Surkhandarya Water Project

Location:

Uzbekistan

Project number:

50979

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Approval date:

26 Feb 2020

Status:

Concept Reviewed

PSD disclosed:

14 Aug 2019

Project Description

The provision of a sovereign loan of up to US$ 50 million (€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

Good

  • 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

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

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 3: 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
+99871-235-85-79
+99871-235-85-79

Business opportunities

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Public Information Policy (PIP)

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Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.