MR3: Mersin CNG Bus Project

Location:

Turkey

Project number:

52470

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

09 Nov 2021

Status:

Approved

PSD disclosed:

10 Nov 2021

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 unsecured loan of up to EUR 15 million to the City to finance the procurement of 100 CNG buses including (i) 30 accordion-type and (ii) 70 solo-type buses for the purpose of renewing the City's aging public transport fleet and to expand urban transport services in the City. The EBRD loan will be co-financed by a Shareholder Special Fund ("SSF") grant for a total amount of EUR 7.0 million, which will be utilised from the Community Resilience Window ("CRW") of the SSF.

Project Objectives

The proceeds of the loan and the capex grants will be utilised to finance the procurement of 100 new CNG powered buses (Euro 6 standard). The fleet involves 70 solo and 30 articulated-style buses. The proposed Project will expand the urban transport capacity in this refugee host community and relieve pressure on existing municipal services by providing extra capacity and better quality services. The existing transport infrastructure is providing inferior services given an aging bus fleet (average life is 9.9 years, and economic useful life of a bus is 10 years). By virtue of this investment, the average vehicle age of the bus fleet of the City will drop to 5.5 years and the total public transportation capacity will be increased, by: (i) replacing 44 old diesel buses (Euro 1 standard, 1990-99 model) experiencing frequent breakdowns; and (ii) adding 56 new CNG buses to the fleet to relieve the burden on Mersin public transportation networks and improve service quality.

Transition Impact

ETI score: 60

Under the MR3 Framework, transition impact is primarily based on enhanced resilience through asset expansion or rehabilitation and specific cost reduction to contribute to the financial sustainability of operations. Additionally, the framework supports the "well-governed" quality through the introduction of higher standards of service quality monitoring.

  • Resilient: The Project supports the resilience of the sector by virtue of infrastructure capacity expansion, which will alleviate stress on transport services exacerbated by the refugee crisis. This will allow the residents to have access to improved transportation services through a younger, enhanced, and more reliable bus fleet. Modern CNG buses displacing aging diesel buses will bring the City financial, economic, and environmental gains due to (i) fuel efficiency (ii) lower maintenance costs (iii) lower rates of vehicle breakdowns, and (iv) lower carbon footprint.
  • Well-governed: The Project supports the well-governed transition quality through the implementation of a Corporate Development Programme including Key Performance Indicators ("KPIs").  Technical assistance will assist the City in the development of the KPIs, and improving transparency and monitoring of service improvements.

Client Information

MUNICIPALITY OF MERSIN

Mersin Metropolitan Municipality ("MMM", or the "City") is a municipal entity located in southern Turkey, and governed under the Turkish Municipal Code. Mersin is the 11th largest city in Turkey in terms of population (1.9 million) and is considered a large refugee host community with a total of 262,270 Syrian refugees residing in the city (14% of the total population), which is placing additional strain on access to public and infrastructure services.

EBRD Finance Summary

EUR 15,000,000.00

Total Project Cost

EUR 22,000,000.00

(excluding technical assistance)

Additionality

Financing Structure: The EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions, e.g. a longer grace period that is rarely available in the market, restricted foreign currency financing etc. Such financing is necessary to structure the project.

Risk Mitigation: The EBRD helps the client to mitigate environmental, social and governance (ESG) risks through identification of risks related to the depletion of natural capital assets, raw materials and water availability, etc., and to manage these risks.

Standard-setting: helping projects and clients achieve higher standards

  • Gender SMART: Client seeks/makes use of EBRD expertise for the adoption of gender standards and/or equal opportunities action plans (e.g. improving women's access to safe transport and/or women-led businesses participation in the client supply chain).
  • 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.
  • 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

Environmental and Social Summary

Categorised B (ESP 2019). The Environmental and Social Due Diligence ("ESDD") for the Project has been undertaken by an independent consultant and included an environmental and social ("E&S") assessment of the project, review of the current operations (including a survey of existing bus users), as well as the E&S management systems and the capacity of MMM as it relates to bus operations.

The ESDD confirmed that benefits associated with the purchase of the CNG buses reaching EURO 6 emission standards include contribution to improving accessibility and mobility for all user groups and the safety and efficiency of urban transportation. The project will bring an average annual reduction in CO2 emissions estimated of 20,468 tons compared with the continued use of existing diesel buses. The specifications of the new CNG buses have incorporated E&S requirements such as accessibility including for persons with disabilities, provision of CCTV monitoring, safety and emergency response and audio and visual passenger communication systems. In support of the Project a new operational control centre campus will be constructed to provide maintenance, repair and refuelling stations for both CNG and diesel buses.

ESDD has reviewed E&S arrangements of MMM operations and the proposed construction of the new campus. The review confirmed that the MMM are managed through a certified integrated management system (ISO 14001, ISO 45001 and ISO 39001). Hazardous waste generated from the vehicle fleets is segregated, stored and then sent to licensed disposal/recovery facilities. The project will replace older diesel buses where they will be scrapped with a small number being retain to support non-operational activities such as driver simulation training.

A formal risk assessment process has been implemented to evaluate risks of all workplaces and Covid19 rules defined by the Ministry of Health are applied with mitigations measures implemented for both employees and service users. Accidents and incidents are recorded, classified and investigated and OHS training is organised and managed in line with the rules defined by Department of Transportation. Training on the technical characteristics of the buses will be delivered to repair and maintenance workers. MMM carries out analysis of all traffic collisions and all new bus drivers receive training which includes general rules regarding driving, safe and defensive driving techniques, safety distances, traffic collisions and their effects.

MMM identified good social performance on engagement and inclusion of vulnerable groups including the refugee community and NGOs, with a recently adopted Local Equality Plan implementing measures for prevention and awareness of Gender Based Violence and Harassment ("GBVH"). MMM already incorporates gender sensitive provisions into its bus operations and provides training on GBVH to bus drivers, this will continue. Further measures will be needed to create specific processes to manage GBVH grievances and increase awareness amongst service users. Current bus fares have been assessed as affordable and no direct change is anticipated due to the project.

MMM complies with national legislation related to labour and working conditions which are generally aligned with Performance Requirement 2 ("PR2"). Some updates (to existing procedures are needed to ensure cascading of both requirements to contractors including the grievance mechanism. Although MMM has certified management systems, implementation requires some further development so that follow-up of the non-compliances and audit findings related environmental, health and safety are fully closed out.

The above requirements have been included in the Environmental and Social Action Plan ("ESAP") which has been developed and will be agreed with the MMM prior to the signing of the loan agreement. The Stakeholder Engagement Plan ("SEP") and the Non-Technical Summary ("NTS") for the project will also be publicised on MMM's website. Additional support for ESAP implementation will be provided through a Technical Cooperation assignment. The Bank will monitor MMM's activities through annual E&S monitoring reports and site visits if necessary.

Technical Cooperation and Grant Financing

It is envisaged that the technical cooperation (TC) support will provide assistance with the following:

Co-investment Grants: EUR 7 million investment grant to be utilised from CRW of EBRD's SSF.

TC Grants:

  • TC1: Technical Due Diligence (TCRS 100319)(ongoing): Consultancy support including performing cost and return estimates, assessment of electric bus alternative, e-mobility assessment and reviewing tender documents to ensure compatibility with relevant standards and requirements of the EBRD. The cost of the assignment is EUR 73,785 and is financed by the SSF.
  • TC2: Pre-signing Procurement Support (TCRS 100320)(ongoing): Consultancy support to support Mersin for the tender preparation and application of the EBRD Procurement Policies and Rules ("PP&Rs") for the )contracts proposed for financing by the EBRD. The estimated cost of the assignment is EUR 64,950 and is financed by the SSF.
  • TC3: Environmental and Social Due Diligence (TCRS 100324)(ongoing): Consultancy support including identifying and assessing potential existing and future environmental and social impacts, assess compliance with applicable laws and EBRD ESP and PRs. The cost of the assignment is EUR 59,750 and is financed by the SSF.
  • TC4: Corporate Development Programme (TCRS 111572) (post-signing): To assist the City with the development of KPIs and monitoring plan for such KPIs to improve the transparency of service improvements in the City. The estimated cost of the assignment is EUR 70,000; to be financed by the SSF.
  • TC5: ESAP Implementation Support (TCRS 111577) (post-signing): The estimated cost of the assignment is EUR 70,000; to be financed by the SSF.
  • TC6: Supporting the Implementation of Local Equality Commitments by Mersin's Public Transportation Branch: The estimated cost of the assignment is EUR 50,000, financed by the Inclusion Technical Assistance Framework.

Company Contact Information

Bayram Demir
bayram.demir@mersin.bel.tr
00905309210510
https://www.mersin.bel.tr/
Çankaya Mahallesi, Atatürk Caddesi No:19 MERSİN

Implementation summary


PSD last updated

10 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)

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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