A sovereign loan of up to EUR 1.8 million to the Republic of Tajikistan to be on-lent to the State Unitary Enterprise "Khojagii Manziliyu Kommunali of Fayzobod Region" (the "Company"). This company is responsible for the provision of water supply and solid waste services in the city of Fayzobod (the "City"), the capital of the Fayzobod Region (the "Region").
The Project aims to rehabilitate water supply and undertake selected wastewater improvements, which will help reduce water losses and result in environmental benefits. It is also expected to yield energy savings as the Company will switch from underground water supply to primarily gravity water supply. The reliability of water network would be greatly improved to provide clean water 24/7 as compared with the current schedule of few hours a day.
The Project will mandate a signing of the Public Service Contract, adoption of a Corporate Development programme and improvement of the existing tariff methodology and tariff increase to cost-recovery level. The project will also aid Region's effort to introduce higher sanitary and hygiene standards. This has become even more urgent amid the COVID-19 crisis.
ETI score: 63
The Project's transition qualities include:
Green (primary quality): the Project is expected to result in significant water losses reduction, increase in wastewater treated and increased number of people with access to clean water.
Well-governed (secondary quality): The Project will support the signing of a public service contract and adoption of corporate development plan, as well as improvement of tariff setting approach and the relevant tariff increase to reach cost-recovery level. Additionally, the project will support transition from norm-based billing to consumption-based billing through the introduction of dual option tariff setting approach and meter installation.
EBRD will provide a sovereign loan to the Republic of Tajikistan ("RT"). The loan will be on-lent to the Company.
EBRD Finance Summary
The loan is expected to be co-financed by a capital grant of € 2.6 million approved by the Swiss government (SECO).
Total Project Cost
Loan financing: € 1,800,000
Grant financing: € 2,600,000
The Bank is additional because it will provide long-term financing that is currently not available from commercial banks. The Company also seeks to make use of EBRD expertise in best international procurement standards as well as EBRD's expertise on higher inclusion and gender standards through the development of a gender action plan.
Environmental and Social Summary
Categorised B (2019 ESP). The Project was initiated in 2016 and the Environmental and Social due diligence (ESDD) for the original Priority Investment Programme (PIP) was carried out as part of the Feasibility Study (FS) by independent consultants in 2017. The FS and ESDD was revised in 2021 to include an update of the earlier ESDD covering health, safety and other social impacts of the COVID-19; renewal of the Bank's affordability analysis; a Gender Based Violence and Harassment review; and review of climate-related vulnerabilities of the PIP components.
The ESDD showed that the implementation of the project would significantly increase access to safe drinking water for 33 thousand people through improving the reliability of water supply services in the City of Fayzobod and by the connection of thirteen additional villages with approximately 19,700 people. The project will also include construction/reconstruction of the wastewater networks, which will allow for connection of approximately 5,400 new customers. Other positive environmental and social benefits of the PIP include reduction of infectious diseases in rural areas; reduced water losses to 25-30 per cent; improved quality of drinking water; provision of the guaranteed 24-hour water supply to all users of the city of Fayzobod; provision of a stable water supply of 4 villages located along the waterway routes; improvements to system reliability and decrease in repairs reducing associated nuisance for dwellers and traffic disturbances, lower accident rate at networks resulting in lower number of water supply interruption cases and lower risk of secondary contamination; reduction of contamination in the Loyak and Elok rivers; reduction of energy consumption; reduction in unsustainable water consumption; better working conditions; and improvements in operational safety.
Current water supply in Fayzobod and surrounding villages is poor and limited to a few hours per day. There are community health risks related to the secondary contamination of the Loyak River by untreated wastewater, which is used as drinking water source by rural communities.
The Company has limited capacity on EHSS matters and lacks an E&S Management System and relevant policies and procedures. Some improvements are necessary to achieve full in compliance with national environmental legislation and the EBRD's related PRs. The Company largely meets national requirements on occupational health and safety; however, further improvements are required to meet EBRD PR4.
Adverse E&S impacts associated with the implementation of the PIP will be limited, localised and temporary, and prevented or mitigated by adhering to good construction practices. The proposed project areas will be mainly confined to existing Company sites, or within the existing pipeline corridors. ESDD has confirmed that no sensitive areas are found in the Project area. Some of the water mains, either new or those to be refurbished, run through the natural landscapes. Construction works in these areas may cause disturbance to the local wildlife which is a particular risk during the nesting and breeding seasons. To mitigate this risk construction work will need to be scheduled outside of these periods. The findings of the local EIA, which is yet to be undertaken, and resulting recommended mitigation measures will need to be incorporated into the EBRD Environmental and Social Action Plan (ESAP). The project implementation will not require any resettlement, and only limited and temporary disturbance to arable land is anticipated. This can be managed to avoid economic impact on harvests. Nevertheless, requirements to carry out a resettlement screening procedure and develop a compensation and/or livelihood restoration action plan, if required, have been included in the ESAP.
Climate warming by several degrees in Dushanbe region, increasing water demand both by the environment and human activities and ongoing depletion of water resources require further improvements to water efficiency and water demand management to optimise the use of limited water resources. Climate change may also increase in the frequency and severity of flooding posing a threat to vulnerable infrastructure, such as the sewage drainage system and the biological treatment ponds. The updated PIP includes a dam to protect the biological treatment facilities from erosion and flooding impacts.
Through implementation of the PIP, the Project will achieve compliance with EU standards for drinking water quality but not for waste water treatment. To achieve full compliance with EU environmental standards for waste water systems additional long-term investments of more than 11 million EUR would be necessary. Therefore, due to affordability constraints, derogation from the EBRD's Environmental and Social Policy will be sought in relation to EU wastewater treatment and discharge standards. The human health implications of the shortfalls from EU standards are minor as compared with the substantial benefits of the PIP implementation resulting in more reliable, efficient and better quality water supply to the local population as well as improved wastewater management. Significant improvement of the water quality and sanitary conditions of the Loyak and Elok Rivers and improvements to operational efficiency and health and safety of employees and contractors are expected. There will be a significant improvement to the sanitary conditions in rural villages thereby reducing the risk of water-borne diseases.
The affordability assessment carried out by the Bank did not identify significant water tariff affordability concerns from the implementation of the project investments with the envisaged grant support and subsidies from the respective regulatory bodies for more vulnerable groups.
An ESAP to address impacts associated with the Project and the Company's existing weak E&S management capacity and systems will be agreed with the Client prior to Board. A Stakeholder Engagement Plan and Non-Technical Summary are under preparation and will be disclosed once finalised. The Company will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank may also conduct monitoring visits, as required. The Bank will closely monitor the implementation of the post-signing Corporate Development Programme and PIU TCs to ensure compliance.
Technical Cooperation and Grant Financing
The following technical co-operation assignments are envisaged as part of this Project:
- Project Preparation and update.
- Project Implementation Support.
- Corporate Development Programme.
Company Contact Information
+992 935 874 862
38 Zebuniso st., Fayzobod, Republic of Tajikistan
PSD last updated
28 Jun 2021
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