Surkhandarya Water Project

Location:

Uzbekistan

Project number:

50979

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

02 Sep 2020

Status:

Passed Final Review, Pending Approval

PSD disclosed:

14 Aug 2019

Project Description

Provision of a sovereign loan of up to USD 50 million (EUR 45 million) to the Republic of Uzbekistan for the benefit of State Unitary Enterprise Surkhandarya Suvokova (the "Company") to finance the rehabilitation of water infrastructure in Surkhandarya region (the "Project").

Project Objectives

The Project is expected to improve water quality and increase the efficiency of water infrastructure.

Transition Impact

ETI score: 61

        Primary Quality - Green. The Project is expected to enhance resilience to climate change and enable sustainable and efficient use of water by restoring supply of water to rural areas, increasing the number of people connected to the centralised water supply network and reducing water losses and;

        Secondary Quality - Resilient. The Project will focus on financial and operational improvements to secure operating and maintenance cost recovery and contribute to sustainability of infrastructure assets.

Client Information

UZBEKISTAN SOVEREIGN

EBRD Finance Summary

USD 50,000,000.00

Total Project Cost

USD 60,000,000.00

Environmental and Social Summary

Categorised B (EBRD's ESP 2014). The Environmental and Social Due Diligence (ESDD) phase of the proposed PIP was carried out as part of the feasibility study by an independent international consultant. It included a review of current Environmental and Social (E&S) practices, an assessment of the Project's potential E&S impacts and a review of the Company's E&S provisions and management capacities.

 

PIP together with ESAP will enable a larger proportion (total of 230,000 people, including 80000 new connections) of the local population to access reliable clean drinking water and achieve compliance with national and EU drinking water quality standards. Still long term investments will be required for large scale extensions and improvements to the water supply system to achieve compliance with the national and EU requirements for the whole population. These further expansion and improvements to the water supply system need to be included in the long term investment programme. At this time the financing for the long-term investment programme from the Companies' own revenues cannot be confirmed and no potential sources of external funding has been identified. Therefore, on account of constraints arising from affordability and limited financial resources, derogation will be sought from the EBRD's Environmental and Social Policy (2014).

 

Issues with the current water supply in the Surkhandarya Region include insufficient capacity and the technical deterioration of water distribution infrastructure. Drinking water is of poor quality (exceeding limits for sulphates, turbidity and coliform parameters) due to the network's poor condition, low efficiency of water disinfection and inadequate quality of water treatment. Water quality monitoring is sporadic and inefficient. The Company's E&S management systems are inadequate and require improvement. Overall, a number of non-compliance issues were identified during the ESDD phase, which will be mostly addressed by corrective measures included in the ESAP.

 

For the population covered under the PIP, to ensure the necessary degree of water treatment, the Company will be required to undertake consistent water chlorination in accordance with the norms, while the compliance with national and EU potable water standards for turbidity and sulphates can be achieved by diluting the water from the existing source with the water from the new underground sources (where the water quality parameters are satisfactory). Enhanced water quality monitoring will also be introduced.

 

The Project's negative impacts are mostly of a short-term nature and relate to its construction stage. Most impacts will be localised within construction sites, apart from investments related to modernising water mains and distribution networks. These impacts include noise generated by equipment, local short-term increases in traffic intensity and corresponding increases in air pollution levels, soil and landscape disturbances during excavation works, and potential temporary economic displacement. The proper organization of works can mitigate these impacts.

 

The ESDD phase has concluded that the PIP's overall implementation will result in long term positive social impacts through the provision of better services to the population. These include improving water supply services, creating possibilities for new connections to the water supply system, raising drinking water quality to meet national and EU standards, reducing sanitary and epidemiological risks, tangibly reducing water losses, and improving occupational safety and working conditions for Company personnel.

 

If all the additional measures (chlorination, proper operational mode of water supply, proper water quality monitoring and immediate follow-up measures) are fully implemented in line with the ESAP, it is expected that the improved water quality will satisfy both local and EU requirements. The ESAP also requires the Company to implement a number of improvements designed to meet the EBRD's PRs, inter alia, increasing the Company's EHS capacity, developing of EHS procedures relating to the main EHS risks, instituting HR policies, including introducing worker grievance mechanisms, developing a contractors' EHS and labour management and monitoring programme, and implementing the SEP together with a public grievance mechanism. An ESAP has been developed to address any E&S impacts and shortcomings, to be agreed upon with the Company prior to the Board meeting.

 

The EBRD will monitor the Project's and ESAP's implementation, as well as the Company's environmental and social performance, by reviewing the Company's annual environmental and social reports and undertaking monitoring visits as needed. A Stakeholder Engagement Plan (SEP) and a non-technical summary (NTS) have also been developed for the Project.

Technical Cooperation and Grant Financing

Pre-signing:

TC 1: Technical, financial, environmental and social due diligence. The assignment costs €187,400, and was funded by the EBRD Shareholder Special Fund through the Infrastructure Project Preparation Facility.

 

Post-signing:

TC 2: Corporate Development Support to the Company to enhance its institutional, operational and financial capacity. The assignment's cost is estimated at €200,000, to be financed by the Early Transition Countries Fund.

Company Contact Information

Aziz Erkaboev
a.erkaboev@mjko.uz
+99871-235-85-79
+99871-235-85-79
http://mjko.uz
1 Niyozbek Yuli street, Tashkent City, 100035, Uzbekistan

PSD last updated

19 Feb 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.

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Email: projectenquiries@ebrd.com

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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.

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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