GrCF2 W2 - Split water purification project

Location:

Croatia

Project number:

51317

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

22 Jul 2020

Status:

Signed

PSD disclosed:

06 Feb 2020

Project Description

Provision of a senior loan to Vodovod i Kanalizacija d.o.o. Split (the "client"), a municipal company incorporated in Croatia providing water and wastewater services in the city of Split and the surrounding 3 cities and 9 municipalities for: (i) construction of a water purification plant in Split; and (ii) upgrade, construction and reconstruction of a system for improving water supply, collection of wastewater and its treatment in the Split-Solin and Kastela-Trogir agglomerations. The latter investments will be co-financed alongside EU-Cohesion Funds (around 70%) and nationally. Total project costs are estimated at EUR 358 million, of which the EBRD is envisaged to finance up to EUR 30 million.

The project is envisaged as part of the Green Cities Framework 2 ("GrCF2"). The facility is designed to serve as a sector-wide catalyst for addressing environmental challenges at city level.

Project Objectives

The loan proceeds will support: (i) construction of a state-of-the-art water purification plant at Jadro river, which will ensure full compliance with EU directives on water quality; and (ii) rehabilitation and upgrade of the water and wastewater network in the Split-Solin and Kastela-Trogir agglomerations. Works related to the agglomerations projects will include the construction of around 120 km new water pipes, the reconstruction of 70 km of existing water network, the construction of 310 km of new wastewater pipes, the construction of new pumping stations water storage tanks, the construction of 1 wastewater treatment plant ("WWTP") and the upgrade of two WWTPs from first to second grade of treatment.

Transition Impact

ETI score: 70

The project is envisaged as part of the GrCF2. The GrCF2 is a strategic and multiproject programme targeting environmental issues in selected large cities in EBRD countries of operation.

The primary goal is to achieve significant environmental improvements and promote the green transition quality within the relevant cities. The GrCF2 also aims to build necessary capacity and facilitate better coordination among various stakeholders within the relevant cities in order improve the governance, operational efficiency and financial sustainability of the targeted investments and initiatives. These objectives are supported by the development and implementation of a city-specific Green Cities Action Plan ("GCAP") identifying and prioritising environmental challenges and ways to address them through targeted investments, services and policy instruments.

Client Information

VODOVOD I KANALIZACIJA D.O.O.

Vodovod i Kanalizacija d.o.o. Split is a limited liability company providing water supply and wastewater services in the area of 4 cities (Split, Solin, Kastela and Trogir) and 9 surrounding municipalities (Podstrana, Marina, Okrug, Seget, Klis, Muc, Dugopolje, Lecevica and Solta), covering the population of around 300,000 citizens. The city of Split has a 56.8 percent ownership, followed by the city of Kastela with a 17.6 per cent stake, whereas other municipalities own the rest.

EBRD Finance Summary

EUR 30,000,000.00

Total Project Cost

EUR 358,300,000.00

Additionality

There are two types of additionality for the project: financial and non-financial. Financial additionality is related to the project's financing structure, with the EBRD offering a tenor and grace period beyond what is currently available in the market, which is necessary to structure the project. Non-financial additionality sources include: (i) risk mitigation, with the EBRD helping the client to mitigate environmental, social and governance risks and take climate action through development of GCAP, as well as (iii) knowledge, innovation, and capacity building, with the EBRD supporting the strengthening of the client's capacity through FOPIP TC.

Environmental and Social Summary

Categorised B under the 2014 ESP. Key E&S impacts/risks associated with the construction of a water purification plant in Split and expansion of water and wastewater services in the surrounding cities serviced by Client to consider include: construction related noise, dust, vibration, waste management, hazardous materials management, worker and community health and safety, impacts on cultural heritage, supply chains, water quality, quality of service and tariff affordability. Environmental and Social due diligence ("ESDD") will be undertaken by a consultant and will include an assessment of Client's current capacity and systems to manage environment, health, safety, labour and social issues in its operations and capacity to implement the project in line with PRs, a review of contractor management, monitoring and supervision arrangements for the project and legal compliance with national permitting procedures, public consultation arrangements and potential issues associated with land acquisition. Additional ESDD for Tranche B will be required to assess project-related E&S impacts which may result in an additional ESAP post-signing.

Technical Cooperation and Grant Financing

Technical co-operation ("TC") for the Project include: (i) Environmental and Social Impact Assessment, to assess whether the procedures and policies utilized by the Client adhere to the EBRD's environmental and social standards, and an assessment of climate change impacts and adaptation recommendations; (ii) Support for Financial and Operational Performance Improvement Programme ("FOPIP") aimed at providing support to the Client concerning financial and operational activities of the Company, including performance benchmarking, preparation of a Public Service Agreement as well as, if required, advice on collection improvements and tariff reform; (iii) Procurement and Implementation Support to the Project Implementation Unit; and (iv) Assistance to the City of Split with the development of a GCAP in order to prioritise investments, capacity building and policy objectives in support of the green agenda

Company Contact Information

Tomislav Suta
info@vik-split.hr
+385 21 545 900
www.vik-split.hr
Hercegovacka 8, 21000 Split, Croatia

PSD last updated

06 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.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

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.

Independent Project Accountability Mechanism (IPAM)

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 Independent Project Accountability Mechanism (IPAM).

IPAM 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 the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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