Serbian Climate Resilience & Irrigation Programme SCRIP

Location:

Serbia

Project number:

50848

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

11 Dec 2019

Status:

Disbursing

PSD disclosed:

24 Jul 2019

Project Description

As a result of the increasing country's climate related vulnerability and obsolete infrastructure, the GoS has decided to engage in upgrading, expanding and modernising its irrigation infrastructure. As continuation and expansion of the long-lasting cooperation with the EBRD and FAO, the three parties signed a Memorandum of Understanding ("MoU") in March 2019 with the objective to implement joint activities aimed at strengthening Serbia's agri-food sector. One of key areas of cooperation set out in the MoU is investment in irrigation and water management including development of a joint investment programme in the sector.

The Programme includes financing construction and rehabilitatation of critical irrigation infrastructure in three distinct regions of Serbia: Negotin (Eastern Serbia), Svilajnac (Central Serbia) and Vojvodina (Northern Serbia). The investments will be financed from a loan to the Republic of Serbia in the amount of up to EUR 30 million. Financing of the Programme is split into two: Loan I (for investments in Negotin and Svilajnac) of up to EUR 15 million to be signed in 2019, and Loan II (for investments in Vojvodina) of up to EUR 15 million expected to be signed in 2020. The Programme also entails continuation of policy dialogue with the Ministry of Agriculture, Forestry and Water Management ("MAFWM") by assisting in preparation of the country's first Irrigation Strategy and a five-year Action Plan.

Project Objectives

In recent years, the government has started shifting its attention to river and related water infrastructure. Agriculture plays an important economic role in Serbia, representing 6 per cent of the country's GDP. However, irrigation infrastructure is obsolete and irrigated areas remain constrained through a lack of sustainable water resources.

Morever, the country's climate related vulnerability is increasing (according to recent estimates, 30 per cent of the total country area and 52 per cent of agricultural land is vulnerable to rainwater related flooding or water logging).

Therefore, the GoS has decided to engage in upgrading, expanding and modernising its irrigation infrastructure to sustain Serbia's climate resilience and support its agricultural sector, including a shift towards higher yield-crops. Additionally, the rehabilitation of Serbia's aged irrigation and water infrastructure is expected to contribute to water and energy savings.

The Project will be implemented by Public Water Management Companies "Srbijavode" (Loan I) and "Vode Vojvodine" (Loan II), in coordination with the Ministry of Agriculture, Forestry and Water Management of the Republic of Serbia (MAFWM), and respective municipalities.

Transition Impact

ETI score: 80

The Bank's involvement in the Project carries transition impact potential both in terms of increased resource efficiency and climate resilience, as well as through the creation of new opportunities for local farmers in the region, while promoting gender-responsive policies and services provisions.

 

1. Improved resource efficiency and climate resilience

The Project is expected to reduce Serbia's vulnerability to the impact of climate change risks. Serbia is facing continuing temperature increases and more frequent and prolonged drought. Additionally, its outdated and inefficient water supply system is amajor barrier to efficiency and sustainability of irrigation system. Upgrading the irrigation system will contribute to increase the efficient use of valuable resources as well as enhance the country's climate resilience.

2. Increased economic opportunities and promotion of gender-responsive policies and service provisions

Upgrade of the irrigation system is expected to create a moderate number of new economic opportunities (including higher agricultural yields and increased revenues from higher value crops), introduce a new training programme to local farmers in the target area and enhance women's leadership and participation in agricultural strategy development with a view to promote gender-responsive policies and service provisions.

Client Information

SERBIA SOVEREIGN

Government of Serbia, represented by MAFWM as the body responsible for agriculture and water management.

EBRD Finance Summary

EUR 30,000,000.00

Two consecutive sovereign loans in a total amount of up to EUR 30 million.

Total Project Cost

EUR 30,000,000.00

Environmental and Social Summary

The Project has been categorised B in accordance with the Bank's 2014 Environmental and Social Policy.  Environmental and Social Due Diligence ("ESDD") has confirmed that the project's environmental and social ("E&S") risks and impacts are readily identifiable and can be mitigated by way of a commitment to implementation of suitable mitigation measures.  Overall, the programme is expected to have positive socio-economic impacts during the operation period by improving access to irrigation water, and increased crop yields and value.

The Loan I components have been subject to ESDD which has been carried out by an independent consultant, while due diligence for the Loan II component will be completed separately. While detailed ESDD for Loan II will be undertaken in parallel with the technical feasibility studies an initial screening of the Loan II components has confirmed that the programme will not affect the overall categorisation of the project and that the Loan II components can be structured to meet the EBRD's Performance Requirements.  Appropriate legal covenants will be established to ensure that ESDD be completed prior to signing of the Loan II documentation and disbursement of funds.

The components of Loan I include the Negotin irrigation system which will convey around 4.6 million m3 of water per year, with an abstraction rate of 1.089 m3/s. ESDD concluded that for Component 1 water abstraction represents 0.008 per cent of the Q95 mean annual flow of the Danube and will therefore  have an insignificant environmental impact on water availability or upon aquatic species and habitats. This component may be subject to an Environmental Impact Assessment ("EIA") under national law once the design is further developed.

Total water abstraction in Svilajnac is estimated at 1.916 million m3/year. Sustainability tests indicated that abstraction from the shallow aquifer at the indicated rates would not have significant impacts on groundwater availability, including abstraction for drinking water.  Abstraction from the Resavska River at a rate of 0.343 m3/s, will be approximately 20 per cent of the monthly average during summer.  A review of the environmental flow prescribed within the local water permit has established that an increase from the current figure of 0.399 m3/s to 0.5 m3/s is recommended to ensure habitat continuity of the river for aquatic species. The revised environmental flow is within the natural variation of the river flow during the irrigation season and water will not be abstracted during fish spawning season.  As further mitigation the weirs will be designed to allow unimpeded fish passage upstream and downstream. Effectiveness of the mitigations measures will be reviewed during monitoring in the first year of operation. An EIA under the national law is not required for this component.

Construction phase impacts for Loan I mainly relates to land acquisition, the majority being temporary acquisition for the right of way of the pipelines with some permanent acquisition for fixed facilities. No physical displacement is anticipated and economic displacement will be minimised through location of pipelines along existing infrastructure routes e.g. road, field boundaries where possible. A Livelihood Restoration Framework has been developed and Livelihood Restoration Plans, appropriate for the scale of the land acquisition will be developed to comply with Performance Requirement PR5.

Construction contractors will be required to develop an Environmental and Social Management Plan to manage impacts of construction including pollution prevention, traffic management and occupational and community health and safety. The infrastructure for both components avoids any sensitive biodiversity areas and is located on modified or agricultural land and associated biodiversity impacts are therefore expected to be minimal.

PWMC Srbijavode as an implementing entity will develop and implement an E&S Policy and E&S Management and Monitoring Plan for the operation phase.  In addition, a Stakeholder Engagement Plan and community grievance mechanism in accordance with PR10 will be implemented by the Company. Support is being provided by EBRD through TC through provision of training to farmers on new irrigation techniques, which will also include water use efficiency and pollution prevention measures.

An Environmental and Social Action Plan has been developed to ensure the Project is structured to meet the PRs which will be agreed with the Client.  The ESAP includes general actions applicable to the Project and specific actions for each Component as needed.  It is anticipated that upon completion of ESDD for Loan II component a new ESAP will be agreed with PWMC Vode Vojvodine which will be an implementing entity for this component. 

PSD will be updated upon completion of ESDD for Loan II.

A Non-Technical Summary and Stakeholder Engagement Plan is available for this project.

Technical Cooperation and Grant Financing

The Project will benefit from the following TC of up to EUR 1.2 million

  • EBRD-FAO Framework agreement - Irrigation and Drainage improvements (USD 44,000, financed at 70 per cent by the EBRD Shareholders Special Fund (SSF) and 30 per cent by the FAO). Key objectives of the assignment were identification of the country's investment needs in irrigation and drainage infrastructure, understanding of national capacity to implement irrigation and drainage projects, and definition of priority areas for irrigation and drainage investment. The assignment was implemented by FAO.
  • Technical, financial, environmental and social due diligence (EUR 290,000) financed by the Government of Austria). The assignment includes a review of technical designs and the present and planned irrigated agricultural activities in the Project areas, environmental and social audit of the facilities to be financed from an EBRD loan, climate risk analysis, assessment of the economic, social, environmental water-/energy-efficiency and climate resilience benefits of the Project.
  • Preparation of the Irrigation Strategy for Serbia (estimated at EUR 823,000, expected to be financed by a bilateral or multilateral donor and FAO, and implemented by FAO). The assignment will result in development and adoption of a national strategy on irrigation, including the Action Plan for implementation of the Strategy and methodology for prioritisation of investments and financing strategy.
  • Serbian Irrigation Training and Gender-Responsive Service Provision i Capacity-building for the Agricultural Advisory and Professional Services of Serbia ("AAPSS") to deliver quality training on irrigation and ensure gender-sensitive service provision (estimated costs of EUR 75,000 to be funded under the Gender Advisory Services Framework).

PSD last updated

20 Dec 2019

Understanding Transition

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

Business opportunities

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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.

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.

Please note that after the appointment of the new mechanism Head in 2020, the revised Project Accountability Policy and Guidance will come into effect to guide case handling.

 

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