to finance the rehabilitation of the M-05 Kyiv-Odesa road sections.
Project Objectives
Tranche 1 will support the capital repair of the M-09 Ternopil - Lviv - Rava-Ruska road section between Lviv and Rava-Ruska on the Polish-Ukrainian border. The ongoing war on Ukraine has prompted a re-assessment of priorities following the redirection of traffic to the land routes in western parts of Ukraine connecting to the EU. There is an urgent need to improve the transport and operational condition of the M-09 road, which is the main route connecting Lviv to Warsaw and part of the TEN-T corridor network, by performing capital repairs with critical road safety upgrades and climate adaptation measures. The Project will address the immediate priorities of developing alternative transport routes to facilitate export and import logistics (including for agricultural exports and critical imports) in line with the Solidarity Lanes initiative and in response to the war on Ukraine.
Tranches 2 and 3 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 the rehabilitation of strategically important sections of the M-05 Kyiv - Odesa road, which is part of Corridor IX.
The Project will also support legal and regulatory reform objectives aimed at developing a competitive and transparent road construction and maintenance sector.
Transition Impact
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 7 October 2020: (i) development and implementation of a comprehensive anti-corruption programme for the Agency involving the strengthening of procurement, anti-bribery and anti-corruption internal controls, policies and procedures; and (ii) review of procurement procedures at the Agency and implementing the recommendations of the Procurement Capacity Building Assessment;
- Adoption of new standardised tender documents, qualification and evaluation criteria and internationally recognised forms of contract for road maintenance / construction contracts procured by the Agency 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-09 Ternopil - Lviv - Rava-Ruska road (section between Lviv and Rava-Ruska) and 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 the State Agency for Restoration and Development of Infrastructure of Ukraine.
EBRD Finance Summary
EUR 450,000,000.00
A sovereign loan of up to EUR 450 million.
Total Project Cost
EUR 546,400,000.00
EBRD Loan: EUR 450 million
Tranche 1 EUR 183 million
Tranche 2 EUR 160 million
Tranche 3 EUR 107 million
EIB Loan: EUR 50 million
Client's contribution towards VAT: EUR 46.4 million
Additionality
The Bank provides support to strengthen the Agency's capacity with respect to procurement, Project implementation, environmental and social issues, and anti-corruption reforms.
Environmental and Social Summary
Tranche 1 (capital repair of M-09 Ternopil - Lviv - Rava-Ruska road section between Lviv and Rava-Ruska) and Tranche 3 (rehabilitation of the M-05 Kyiv-Odesa road sections) are categorised B. Tranche 2 (construction of the northern section of the Lviv bypass) is categorised A under the 2019 ESP.
Tranche 1 (capital repair of the M-09 Ternopil - Lviv - Rava-Ruska road section between Lviv and Rava-Ruska)
The Environmental and Social Due Diligence ("ESDD") for Tranche 1 was undertaken by external consultants and confirmed that the Project will result in environmental and social benefits and safety improvements with limited environmental and social impacts, which are expected to generally be temporary in nature, primarily related to the construction activities and can be readily addressed through appropriate mitigation measures.
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 road section and are subject to the state expertise. Findings from the ESDD and Road Safety Audit have been taken into account by the designers and integrated into the Project design. Disclosure of Project related information and public engagement was organised and completed in accordance to the national requirements and additional engagement was undertaken during the ESDD.
Whilst the Project is generally found to be structured to meet EBRD PRs, the ESDD has identified a number of areas for improvement 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 should be further improved in regards to the benefits and impacts of the Project with more specific information in relation to road safety, bicycle lanes, informal businesses and accessibility. Additional stakeholder consultation activities are required in parallel with the Project development in line with the developed Stakeholder Engagement Plan ("SEP"). Feedback from these consultation activities will inform the final detailed design of the Project and the engagement will continue prior to and during construction and during operation.
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 a 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 and align with the EBRD/IFC worker accommodation guidelines.
There is no physical resettlement associated with the M-09 Project component. Land acquisition is anticipated to be limited since the works will be restricted to land already part of the current road right-of-way. Any additional land needs and/or effects on informal users of existing land will be confirmed after the design is finalised. Permanent economic displacement is 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. The needs for mobile informal business activities will be further analysed and addressed as part of the regional road network development strategy, including parking infrastructure for trucks and rest areas.
The Client has a Resettlement Policy Framework ("RPF") in line with both national and MDB (EIB and EBRD) requirements, which will be updated to cover the M-09 Project component and is required to prepare and publicly disclose a Land Acquisition and Livelihood Restoration Plan ("LALRP") proportionate to the predicted Project impacts.
No negative biodiversity impacts are expected. Additional noise impact 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 improvements in relation to the baseline scenario with a number of good international road safety practice measures introduced, including installation of barriers to separate traffic and bicycle infrastructure connecting settlements along the road. The Bank also will continue broader involvement into policy dialogue and Road Safety reforms once the situation in Ukraine allows. That will include: completion of the Strategic Road Safety Risk Assessment; improved coordination of a Road Safety Department within the Agency; 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 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 for the Tranche 1 component was agreed with the Client. 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. This will include TC's already approved for implementation of LALRP and stakeholder engagement. 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.
Tranche 3 (rehabilitation of the M05 Kyiv-Odesa road sections)
The independent Environmental and Social Due Diligence ("ESDD") for Tranche 3 of the 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 Tranche 3 road sections 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 Tranche 3 road sections. 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 M-05 road section in Cherkasy region. 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.
For the M-05 road section in Kirovohrad, Mykolaiv and Odesa regions permanent additional land acquisition needs are preliminary estimated at approx. 85 ha, including for additional interchanges to replace closed U-turns. Due diligence identified some legacy issues in relation to historical land acquisition on non-residential land which will be addressed by entitlements defined within the Resettlement Policy Framework ("RPF") for the Project.
As part of Tranche 3 the Client has prepared a RPF in line with both national and MDB (EIB and EBRD) requirements, which covers the Project. The RPF has been further updated to account for the results of the due diligence, including entitlements and compensation provisions to address legacy issues and has been agreed with the Client. A Resettlement Action Plan ("RAP") will be developed, disclosed and implemented by the Client prior to construction activities commencing. The RAP will also cover any entitlements needed for permanent and temporary impacts associated with loss of access to the M-05 road from existing formal and informal roadside businesses.
No negative biodiversity impacts are expected. Additional noise and air quality studies are required for Tranche 3 during detailed design to identify areas where installation of noise mitigation measures and additional monitoring may be required.
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 will be replaced by footbridges or underpasses and 21 out of 23 U-turns will be closed for the M-05 road section in Cherkasy region and 67 out of 80 U- turns will be closed or replaced with 19 new grade separated interchanges for the section in Kirovohrad, Mykolaiv and Odesa regions. The Bank also will continue broader involvement into policy dialogue and Road Safety reforms already agreed at the time of the Project approval, which among others will include: completion of the Strategic Road Safety Risk Assessment; improved coordination and establishment of a Road Safety Department within the Agency; 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. Additional engagement with the Client will continue to close all other remaining U-turns subject to alternative access arrangements being finalised and consultation with local communities on the proposed solutions.
The ESAP for Tranche 3 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 for Tranche 3 was agreed with the Client. 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 Assessment for Tranche 1.
- TC2: Road Safety Audit for Tranche 1.
- TC3: ESIA Gap Analysis for Tranche 2.
- TC4: Road Safety Audit for Tranche 2 and Review of the Road Safety Reform Agenda.
- TC5: Technical and Economic Due Diligence for Tranche 2.
- TC6: Anti-Corruption Action Plan (ACAP). Development of a targeted ACAP for the Agency and support in its implementation.
- TC7: Environmental and Social Assessment for Tranche 3.
- TC8: Road Safety Audit for Tranche 3.
- TC9: Technical and Economic Due Diligence for Tranche 3.
- TC10: 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.
- TC11: Procurement Capacity Building Assessment by CIPS.
- TC12: Strategic Risk Assessment across the highways network.
- TC13: Lender's Technical Monitor to monitor implementation of the Project.
- TC14: Action Plan to Support Electric Vehicle Roll-out and Impact Assessment on Funding Model.
- TC15: Environmental and Social Impact Assessment for Tranche 2.
- TC16: Stakeholder Engagement Support and Capacity Building.
- TC17: Anti-Corruption Action Plan Implementation Support.
- TC18: Environmental and Social Assessment and Road Safety Audit for New Project Component.
- TC19: Technical and Economic Due Diligence for New Project Component.
Company Contact Information
Vadym Nozdria
pmu@restoration.gov.ua
+38 (044) 287 12 15
https://restoration.gov.ua/
51 Antonovycha Str.
Kyiv, 03150
Ukraine
PSD last updated
29 Jun 2023
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