Project Description
Provision of a sovereign loan of up to EUR 175 million to the Republic of North Macedonia (the "Borrower") for the benefit of the Public Enterprise for Railways Infrastructure ("PERI") for completion of the last section of rail infrastructure on the eastern end of the rail Corridor VIII. The loan will finance: (i) the construction, signalling and telecommunication from Kriva Palanka to the Bulgarian border in total length of 23.4 km, and (ii) the electrification works for the overall eastern rail line including the sections 1, 2 and 3 in total length of 88 km. The Project is envisaged to be co-financed by European Investment Bank ("EIB") and the EU through the Western Balkans Investment Framework ("WBIF") and the national Instrument for Pre-Accession II ("IPA II").
Project Objectives
The Project will: i) establish very first connection of the Macedonian rail transport with the Bulgarian and EU core TEN-T network, ii) facilitate the international/transit movement of goods and people, in particular with EU neighbouring countries and Turkey, and iii) shift traffic from road to rail transport by improving the competitiveness of the rail sector. Additionally, the Project will increase traffic safety and reliability for both passengers and freight, offer opportunities for business development near the railway line and stations, and improve environmental conditions in settlements and regions covered by the Project.
Transition Impact
ETI score: 72
Primary Quality: Inclusive - The Project will support the Company to integrate universal and gender-responsive access standards into the current investment and future railway infrastructure investments. This will contribute towards increasing rail passenger utilisation, and towards human capital development by supporting greater mobility for women and people with disabilities/restricted mobility.
Secondary Quality: Green - The percentage of EBRD use of proceeds that supports a green economy transition and therefore qualifies as GET finance.
Client Information
NORTH MACEDONIA SOVEREIGN
The Borrower is the The Republic of North Macedonia, represented by the Minister of Finance ("MoF").
The Project Entity is the Public Enterprise for Railway Infrastructure ("PERI"), a joint stock company organised in North Macedonia and fully owned by the Republic of North Macedonia
EBRD Finance Summary
EUR 175,000,000.00
EBRD Sovereign loan in an amount of up to EUR 175 million. The EBRD loan is envisaged to be structured in separate tranches.
Total Project Cost
EUR 559,733,044.00
EBRD Financing: EUR 175,000,000
EIB Financing: EUR 175,000,000
WBIF Grant: EUR 133,983,044
IPA Grant: EUR 60,750,000
Additionality
The Bank's additionality is derived from i) provision of missing long-term financing in the country to match the life of infrastructure investments; and (ii) the Bank's support on the integration of gender responsive access standards into infrastructure investments.
Environmental and Social Summary
The Project is categorised A under EBRD's Environmental and Social Policy (2019) as there is the potential for significant environmental and social ("E&S") impacts associated with the construction and operation of a new 23km single-track railway line from the town of Kriva Palanka to the border between North Macedonia and Bulgaria and electrification of the 88km eastern rail line. Benefits of the Project include enhanced transport links within the region with reduced travel time between Skopje and Sofia, increased freight capacity and reduced CO2 emissions associated with a shift from road transport to rail. Environmental and Social Due Diligence ("ESDD") commenced with a review of the approved national Environmental Impact Assessment (2017), which determined that a further assessment on certain topics was required. A Supplementary E&S disclosure package has been developed in accordance with the EBRD Performance Requirements ("PRs") which includes: an Environmental and Social Impact Assessment ("ESIA") Addendum; Supplementary Biodiversity Assessment; a Biodiversity Management Plan ("BMP"); Environmental and Social Management Plan ("ESMP"); Resettlement Action Plan ("RAP"); Non-Technical Summary ("NTS") and Stakeholder Engagement Plan ("SEP"). This E&S disclosure package was disclosed in English, Macedonian and Albanian (NTS only) on 15 June 2023, so for a period of at least 120 days prior to the EBRD's Board consideration of the project in line with the Bank's Access to Information Policy. Results of consultation undertaken during the disclosure will be summarised in the Board document. The Project route crosses both urban and rural areas and the design of the Project was recently reviewed to optimise the routing options which included a consideration of E&S issues. As a result, the access roads were re-designed in response to community feedback and to reduce the amount of physical resettlement. Environmental and social impacts, particularly resettlement, economic displacement and biodiversity impacts have been avoided in many cases since approximately 10km of the alignment is within tunnels and a further 5km on bridges. A RAP has been developed and publicly disclosed to define mitigation, compensation and livelihood restoration measures in line with national law and PR5. The supplementary biodiversity assessment identified a number of areas of critical habitat ("CH") and priority biodiversity features ("PBF") with 12ha of such habitat due to be lost to the Project. A number of CH and PBF mammal, bird and amphibian species are noted, but impacts are generally expected to be restricted to construction phase disturbance and, subject to mitigation, will not be significant. The railway route passes through three areas that are proposed for biodiversity protection. An appropriate assessment process has been conducted for the two proposed Emerald sites and concluded that there are unlikely to be significant effects on the integrity of these areas or qualifying features: in Pchinja-German (MK0000029, a 1.8km section of the railway is routed along the edge of the protected area, the majority in tunnels or under bridges and no qualifying habitats will be affected; and in the Osogovo Mountains (MK0000023) the entire area is crossed by a tunnel. On 2.4km of railway that crosses a degraded part of the proposed Nature Park "Gorge of Kiselichka Reka", the majority of the railway is within a tunnel and impacts are not expected to be significant. Noise and vibration impacts have the potential to be significant. During construction, these will be addressed in line with the national and international standards and mitigation measures such as noise barriers, low noise and vibration construction methods, advance notification to communities, restriction on working times, pre- and post-condition surveys and monitoring during construction activities. Where impacts are predicted to be significant, residents will be offered the opportunity to temporarily relocate during the construction activity at the cost of the Project. During the operations phase, noise will be mitigated through installation of noise barriers or noise insulation at selected properties. Disturbance due to vibration has the potential to affect a large number of properties during the train movements, which will be mitigated through specific track design measures and operational controls. Both noise and vibration models will be updated by the Contractor and mitigation measures updated is appropriate and included in the final design. Due to the underlying terrain and the necessity of Project bridges, even after the application of mitigation measures, significant visual impacts are predicted at specific locations. Photomontages of the Project have been developed and are included in the ESIA Addendum. Rail and tunnel safety will be designed and managed in accordance with national and EU standards, including detailed requirements for management of safety risks such as emergency escape systems and seismic hazards. An Emergency Response Plan will be developed for both construction and operation phases. All crossings will pass either under or over the railway, which provides significant mitigation of community health and safety impacts. Fencing will be constructed in areas of high risk of third party access. An occupational health and safety plan will be developed for construction and operation phases. The construction contractor and sub-contractors will also be required to manage potential impacts to workers and communities, including labour rights of construction workers, health and safety risks to workers and communities and will establish and implement grievance procedures in line with the Bank requirements. Accessibility measures and gender considerations will be included in the final station design. Consultations have been undertaken to inform the Supplementary E&S package. A SEP has been prepared defining engagement activities during the Project lifecycle, including a grievance mechanism. As part of the 2017 ESIA, the national authorities undertook consultation with their counterparts in Bulgaria due to the cross-border tunnel, to which the Bulgarian authorities concluded that there was no further need for their participation or public discussion of the report. The NTS for the supplementary package has also been made available in Bulgarian. The E&S impacts of the works on the Bulgarian side of the border were assessed in the Supplementary E&S package as an associated facility and are considered to be low and suitably mitigated in accordance with EU legislation. An Environmental and Social Action Plan ("ESAP") has been developed, agreed with the Project Entity and disclosed and the project will be monitored regularly including site visits by the Bank and consultants to ensure compliance with the ESAP and the PRs.
Technical Cooperation and Grant Financing
Pre-signing:
TA1: E&S Support and Gender Due Diligence
TA2: RAP Implementation Support
Post- signing
TA3: Integrating Universal and Gender-Responsive Access Standards into Railway Infrastructure Design
Company Contact Information
Driton Rusi, Assistant Director for Railway Lines
d.rusi@mzi.mk
+389 (0)2 2449 740
Str. Jordan Mijalkov no.50b, 1000 Skopje
Implementation summary
PSD last updated
24 Jul 2023
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.
