Aktobe Water

Location:

Kazakhstan

Project number:

47570

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

29 May 2015

Status:

Disbursing

PSD disclosed:

30 Apr 2012

Translated version of this PSD: Russian

Project Description

The EBRD is considering providing a loan of up to KZT 2.0 billion to Joint Stock Company “Akbulak”, a water and wastewater management company in the city of Aktobe, Kazakhstan, to support the rehabilitation and upgrade of the water supply and wastewater management system in Aktobe.

The loan will allow to replace parts of the obsolete water supply network and modernise the wastewater management system operated by Akbulak. This will reduce energy and water losses, increase reliability and quality of provided water services, reduce maintenance and operating costs, as well as reduce the negative environmental impact.

Transition Impact

This project would deliver:

(i) Energy efficiency improvements in the operations of Akbulak through the modernisation of the water supply and wastewater management facilities;

(ii) Introduction of commercial water tariffs covering the full costs of service for all customer groups as part of the Priority Investment Programme agreed with the regulator and the commercialisation of the Company by means of a public service contract and business planning;

(iii) Contribution to modern water management business practices through the demonstration of new replicable products and processes to operate water sector utilities in Kazakhstan;

(iv) Higher environmental standards.

Additionally, the transaction aims to increase transparency and improve business standards through the introduction of International Financial Reporting Standards (IFRS) and the implementation of an Environmental and Social Action Plan (ESAP).

The Client

Joint Stock Company “Akbulak”, a municipally owned water and wastewater company in the city of Aktobe, Kazakhstan.

EBRD Finance

Senior corporate loan to the Company in the amount of KZT 2.0 billion (€9.4 million equivalent).

Project Cost

KZT 4.0 billion (€18.7 million equivalent) including related technical cooperation to support the Company with the project preparation and implementation. Co-financing grant contributions from the state budget under the Enhanced Partnership Framework Arrangement (“EPFA”), signed between the EBRD and the Government of Kazakhstan (the “Government”) in May 2014, in the amount of up to KZT 1.4 billion (€6.4 million) and from the City / Oblast Akimats in the amount of up to KZT 0.3 billion (€1.6 million) are also envisaged and will be partially used to cover the capital expenditure components as well as taxes and fees associated with the Project’s implementation.

Environmental Impact

Categorised B under the 2008 Environmental and Social Policy. The potential adverse future environmental and social impacts associated with the modernisation of the water and wastewater networks are site-specific and can be readily identified and addressed through adequate mitigation measures. The project takes place at existing facilities and is not associated with any land acquisition. The implementation of the Priority Investment Programme (PIP) involves construction works primarily on the existing site that will result in limited, localised and short-term adverse environmental impacts which can be readily mitigated.

The loan to the Aktobe Water Company will finance the rehabilitation and upgrade of water and wastewater systems in the City of Aktobe (the "City"), including complex modernisation and optimisation of the water and wastewater infrastructure throughout the network rehabilitation, the introduction of water demand management, reduction of water losses, and the improvement of water quality supplied to the customers (the Project). This will result in enhanced energy efficiency, reduced consumption of water and losses in the system, and improved environmental standards.

The environmental and social due diligence (ESDD) showed that the project would meet EU standards for drinking water. While the PIP will improve WWTP efficiency, significant improvements needed for the WWTP will not be able to be identified until the PIP is implemented. Wastewater is not discharged to surface water (stored, dewatered) and all regulatory requirements are met.

The ESDD was carried out by independent consultants as part of the Feasibility Study in 2012 and included environmental and social audit/review of the Company's current operations and facilities, and an analysis of potential environmental and social issues associated with the PIP. The Company's existing management systems on environmental and social issues were reviewed and assessed, including six water intake points.  This information was updated by external consultants in 2015 and the ESAP was restructured to make it easier for the client to implement, with no major changes.

ESDD established compliance of the proposed investment project with EBRD PRs, including relevant EU environmental standards for drinking water quality and treated effluent. ESDD confirmed that the Project will substantially improve quality, reliability and efficiency of water and wastewater treatment and pipework systems. A qualitative assessment of the Climate Change Issues was done for the project and no major issues were identified. 
The Project is predicted to reduce water losses by 959k m3/year and result in energy savings of ca 9,586 kWh/year. Greenhouse gas reductions of emissions by 12,989 t CO2 equivalent per year. The Project will result in a reliable and high quality water supply.  Minor construction nuisances associated with pipeline replacement will be mitigated with a grievance procedure and through adequate construction procedures and practices as part of ESAP
An Environmental and Social Action Plan (ESAP) and Stakeholder Engagement Plan (SEP) were prepared based on mitigation measures and corrective actions identified during due diligence to cover construction and operation stages and have been agreed with the Client. The ESAP includes development of an environmental policy and procedures for the Company and further enhancing their monitoring programme.  The ESAP includes the requirement for environmental, health and safety and social requirements into contractor agreements and develop monitoring programme of contractor compliance; to establish an EHS policy and procedures; developing chlorine handling procedures; working with the authorities to develop a plan for managing municipal industrial wastewater discharges; monitoring dam safety and maintenance programme; fencing and securing construction site; implementation of Stakeholder Engagement Plan, including media announcements prior to works commencement.
 

Technical Cooperation

  • Preparation of a detailed Feasibility Study including the water supply and wastewater priority investment programme and the development of a comprehensive Environmental and Social Action Plan (ESAP) (€280,000; funded from the EBRD Shareholder Special Fund);
     
  • Revision of the ESAP and environmental and social due diligence update (€7,000; funded from the EBRD’s own resources);
     
  • Project Implementation Support Consultants for the project management, design, procurement, engineering, supervision of works, staff training and assistance with the implementation of the ESAP (up to €600,000; to be funded by the Government under EPFA);
     
  • Corporate Development Support to the Company, including the introduction of Public Service Contract for the provision of water and wastewater services, to secure sustainability of the Company’s operations through the implementation of the Financial and Operational Performance Improvement Programme, institutional capacity building, development of a strategic plan for the Company, and implementing a Stakeholders Participation Programme in the City. (up to €320,000; to be funded by the Government under EPFA).

 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

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Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.