Kulob Water and Wastewater Project

Location:

Tajikistan

Project number:

51436

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

02 Sep 2020

Status:

Approved

PSD disclosed:

12 Dec 2019

Project Description

Provision of a sovereign loan of up to EUR 7.5 million to the Republic of Tajikistan. The loan will be on-lent to the state enterprise Kulob Water and Wastewater Services, wholly owned by the state unitary enterprise Khojagii Manziliyu Kommunali.

The sovereign loan will have two tranches: Tranche I (committed) of up to EUR 3 million to finance the rehabilitation of the water network and pump stations, and Tranche II (uncommitted) of up to EUR 4.5 million to finance the rehabilitation and modernisation of the wastewater treatment plant. Tranche I will be co-financed by a capital grant of up to EUR 3 million, Tranche II will be co-financed by a capital grant of up to EUR 4.5 million. Both grants are to be sourced from an international donor or the EBRD Shareholder Special Fund (the "SSF")

Project Objectives

The project will improve water supply and wastewater services in the city of Kulob.

Transition Impact

ETI score: 66

The proposed project's transition objectives include material improvements to the existing ineffective contractual arrangement to bring them in line with international best practice; the establishment of a municipal or regional water authority to plan and coordinate infrastructure services/investments; to enhance climate change resilience and enable sustainable and efficient use of water by rehabilitating a water treatment plant, increasing water re-use and volume of water treated.

Client Information

TAJIKISTAN SOVEREIGN

Republic of Tajikistan

EBRD Finance Summary

EUR 7,500,000.00

A sovereign loan in the amount of up to EUR 7.5 million to the Republic of Tajikistan under two tranches.

Total Project Cost

EUR 15,000,000.00

The Project is expected to be financed from two sources: (i) EBRD loan of up to EUR 7.5 million and, potentially, (ii) a capital grant of up to EUR 7.5 million from an international donor or the SSF.

Additionality

The Project is considered additional through:

-          Financing structure: financing with terms and conditions (grace period and tenor) not available from commercial sources in Tajikistan;

-          Policy, Institutional or regulatory change: designed to trigger a change in the policy and enhance practices at the sector or country level;

-          Standard-setting: helping projects and clients achieve higher standards (best international procurement standards, higher inclusion and gender standards); 

-          Knowledge, innovation and capacity building: expertise, innovation, knowledge and capabilities to strengthen the capacity of the client.

Environmental and Social Summary

The Project is categorised B under the 2014 Environmental and Social Policy. The environmental and social due diligence ("ESDD") includes a review of the due diligence documents and reports from earlier projects with the Company. It also includes an independent environmental and social audit/review of the Company's current operations and facilities (focusing on the issues identified during the ESDD for the first project), as well as analysis of potential environmental and social issues associated with the proposed priority investment programmes. Improvements in the Company's environmental and social management systems were also reviewed and assessed.

The investment components will mainly involve construction, expansion and rehabilitation of water mains, water supply networks, water intakes, water pumping stations, sewers and sewerage networks, and the rehabilitation of the existing WWTP. Implementing the investment components will result in limited, localised and short-term adverse environmental impacts, including 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. These will be mitigated by adhering to good construction practices.

The City's existing wastewater collection and treatment system was constructed during the Soviet period and neither national nor EU standards. The Company's Priority Investment Programme ("PIP") will increase the City's sewage collection rate from 70 to 82 per cent and will cover both the WWTP's rehabilitation and improvement to sludge management. This will enable compliance with national and EU standards for treated wastewater discharge and sludge management. For households not connected to the wastewater system, cesspits will continue to be emptied by Company trucks and will be treated at the upgraded WWTP.

The ESDD concluded that the Project will improve the drinking water supply's reliability and quality, meeting local and EU requirements for the areas covered under the PIP, but not for the all City. Altogether, additional long-term investment, estimated at over EUR 33 million, would be required; EUR 8 million to bring water and EUR 25 million to bring wastewater systems in Kulob to EU requirements. The investments required to meet EU standards for wastewater and water supply include rehabilitating and expanding the wastewater collection system and constructing a new WWTP to increase treatment capacity and further replacing and expanding the water network. Financing for the long-term investment programme from the Company's own revenues cannot currently be confirmed, and no potential sources of external funding have been identified. Therefore, on account of constraints arising from affordability and limited financial resources, derogation from the EBRD's Environmental and Social Policy is sought.

The ESDD showed that the Project will have a significant and positive impact on health and the environment despite the Project not being able to achieve full EU compliance in the short term. The human health implications of not reaching EU standards have been assessed as minor compared to the benefits of delivering a safer and more reliable water supply to the local population. Mitigation plans, including awareness raising programmes, will be developed and implemented to minimise the associated health risks to local communities and to prevent risk of water borne diseases.

The ESDD showed that the earlier project's ESAP implementation has been poor. The Company still has weak Environmental Health and Safety ("EHS") management capabilities and underdeveloped EHS management systems, and the current occupational health and safety and stakeholder engagement practices require further improvement to meet the EBRD's Performance Requirements (PRs). Lessons from the earlier project will need to be carefully assessed by the post-signing CDP consultants to ensure that the Company build their corporate environmental and social capacity and implement the ESAP. The ESAP was prepared and agreed with the Company. A Stakeholder Engagement Plan and Non-Technical Summary were also prepared and will be disclosed after signing.

The Company will provide the Bank with annual environmental and social reports, including updates on the ESAP's implementation. The Bank may also conduct monitoring visits, as required. The Bank will closely monitor implementation of the post-signing CDP and PIU TCs to ensure compliance.

Technical Cooperation and Grant Financing

Pre-signing: (i) Technical due diligence, to support scoping and structuring of the project, financial analysis and an environmental and social assessment (estimated cost is EUR 100,000).  

Post-signing: (i) Project Implementation Support, including tender support and contract supervision (estimated cost is EUR 750,000) and (ii) Corporate Development and Stakeholder Participation Programme, including public awareness programme and improvement of equal opportunities policies and procedures (estimated cost is EUR 500,000).

Company Contact Information

Fayzulloev Abduqodir
mid_piu@mail.ru
+992372334983
Republic of Tajikistan, Dushanbe, N.Karaboyev street 56

Implementation summary


PSD last updated

14 Oct 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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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 how to submit a Request for review through our confidential online form, by emailmail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requesters’ identities may be kept confidential, upon request.

 

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