Albanian Railways

Location:

Albania

Project number:

48466

Business sector:

Transport

Notice type:

Public

Environmental category:

B

Target board date:

30 Nov 2016

Status:

Signed

PSD disclosed:

21 Jun 2016

Translated version of this PSD: Albanian

Project Description

A sovereign loan to the Republic of Albania for the benefit of the Albanian Railways (“HSH” or the “Company”).

The loan will finance: i) the rehabilitation of the existing railway line between the cities of Tirana and Durres with approximate length  of 34.17 km  and ii) the construction of a new railway link approximately 5 km in length to connect the existing Tirana-Durres rail line with  the Tirana International Airport (TIA) and the interchange with the existing line. The proceeds of the Bank’s loan will be used to co-finance the construction works related to the Project.

Project Objectives

The Project is part of Route 2 of the Western Balkans Core Network connecting the cities of Podgorica in Montenegro and Vlore in Albania and has been established as an indicative extension to the Trans-European Transport Networks (TEN-T) to the Western Balkans core railway network.

The Project will support Albania’s national economic development and contribute to Albania’s regional integration by improving connectivity of its main cities to the Port of Durres and TIA.

Transition Impact

The Project will include sector reform and institutional strengthening measures in the following areas:

Asset Management Plan and Track Access Charges: developing an Asset Management Plan, which will include a survey of the condition of the Company’s assets, as well as an assessment of the full cost of operating and maintaining the network. This will enable an efficient allocation of maintenance resources to be made and provide a transparent basis for the calculation of track access charges in line with the EU rail sector guidelines, which will enable open and transparent third party access to the network;

IFRS Accounting: improving the Company’s accounting and reporting systems to enable the Company to prepare financial statements that are fully compliant with IFRS going forward;

Green Economy: the provision of high-quality rail services which is fundamental for the development of sustainable transport systems which reduce CO2 emissions in line with national and EU transport policy targets.

Client Information

The Beneficiary of this Project is Albanian Railways which is responsible for the railway infrastructure and train operation.

EBRD Finance Summary

A sovereign loan of up to EUR 36.87 million.

Total Project Cost

The total Project cost is estimated to be up to EUR 92.03 million.

Environmental and Social Summary

Categorised B (2014 ESP). The rehabilitation and upgrade of the existing railway line of 34.7 km in length between Tirana and Durres and construction of a new railway link of approximately 5 km, to connect Tirana International Airport, may involve specific environmental and social issues that can be addressed by adequate mitigation measures. The rehabilitation works are within the existing railway corridor and the new alignment is mainly through agricultural land.

The potential environmental, health and social risks linked to the planned works and current operational and managerial practices of the Company (depots, maintenance facilities, track and road safety, crossings etc.) were initially reviewed by ESD and assessed further by independent consultants.  The environmental and social due diligence (ESDD) included: an environmental and social audit of the existing operations; a review of the Environmental Impact Assessment (EIA) prepared for the new railway line; a review the Company’s environmental, health and safety and social management systems and Environmental, Health, Safety and Social (EHSS) performance.  An additional social study and land acquisition framework were also provided for review.

The environment in which the Project is located is a mixture of urban development within Durres and Tirana, and agricultural land with occasional small settlements.  The Lana and Tirana rivers lie within the project area; these are heavily polluted and have a low sensitivity to impacts as a result of the Project. The principal baseline sensitivities for the Project are local communities within the project areas, since the largest change is anticipated to be the fencing of the corridor and closure of a number of illegal crossings that are currently used by communities for access.  Those affected by land acquisition derive the majority of their income from farming.

Currently the Company does not fully comply with all national environmental and health and safety legislation.  There is no environmental permit and risk assessments required under Health and Law are not fully in place.  

The Bank’s ESDD found that the Company is generally in compliance with national labour law and there is a collective bargaining agreement in place with the Railway Union, however recently there has been a labour dispute relating to the non-payment of wages and there are a number of areas where Human Resources management systems will need to be improved.   Equal opportunities will need to be addressed and a TC is proposed to introduce improved HR policies and practices with a view to promoting equal opportunities and in particular women’s participation in the workforce.  In addition, a labour assessment is proposed within the Environmental and Social Action (ESAP) to enable a detailed HR Improvement Plan to be defined to assist the Company in meeting EBRD PR 2 requirements.

The Company does not operate any recognised systems for the management of EHSS requirements.  Based on the audit of current practices, it is considered that the capacity of the Company is currently insufficient to manage and deliver the EHSS requirements of the Project.  Substantial assistance will be required to implement the proposed ESAP and establish appropriate monitoring and review processes.   Support for the application of EHSS requirements, particularly during the construction phase has been included in the proposed TC Grants for works supervision and implementation support, plus additional support will also be provided through a TC for EHSS Management system development and implementation.

ESDD confirmed that the Project and EIA process has been designed and implemented in line with the Albanian Environmental Framework.  The Ministry of the Environment issued the EIA Declaration on the 11th October 2016, which confirms that the project does not impact on any protected areas and sets out requirements in relation to waste, noise, soil, rehabilitation and reporting requirements.  ESDD identified the need for some pre-construction surveys to be carried out such as archaeology, access arrangements and a river crossing biodiversity survey.  These have been included in the ESAP as requirements to be completed during the project preparation phase.  

Currently the railway is not fenced, enabling free access to the track which has resulted in illegal crossings being established for both vehicles and pedestrians, posing a significant health and safety risk.  The plan is to now fence the railway for safety reasons due to the increase in speed of the trains.  Early due diligence identified that there had been little engagement with key stakeholder group utilising the track  as part of the design process with no consultation regarding the illegal crossings, and how these are being used by local communities and vulnerable groups such as the elderly and children.  Steps are already underway to address this lack of consultation, initially via a social survey that has been recently completed and going forward via the Stakeholder Engagement Programme.  

The Notification of Public Interest has not yet been made however new track alignment will require changes to access arranged to homes and businesses and 250,000m2 of land to be acquired but will not require the demolition of any existing residential buildings.  Over 70% of the affected land is agricultural land.  A Land Acquisition Framework has been prepared in line with PR 5 requirements and made publicly available.  The ESAP includes the requirements for a Land Acquisition Plan (LAP) to be prepared.  ESD aims to mobilise financing to provide support the development and implementation of the LAP.   

A stakeholder mapping exercise was undertaken as part of the development of the Stakeholder Engagement Plan. In addition to the Public Hearing that was completed as part of the EIA process in May 2016 further meetings have been held with regional authorities and local municipalities. In addition, a series of focus group meetings and interviews with people and business affected by the project have taken place, this has included farmers, communities living adjacent to the railway line (including potentially vulnerable groups such as the elderly, Roma, rural residents) and a sample of pedestrians who currently use the railway corridor.   Project information shared included details of crossing points, changes to access arrangements and that the railway is to be fenced.   Key issues raised by stakeholders included: crossing points, land expropriation, noise, safety and security concerns and disability access.   The SEP includes continuing programme of stakeholder engagement activities such as further consultation of access changes, land acquisition, construction and community safety issues with a particular focus on vulnerable groups.  The SEP will be linked to the TC for Civil Society Capacity building as there has been limited engagement with civil society to date. The SEP also includes a grievance mechanism that is currently lacking within the company. 

A Non-technical summary, Land acquisition framework and the SEP prepared and disclosed for the project are available below.

NTS: English | Albanian

SEP: English | Albanian

LAF: English | Albanian

The ESAP includes requirements for EHSS management systems and operational controls to be adopted in order for the project to be structured to meet the Banks PRs.  The initial focus will be on ensuring that the construction works are subject to controls, so the ESAP includes the requirement for a Construction Environmental and Social Management Plan, Contractor SEP and Construction H&S Plan. In addition, the ESAP also includes requirements for the development of Company systems and procedures for environmental, health and safety and human resources.   There is also a requirement to assess land contamination at the depot site and review and update emergency response plans. Also included is the implementation of a workers grievance mechanism and the SEP which will be linked to and awareness campaign regarding safety around railways.

The Bank will monitor the Project's environmental and social performance and compliance with EBRD PRs by reviewing reports on environmental and social matters, and implementation of the ESAP. Site visits to monitor the project  will also be carried out.

Technical Cooperation

The following Technical Co-operation assignments are envisaged as part of this project:

  1. Works supervision;
  2. Project implementation support and management of environmental and social issues;
  3. Institutional strengthening to assist with the preparation of an Asset Management Plan and Track Access charges in Albania.
  4. Capacity building for improvement of the HSH’s accounting systems to comply with IFRS standard.
  5. Development and implementation of a Construction Environmental and Social Management Plan (CESMP) to implement EIA commitments, national and EBRD Performance requirements.
  6. Promotion of HR practices regarding equal opportunities.

Civil society and public awareness capacity building regarding the use of rail transport.

Business opportunities

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