MR3: Gaziantep Solar Project

Location:

Turkey

Project number:

51857

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

30 Nov 2021

Status:

Signed

PSD disclosed:

26 Oct 2020

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

A senior secured loan of up to EUR 10.0 million to GMM to finance the construction of solar photovoltaic (PV) plants with a total installed capacity of 27 MW (the "Project"). The electricity generated by the solar PV plants will be utilised for self-consumption of GMM's facilities. The loan will be co-financed by a CAPEX grant of up to EUR 7.0 million from the Community Resilience Window ("CRW") of the EBRD Shareholder Special Fund ("SSF"). 

Project Objectives

The proceeds of the Bank's loan will be used for the design and construction of five (5) grid-connected solar PV plants with a total installed capacity of 27 MWac under a design & build contract for the self-consumption of GMM's facilities. 

Gaziantep experienced significant population growth caused by the refugee influx since the start of the conflict in Syria. Gaziantep has a population of 2.1 million and hosts around 450,000 of Turkey's 3.7 million refugees. The refugee crisis has placed a huge strain on Gaziantep's existing infrastructure as it seeks to maintain service levels in the face of rapid unexpected population growth. It is in continuous need of investments to maintain and provide sustainable, high quality, efficient municipal services to its inhabitants. The solar PV plants will relieve pressure on GMM and improve its resilience by supporting the city's fiscal budget through annual savings in electricity bills, without adding to greenhouse gas emissions of the sector. The electricity generated by the solar PV plants will be netted-off against the overall consumption of the city's facilities including but not limited to administrative buildings, the light rail system and water pumps and facilities.

The proposed solar PV plants will support Gaziantep's aim to become the first metropolitan municipality in Turkey which covers all of its electricity needs from renewable sources. 

Transition Impact

ETI score: 60

The project is part of the Municipal Resilience Refugee Response Framework ("MR3"), which is designed to support the resilience of municipal infrastructure services by financing critical investments in host communities accompanied by targeted sector reform elements focusing on improving funding sustainably post investment, improving accountability through formalised performance indicators or service contracts and increasing private sector participation where feasible. The project promotes the transition objectives of the MR3 in the following ways:

Resilient: The project is expected to alleviate the stress on related infrastructure services amplified by the refugee crisis and therefore support the resilience of the sector by financing the implementation of solar PV plants with a total installed capacity of 27 MW to be self-consumed by GMM's facilities, which will result in energy savings and the supply of clean energy. This is expected to alleviate the financial burden of GMM, and increase its capacity to provide better and offer more municipal services accessible to local host communities and refugees.  

Well-governed: The Project supports the well-governed transition quality through the implementation of a sustainable funding ratio at 1.0x minimum for the Bank-financed solar PV plants.

Client Information

MUNICIPALITY OF GAZIANTEP

Gaziantep Metropolitian Municipality ("GMM" or the "City") is a public legal entity in charge of providing municipal services to Gaziantep, a major Turkish city located in the Southeast border of Turkey. Gaziantep is the 9th largest city in Turkey with a population of 2.1 million and hosts more than 450,000 Syrian refugees which makes it the 2nd largest host city after Istanbul. Gaziantep is a fast growing regional centre producing goods for both domestic and international markets with its strong trade links to Europe and North Africa and has an important role in the Turkish economy with its diversified industrial activity and commercial infrastructure. Among Turkish cities, Gaziantep ranks 4th in terms of export value and 10th in terms of GDP.

 

EBRD Finance Summary

EUR 10,000,000.00

Total Project Cost

EUR 17,000,000.00

Excluding technical assistance and GMM's contribution.

Additionality

Financing Structure

EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a longer grace period. Such financing is necessary to structure the project.

Risk Mitigation

- EBRD's long-term relationship with a client provides comfort to the client to be willing to take on more risk and/or finance, enabling outcomes such as innovation or expansion into new markets.

- EBRD helps the client to mitigate carbon transition risks and take climate action, such as to move along a low carbon transition pathway.

Standard-setting: helping projects and clients achieve higher standards
- Client seeks/makes use of EBRD expertise on corporate governance improvements, including climate risk management.

Client seeks/makes use of EBRD expertise on higher environmental standards, above 'business as usual' (e.g. adoption of emissions standards, climate-related ISO standards etc.).

Client seeks/makes use of EBRD expertise over energy and resource efficiency and climate resilience financing via provision of energy and climate audits, minimum performance standards of technologies, climateirelated strategies and policies, monitoring, reporting and verification (MRV) systems etc.

Client seeks/makes use of EBRD expertise on best international procurement standards.

Client seeks/makes use of EBRD expertise on higher financial standards, including through financial covenants.

Client seeks EBRD expertise on higher inclusion and gender standards and/or equal opportunities action plans.

Knowledge, innovation, and capacity building
- EBRD provides expertise, innovation, knowledge and/or capabilities that are material to the timely realisation of the project's objectives, including support to strengthen the capacity of the client

Gender SMART: Client seeks/makes use of EBRD expertise for the adoption of gender standards and/or equal opportunities action plans

Environmental and Social Summary

The Project has been Categorised B in accordance with the EBRD's environmental and social (E&S) Policy (2019) and due diligence confirmed that the E&S impacts associated with a five small scale (total installed capacity of 27 MWac) solar PV plants are generally site specific and can be readily mitigated through the implementation of a targeted action plan. Independent E&S Due Diligence ("ESDD") has been undertaken, with the EBRD Technical Cooperation support, and a suite of E&S management plans ("ESMPs") - including a Stakeholder Engagement Plan ("SEP"), Non-Technical Summary ("NTS") and E&S Action Plan ("ESAP") - have been prepared for implementation by the GMM during the development of the Project.

 

Each of the five subprojects are classified as "Annex 2 Projects" in accordance with Turkish Legislation and are therefore exempt of full Environmental Impact Assessments. The relevant approvals for the sub-projects have been prepared and approved by the competent authorities. GMM has a number of certified Management Systems in place including ISO50001 (Energy Management System), ISO14001 (Environmental Management System) and ISO45001 (Occupational Health and Safety System). The requirements of these management system will be cascaded to the contractors appointed for the implementation of the project in the form of a Construction Environmental and Social Management Plan (CESMP).

 

GMM has a dedicated team for the execution of the Project but has limited experience and capacity in implementing renewable energy projects. A dedicated and accountable E&S resource will be required to be assigned to oversee the implementation of E&S Requirements defined for the Project. A suite of Contractor Management Plans ("CMPs") has been prepared as part of the ESDD to define the minimum requirements for the environmental, social and OHS issues for the construction phase of the Project. These, and a requirement for commitment for provision of adequate resources to the compliance of Contractor with Project Environmental and Social Requirements, have been included in the Tender Documentation and in the scope of works for the Supervising Engineer. 

 

The ESAP for the Project requires GMM to develop and implement supply chain due diligence and management procedures to identify risks of forced labour in solar equipment and solar components. Such requirements will also be cascaded down to contractors and sub-contractors with supply chain declarations to be provided by the participating tenderers, envisaged to be the main tools to identify and manage supply chain risks. Where forced labour risks have been identified, GMM and/or its contractors will seek alternative supply chains, in accordance with the Project procurement documents. Compliance with this covenant will be reported by GMM to the Bank. Relevant provisions on forced labour will be enhanced in the Bank's Standard Procurement Documents ("SPDs") applicable to contractors, subcontractors, and primary suppliers in public sector operations. SPDs will include the obligation for contractors and their direct suppliers involved in any part of the contract: (a) to be in compliance with ILO core labour standards, including forced labour; and (b) as appropriate, to permit the Bank and/or persons appointed by them, to inspect the aforementioned compliance. This approach is in line with the EBRD's agreed methodology for development of solar sector projects.

 

The land-parcels where the Project is proposed to be located are registered as public property, which belong to State Treasury of Turkey and will be transferred to GMM. ESDD did not identify any social sensitivities associated with the land parcels such as formal livelihood dependencies. However, there is potential that the lands are used by local people for informal grazing and access. Land-take required for transmission lines and access roads will primarily be on private agricultural lands and a detailed and structured land acquisition process will be conducted in line with a Land Acquisition and Livelihood Restoration Framework ("LALRF") prepared for the project in accordance with the EBRD's Performance Requirement 5. This framework addresses both land acquisition and minimisation of livelihood impacts which requires additional consultation with local herdsmen and communities.

 

No other E&S sensitivities, such as biodiversity or cultural heritage, associated with the project have been identified during the ESDD. A Stakeholder Engagement Plan including a proposed Grievance Mechanism for the Project has been developed as part of the E&S Assessment. The Stakeholder Engagement Plan will be implemented by GMM.

Technical Cooperation and Grant Financing

Pre-signing:

  • TC1 - Feasibility Study, Concept design, Tender Preparation and Procurement Support: Consultancy support including independent technical, economic, financial and socio-environmental feasibility study, E&S Due Diligence ("ESDD"), development of procurement and implementation strategy, identification of main technical specifications, preparation of the Project's basic design, technical requirements, technical and functional designs, drawings / schemes and specifications, preparation of tender documents, tender evaluation support. The estimated cost of the assignment is EUR 508,000 and is financed by the EBRD SSF.

Post-signing:

  • TC2 - Supervision Engineer and Implementation, Environmental and Social and Health and Safety Support: Consultancy support including supervision of work contracts, PIU support with loan reporting, ESAP implementation support, quality control, site management, performance tests. The estimated cost of the assignment is EUR 850,000 and to be financed by the EBRD SSF.
  • TC3 - Green City Action Plan (GCAP): Consultancy to assist the City with the development of a GCAP in order to prioritise investments, capacity building and policy objectives in support of the green agenda. The estimated cost of the assignment is EUR 350,000 and proposed to be financed by Climate Investment Funds and the EBRD SSF.
  • TC4 - Technical Support for Gender-Responsive Skills Development for Green Jobs: Development of an accredited internship programme in collaboration between GMM and local education institutions to improve the gender balance in green jobs. The estimated cost of the assignment is EUR 40,000 and will be funded by the EBRD SSF.

Company Contact Information

Ahmet Erturk
ahmeterturk@gaziantep.bel.tr
+90 850 207 27 27
https://gaziantep.bel.tr/tr
Incilipinar mah. 4 Nolu Cadde Buyuksehir Belediyesi Binasi Sehitkamil / Gaziantep / Turkey

PSD last updated

30 Nov 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

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Environmental and Social Policy (ESP)

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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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