Provision of a sovereign-guaranteed loan in favour of the Public Enterprise for State Roads (the "Company" or "PESR"), a state-owned company incorporated in the Republic of North Macedonia, at the amount of up to EUR 110 million. The operation will finance the construction of an approximately 10 km-long sub-section of the Trans-European Transport ("TEN-T") Route 6 motorway (the "Motorway A4") running from Skopje (Interchange Stenkovec) to the Blace Interchange, close to the border with the Republic of Kosovo (the "Project").
The Project will be co-financed with a EUR 20.8 million investment grant provided by the European Union (EU) through the Western Balkans Investment Framework ("WBIF"). In addition, the WBIF approved grant package includes EUR 8.8 million of TC funds for project preparation, project implementation support and supervision of works.
The existing road between Skopje and the Kosovo border is a two lane road built 50 years ago which does not meet traffic needs or EU safety standards. As trade between North Macedonia and Kosovo has increased, greater traffic volumes have led to increased travel time. The Project involves the construction of a 4 lane highway which establishes a safe fast connection and trade route between the two neighbouring countries, as well as the wider Western Balkans region. The Project is structured to support the Bank's reform agenda in the Macedonian road sector with a focus on financial sustainability and climate resilience while promoting an enabling environment for electric vehicle infrastructure roll-out.
ETI score: 63
Primary Quality: Integrated
The Project delivers material quality improvements of the current infrastructure between or within regions that are currently inadequately integrated. The new motorway, as part of the TEN-T Core Network a strategic transport axis, is expected to establish a fast and safe connection between North Macedonia and Kosovo, as well as between the Western Balkans and EU.
In addition, the Bank will support the Ministry of Transport and Communications for the development of a National Strategy (and Action Plan) for the promotion and deployment of electric vehicles charging infrastructure in North Macedonia.
Secondary Quality: Resilient
The Project will promote the enhancement of the Company's financial sustainability. Fuel excise tax is PESR's key source of income. Ministry of Finance has agreed to increase fuel excise tax allocation to PESR so that the Company reaches operating and capital cost recovery.
PUBLIC ENTERPRISE FOR STATE ROADS
PESR is a state-owned company responsible for the operation and maintenance of the national and regional road network in North Macedonia.
The Guarantor for the Project is the Republic of North Macedonia.
EBRD Finance Summary
EBRD Loan: EUR 167.6 million
WBIF Investment Grant: EUR 20.8 million
Total Finance: EUR 188.4 million
Total Project Cost
Capital Expenditure: EUR 186.7 million
The Bank's additionality is derived from i) provision of missing long-term financing in the country to match the life of infrastructure investments; ii) the Bank's further support of the commercialisation of the road sector in North Macedonia; and iii) promotion of best procurement standards.
Environmental and Social Summary
Category A (2019). The Project consists of an approximately 10 km of road from the interchange with local road for the village of Blace to the existing Stenkovec interchange, one of two sub-sections for construction of the Motorway A4 in North Macedonia. The Environmental and Social Impact Assessment ("ESIA") for this Project was completed with support from WBIF and the follow documents will be disclosed for public review and comment:
- ESIA, including an Environmental and Social Management Plan ("ESMP") (English, Macedonian)
- Non-technical summary ("NTS") (English, Macedonian, Albanian)
- Stakeholder Engagement Plan ("SEP") (English, Macedonian)
- Environmental and Social Action Plan ("ESAP") (English, Macedonian)
- Land Acquisition and Resettlement Framework ("LARF") (English, Macedonian)
Public consultation for the disclosure package began on 15 February 2022. To date, no comments have been received. A climate resilience assessment has also been carried out. All of the these documents have been reviewed on behalf of EBRD by independent environmental and social consultants, who have confirmed that they meet the requirement of Macedonian regulation and EBRD Performance Requirements. A predicted gradual increase in temperatures is to be taken into account in the finalisation of the Detailed Design during Engineering Supervision. The Project connects with the Skopje ring road and runs approximately north-west towards the border with Kosovo parallel to the route of the existing national road A4. The land is largely agricultural or forested. The Project is expected to have positive impact associated with the improved road network, increasing both speed and safety of the existing route, plus facilitate increased employment and economic activity. Impacts as a result of land acquisition are limited to weekend houses and some infrastructure related to agriculture. There is no physical resettlement expected. A Land Acquisition and Resettlement Plan is being prepared based on the existing Framework document that is part of the disclosure package and will be finalised prior to construction. It will address potential livelihood impacts. Risks related to construction activities will be managed by contractors through key management plans. These will include occupational health and safety, community health and safety and traffic management plans. This Project has been in development since 2002. From 2018 to 2021, a series of engagement activities with institutional stakeholders were undertaken by PESR to obtain relevant data for the selection of project options and the opinions of relevant institutions. A Stakeholder Engagement Plan in line with EBRD requirements has been developed to identify relevant local stakeholders and define a stakeholder engagement program to be implemented for the Project. The biodiversity assessment covered 2x500m from both sides of the highway alignment. This area was used for mapping of habitats and calculations of the coverage of habitats and land use types Separate Ecologically Appropriate Area of Analysis (EAAA) were defined for critical habitats (CH) and priority biodiversity features (PBF). The aggregated EAAA encompasses the whole watershed area of the river Lepenec as well as the most-likely affected villages in the area since they are situated at the bottom of the valley of river Lepenec, however the projected motorway does not cross the river Lepenec at any point. There are no internationally designated areas for biodiversity in the vicinity of the projected motorway corridor. The assessment confirmed that two habitats and eight species trigger criteria for priority biodiversity features, while one habitat triggers the criteria for critical habitat. Impacts related to loss and fragmentation of habitats are to be managed through a Biodiversity Management Plan (BMP) and Vegetation Removal Management Plan, which will seek to include wildlife crossings into the Detailed Design. The main risks posed by this Project relate to the construction activities to be performed by contractors. They include potential impacts to local water quality, nuisances caused to the local population during construction and possible impacts to local community and their livelihood associated with land acquisition. The Environmental and Social Management Plan ("ESMP") for the Project requires a range of plans with defined mitigation measures to be implemented during the construction and operational phases. A road safety audit will be required with design amendments and mitigation measures incorporated into the Project as appropriate. An ESAP has been developed to ensure that the Project is structured to meet the EBRD's Performance Requirements. The ESAP includes requirements for the client to implement the ESMP, to establish a grievance mechanism and to development and implement health and safety and biodiversity management plans. The Bank will monitor the Project's environmental and social performance and implementation of the ESAP through active monitoring during the construction phase including monitoring site visits when necessary.
Technical Cooperation and Grant Financing
- TC 1: Project preparation including development of a Feasibility Study, designs, ESIA and tender documentation.
- TC 2: Technical and economic due diligence, including independent review of the Project, climate resilience assessment and gender analysis.
- TC 3: Initial assessment of support for introduction of EV charging infrastructure.
- TC 4: Environmental and social due diligence
- TC 5: Detailed habitat mapping for ecosystems in North Macedonia.
- TC 6: Supervision of works.
- TC 7: Support in Project implementation.
- TC 8: Support for the development of a E-mobility National Strategy (and Action Plan) for the promotion and deployment of electric vehicle fleet and charging infrastructure in North Macedonia.
Company Contact Information
+389 (0) 2 3118-044
+389 (0) 2 3220-535
Dame Gruev no.14, 1000 Skopje, Republic of North Macedonia
PSD last updated
25 Apr 2022
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