Project Description
The provision of a senior loan of up to PLN 259.2 million, equivalent to € 54.2 million, in favour of PPP Solutions Polska 2 Sp. z o.o. (the SPV, or the Borrower), a special purpose vehicle established for the sole purpose of developing and implementing the 4th phase of the Krakow Fast Tramway, under a private public partnership (PPP) granted by the City of Krakow.
The Project involves the development, construction and maintenance of the 4th phase of the Krakow Fast Tramway including (i) the construction of a 4.5 km new twin track, (ii) the extension of the existing tramline loop Mistrzejowice, (iii) the construction of a tunnel (approx. 0.9 km), (iv) the redevelopment of the existing road scheme (approx. 10.3 km), and (v) the development / redevelopment of associated infrastructure.
Project Objectives
The Project aims to connect two existing tramlines in the northern part of the city centre passing through two residential districts, with an objective to increase services and improve the integration of public transport as an efficient and more sustainable alternative to passenger car traffic. Once operational, the tram track is expected to lead to a capacity increase of 40 trams per hour in both directions (in total about 556 tram passages per day).
The Project is expected to result in environmental and social benefits for the residents of Krakow by reducing the level of emissions from the transport system. Additionally, complementary infrastructure in line with the city's sustainable transport strategy will be developed as part of the Project to promote other sustainable forms of travel such as walking and cycling.
Transition Impact
ETI score: 67
Transition impact stems from the following two transition qualities:
Resilient - The proposed project will be the first PPP implemented by Krakow and the first PPP project in Poland related to the development of tramway infrastructure. The project structure is expected to ensure resilient management of the city budget by spreading the capital expenditures on the development of the new tramway line over a long period with involvement of the private partner in the maintenance of the infrastructure.
Green - The project is expected to help reduce the CO2 emissions of the city's transport system resulting from a modal shift possible through the increase of the tram service between two currently unconnected districts. With a new infrastructure and better connectivity, the project will promote the commercialisation of environmentally friendly infrastructure. The Project is expected to be classified as 100 per cent GET eligible.
Client Information
PPP SOLUTIONS POLSKA 2 SP ZOO
The Borrower is PPP Solutions Polska 2 Sp. z o.o., a special purpose vehicle established for the sole purpose of developing and implementing the Project.
The SPV is 100 per cent owned by the project sponsor Gulermak Agir Sanayi Insaat ve Taahhüt A.S.
EBRD Finance Summary
PLN 259,102,568.00
Total Project Cost
PLN 1,013,418,917.57
Additionality
The Bank's additionality in the Project stems from (i) the EBRD's requirements related to the environmental and social monitoring systems and reporting going beyond what is required by law and by other commercial banks, (ii) the role played in ensuring bankability of the project, which will be the first PPP procured by the city of Krakow and (iii) the long tenor of the financing, which goes beyond the tenors proposed by the commercial banks.
Environmental and Social Summary
Categorised B in line with ESP 2019. The project, comprising of the construction and maintenance operation of a 4,5km long new tram line inclusive of 1,2 km cut-and-cover tunnel and reconstruction of surrounding urban streets in Krakow, Poland, has the potential to cause environmental and social impacts, which can be mitigated with application of relevant planning, Environmental and Social ("E&S") management and application of good construction practices. The Environmental and Social Due Diligence ("ESDD") was undertaken by an independent consultant and concluded that the Project Sponsor has relevant institutional capacity and experience in applying international E&S standards to undertake the project in line with the EBRD Performance Requirements ("PRs"). The project was subject to national Environmental Impact Assessment ("EIA") process in 2017 with stakeholder consultations undertaken in line with the national legislation. The Project falls within the Krakow Transport Policy (2016-2025) and is included in the set of local development plans, which were subject to Strategic Impact Assessment (2014). As the Environmental Decision was granted based on conceptual design, the second EIA was required to be undertaken based on the detailed design and to be submitted prior to application for the Building Permit. The second EIA was undertaken in 2022 and was submitted to the competent authorities pending approval. The ESDD has reviewed the 2017 national EIA, most up to date design and project preparatory activities and consulted with designer E&S team responsible for preparation of the second EIA.
The project is located in the urban environment, mostly in modified habitat (planted central reserve of dual carriageway) and does not cross environmentally sensitive areas. The Project will require cutting of close to 1000 trees and shrubs representing common species in Poland. Detailed design included a number of micro-realignments to minimise tree cutting and biodiversity compensation measures related to replanting of trees. Detailed design includes also a number of technical solutions to minimise noise emissions near residential areas, including Rail Comfort Systems (at specific rail sections), use of vibration isolating layers, and use of silent asphalt at reconstructed road surfaces and installation of acoustic screens. The project will have positive net benefits on air quality and Green House Gas ("GHG") emissions due to modal shift and reduction of individual car usage and replacements with electric fast tramline. The project has undergone design safety review undertaken by national authorities and the EBRD in-house specialists. The project is associated with limited land acquisition.
The project is of strategic importance for the development of the city due to the fast tram connection of settlements located in the northern part of Krakow with the city centre. The Project area is ca. 30.6 ha and neither residential nor agriculture land is affected. The project will not require physical resettlement. Most of the land required for the project belongs to Krakow municipality. In addition 50 privately owned plots will be subject to partition into sub-plots and expropriation. Across all the 514 impacted public and private plots, ESDD identified a 13 businesses and business structures subject to economic displacement. Resettlement Framework ("RF") has been developed for the project outlining land acquisition process for the project in line with national legislation and EBRD PR5 and will be disclosed. Upon finalisation of the detailed design and issue of ZRID decision (special decision for road infrastructure), detailed Resettlement Action Plan ("RAP") will be prepared, disclosed and implemented by the City of Krakow and SPV in line with PR5 requirements.
Stakeholder engagement and public consultation for the project has been ongoing since 2014. Initially stakeholder engagement was led by the city and directed at residents of the municipal areas affected by the planned project. Project EIA was disclosed to public in 2017. Following agreement under the PPP structure, Gulermak undertook further engagement activities in 2021 and 2022, in person, through online public meetings and by publishing updates on design progress and details in regards to project impacted public spaces through social media platforms, project dedicated website, physical project information point, dedicated telephone line, workshops for local children and multiple local media. Overall there was high engagement from the public at all consultation stages, with strong majority supporting the project. Stakeholder Engagement Plan ("SEP") has been developed for the project and will be implemented by the Borrower.
Construction stage impacts will mostly include temporary traffic reorganisation in the suburban city area, dust and noise emissions and health and safety risk. Gulermak has extensive experience in undertaking and managing transport infrastructure works in the city context and has developed a suite of E&S management procedures to minimise risks and nuisance to nearby communities. Project specific Environmental and Social Management Plan ("ESMP") is under development by the Borrower. Project Environmental and Social Action Plan ("ESAP") covenants a number of mitigation measures relating to construction stage including traffic management and construction logistics and community safety plan, occupational Health and Safety plans and management system, nigh time works limitation and grievance mechanism.
ESAP has been developed for the project and agreed with the Borrower. Apart from construction stage actions listed above, the ESAP addresses establishment of appropriate E&S management for the project, contractor management, environmental monitoring undertaken at commissioning stage and during operation, preparation and implementation of detailed RAP, continued implementation of SEP and establishment of grievance mechanism. Non-Technical Summary ("NTS"), Stakeholder Engagement Plan ("SEP") and RF prepared for the Project will be disclosed by the Bank and the Borrower. The Bank will monitor the project through review of Annual Environmental and Social Reports, Supervision Engineers reports and site visits as required.
Technical Cooperation and Grant Financing
N/A
Company Contact Information
Gabriela Lazarczyk
info@tramwajdomistrzejowic.pl
+48 722 220 088
n/a
https://www.tramwajdomistrzejowic.pl/en/
ul. Ostatnia 1c, 31-444 Kraków
PSD last updated
26 Oct 2022
Understanding Transition
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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