The EBRD is considering providing a KZT 1,230 million senior loan to TVS&V, a water and district heating company in the city of Aktau to finance priority investments in the water and wastewater sectors in the city and to enhance the financial and operational performance of TVS&V.
The Project objectives are to: increase efficiency of the water and wastewater service provision, reduce the risk of environmental pollution, produce service enhancements in the water and wastewater sectors and increase the reliability of water supply in Aktau.
The project will:
(i) contribute to improvements in tariffs by agreeing a priority investment programme with the regulator and to commercialisation of the company by introducing a public service contract or a management contract and business planning;
(ii) contribute to market-based behaviour patterns through the demonstration effect of new instruments to finance activities in the water sector on a sub-sovereign level in Kazakhstan;
(iii) contribute to the transfer of skills through the technical assistance components.
Additionally, the transaction aims to increase transparency and improve business standards through introduction of IFRS and implementation of ESAP.
TVS&V, a municipally owned water and district heating company in the city of Aktau of the Mangystau Oblast, Kazakhstan.
Senior corporate loan of KZT 1,230 million.
KZT 2,460 million.
1. Description of the project
The proposed priority investment programme (“PIP”) includes the following components:
- Rehabilitation of critical water supply network sections;
- Reconstruction of booster pumping stations in sewage system;
- Provision of the maintenance and leak detection equipment for water supply and sewerage networks, and wastewater laboratory equipment.
2. Environmental classification and rationale
The EBRD has classified this project B/1 under the 2003 Environmental Policy. An environmental audit of the existing facilities and operations of the Company was undertaken to determine the Company’s current regulatory compliance as well as to support the selection of priority investments. The selected PIP is targeted at the rehabilitation and replacement of water distribution networks and reconstruction of the sewage pumping stations, as well as leak detection and prevention. The PIP will result in limited adverse environmental and social impacts as well as in significant health and environmental benefits that have been identified, assessed and mitigated in an environmental analysis. The corporate policies and procedures applied by the Company in managing environmental, health and safety and social issues have also been reviewed.
3. Information reviewed during the environmental appraisal
The environmental appraisal has been based on the review of the Environmental Audit and Analysis report that is a part of the Feasibility Study for Aktau Vodokanal Kazakhstan (October 2009), prepared by external independent consultants.
4. Environmental and social issues
The due diligence identified existing non-compliances with national regulatory requirements and EU environmental standards for drinking water quality and wastewater discharges. Drinking water currently meets national quality standards for water treatment plants, but fails to meet national and EU standards at the consumer level due to the poor condition of the water supply networks, and occurrence of pipe leaks and bursts. In addition, the drinking water quality monitoring is insufficient and this causes health risks for the population. The effluent quality also fails to meet national and EU standards due to sludge present in effluent, and due to the poor state of the existing Waste Water Treatment Plant (WWTP1).
However, the wastewater does not currently have significant environmental impacts, because it is discharged into the already heavily contaminated area of Koshkar-Ata. Although these discharges also help control the generation of the contaminated dust and provide for an extra revenue for the Company, current untreated wastewater discharge practices are unacceptable and should be discontinued. Due diligence indicated also that current sludge management practice remains an area of concern due to significant bacteriological contamination. For the same reason, existing sludge fields are heavily contaminated, making sludge unsuitable for re-use in agricultural or other purposes. Other environmental issues are related to the capacity of the Company to manage environmental, health and safety issues at the corporate level; health and safety issues during construction, operation and maintenance.
The environmental due diligence showed that the proposed PIP will provide for considerable improvement of the selected water and waste water facilities, and will contribute to improvements of the environmental and health conditions in Aktau. However, the due diligence also indicated that the PIP budget of TVS&V at this stage is not sufficient to bring the quality of drinking water and effluent to full compliance with the national and EU environmental standards, or to address the discharge of untreated wastewater into Koshkar-Ata.
The environmental investigations showed that the PIP would not result in any significant negative environmental or social impact and would provide substantial environmental and social benefits compared to the existing situation by improving the quality and efficiency of drinking water supply, sewerage collection, transportation infrastructure and services in the City. However, minor temporary negative environmental or social impacts might occur due to construction activities like emission of exhaust gases, soil disturbance, waste generation, etc. Appropriate mitigation measures have been included in Company’s Environmental and Social Action Plan to minimise or prevent these temporary impacts.
The Company’s medium- and long-term investment plans include further investments into water and wastewater infrastructure including construction of the new WWTP2 that would help to rectify these problems. The due diligence has also recommended that sludge management issues are to be addressed as part of the construction of the new WWTP. A better sludge management practice solution should be developed and implemented by the Company, including possibly a clean up of the existing sludge fields, and considering sludge processing to improve its bacteriological / biological condition and enable its re-use.
5. Summary of mitigation measures
An Environmental and Social Action Plan (ESAP) has been prepared to guide the Company towards meeting the applicable Kazakh and EU environmental, health and safety standards. ESAP includes key measures for improving Company’s environmental, health and safety management and implementing a corporate Environmental Management System (EMS), development of emergency preparedness and response measures, managing and mitigating EHS impacts of the construction activities, and improving Company’s monitoring practices, particularly in terms of the drinking water quality at the consumer level. Additional measures have been recommended to the Company for improving the operational performance of the existing WWTP, for improving sludge management practices and developing alternative solutions for sludge disposal/use, and also some measures for preventing/restricting access to Koshkar-Ata area. ESAP will be agreed with the Company and covenanted to the Loan Agreement for implementation during the project.
6. Disclosure of information and consultation
Environmental information on the project will be disclosed to public in accordance with the planning and construction procedures of Kazakh law. In the context of EBRD’s participation in the project, this environmental summary will be disclosed locally at TVS&V and the Akimat (local authority) offices, on their website and in local media as well as in English on ebrd.com
7. Monitoring and reporting
The Company will report to the EBRD annually on the measured environmental impacts and on the implementation of the ESAP. The Bank will evaluate the project's compliance with the applicable environmental and social standards during the lifetime of the project by reviewing these reports and by conducting monitoring visits to the project when and if deemed appropriate.
- Preparation of a feasibility study (special investment programme) in line with requirements of the natural monopoly regulator AREM (€210,000 – financed by the Netherlands; €90,000 financed by the EBRD Shareholders Special Fund.
- Project Management Consultants for the project management, design, procurement, engineering and supervision of works (up to €500,000);
- Preparation of a public service contract and a corporate development plan (up to €300,000).
Mr. Ensepov Ospan Latipovich
General Director TVS&V
Republic of Kazakhstan,
130000, Aktau, microdistrict 22
Telephone: +7 7292 605318
Ms. Zhanat Samat
Projects Management and Coordination Center on Housing and Communal Sector in Mangystau oblast (PM&CC)
Republic of Kazakhstan, 130000,
Aktau, mcr15, bld 67A, 3rd floor
Mobile: +7 701 222 4004
Telephone: +7 7292 422000
For business opportunities or procurement, contact the client company.
EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Public Information Policy (PIP)
The PIP 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. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP