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.
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 However, irrigation infrastructure is obsolete and irrigated areas remain constrained through a lack of sustainable water resources.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.
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.
Government of Serbia, represented by MAFWM as the body responsible for agriculture and water management.
EBRD Finance Summary
Two consecutive sovereign loans in a total amount of up to EUR 30 million.
Total Project Cost
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
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