Batken Water Sub-Project

Location:

Kyrgyz Republic

Project number:

45160

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

13 Mar 2015

Status:

Signed

PSD disclosed:

12 Nov 2014

Translated version of this PSD: Russian

Project Description

The EBRD is considering supporting the Batken Water Sub-Project. The EBRD would extend a sovereign loan of up to €1.5 million to the Kyrgyz Republic, to be transferred to Batken City for the benefit of the Batken Water Company for improvement of water supply and selected wastewater services.

The EBRD will also seek an investment grant from an international or bilateral donor of €2.5 million to co-finance implementation of the sub-project which will address water and wastewater infrastructure rehabilitation needs.

This support will be extended under the existing EBRD sovereign framework of up to €20 million, established by the Bank to co-finance with international donors priority water and wastewater rehabilitation sub-projects across the Kyrgyz Republic. The framework envisages sovereign loans that would be transferred to the cities for the benefit of the water companies involved and would focus on urgently needed water and wastewater infrastructure investments.

The overall objectives of this sub-project are to: (a) rehabilitate the water supply and selected wastewater improvements; and (b) improve financial and operational management.

Transition Impact

Transition impact of the sub-project would be:

  • Improved access to basic public utilities;
  • Introduction of tariff reform within affordability limits;
  • Higher collection rates;
  • Establishment of a contractual arrangement between the city and the company;
  • Improvement of operational and financial management of the Batken Water Company to be merged with Batken Wastewater Utility (including preparation and publication of IFRS and a business plan, training on procurement, etc.); and
  • Introduction of a formal consultation process with water users in form of a community-based stakeholder participation programme.

The Client

Government of the Kyrgyz Republic, Batken City and the Batken Water Company.

EBRD Finance

Sovereign loan of up to €1.5 million to the Kyrgyz Republic, transferred to Batken City for the benefit of the Batken Water Company.

Project Cost

The total sub-project cost is €5.4 million including technical cooperation. The sub-project will be co-financed by an investment grant from an international donor.

Environmental Impact

Categorised B. An Environmental and Social Review of the Batken Water Company’s current environmental and social (E&S) management practices, operations and facilities, and an Environmental and Social Analysis of the proposed Priority Investment Programme (PIP) has been carried out as part of the Feasibility Study by independent consultants. Based on the findings of the Feasibility Study, the implementation of the proposed PIP is expected to significantly improve efficiency and reliability of water supply and wastewater services in Batken, thus contributing to the provision of access to safe drinking water, prevention of ground and watercourses pollution and improvement of public health. The implementation of the PIP involves construction works that will result in limited, localised and short-term adverse environmental impacts, which will be mitigated or prevented by adhering to good construction practice.

The results of due diligence investigations has shown that the capacity of the Batken Water Company to manage E&S issues is low and their E&S management systems, occupational health and safety and stakeholder engagement practices require further upgrading and improvement to meet EBRD's Performance Requirements (PRs).

Through the implementation of the PIP, the reliability of the water supply services will be significantly improved and water losses will be considerably reduced. Improved and extended water supply system will increase access to tap water. Turbidity and colour problems which occur during early spring period will be addressed by improvements to the water intake and existing filters. Provision of basic laboratory equipment and facilities will enable better control of the water quality. The outbreaks of water borne diseases will be significantly reduced by improved and better controlled water quality and improved sanitation. Still, additional further long-term investments into water networks would be required to bring the water supply system in full compliance with the EU standards.

Currently, only four per cent of the population is served by a piped sewerage network while the majority disposes of their wastewater into open drains, septic tanks, gardens/yards, onto the streets etc. This constitutes significant health risks. The PIP includes limited sewer network expansion but as a first phase priority proposes provision of equipment and training to ensure safe collection and disposal of the septage. The existing wastewater treatment plant (WWTP) has the capacity to serve only 5 per cent of the population. Although the PIP will improve the treatment efficiency of the WWTP to achieve compliance with the national requirements, long term investments will be required for large scale extensions to the collection system and to build a new WWTP to achieve compliance with the national and EU requirements for the while population.

Further expansion and improvements to the water supply system and expansion of wastewater infrastructure and a new WWTP need to be included in the long term investment programme due to affordability reasons. At this time the financing for the long-term investment programme from the Batken Water Company’s own revenues cannot be confirmed and no potential sources of external funding has been identified. Therefore, on account of constraints arising from affordability and limited financial resources, derogation will be sought from the EBRD’s Environmental and Social Policy.

The human health implications of the shortfalls from EU standards are assessed to be minor compared to the benefits of the PIP implementation resulting in more reliable water supply to the local population. To minimise the associated health risks to the local communities, awareness raising programmes will be developed as part of mitigation plans and implemented to prevent risks of water borne diseases.

The affordability analysis indicates that there are significant affordability concerns for the average and lower income households in Batken if the capital costs are fully passed on to the consumers. To address this issue, a Social Support Programme will be developed for the low income customers for the sustainability of their payments.

The Environmental and Social Action Plan (ESAP) commits the Company amongst others to developing an environmental, health and safety (EHS) management system, E&S trainings, acquiring necessary permits, provision of laboratory facilities for improvement of water and wastewater monitoring, monitoring of affordability for low-income groups, management and monitoring of contractors, asbestos handling and disposal, archaeological chance find procedures, and improving human resources practices. A Stakeholder Engagement Plan has also been developed for the Water Company.

The Batken Water Company’s environmental and social performance and implementation of the ESAP will be monitored through annual E&S reports and site visits when deemed necessary. The project completion review will also assess EHSS compliance.

Technical Cooperation

The following technical co-operation (TC) assignments are included as part of this sub-project:

Pre-signing

  • Feasibility study including the preparation of a financial, technical, environmental and social feasibility study. EUR 280,000, financed by the EBRD Shareholder Special Fund;
  • Initial Corporate Development Programme to make a recommendation for institutional reform in the water supply and wastewater management in the City. EUR 120,000, financed by the EBRD Shareholder Special Fund.
  • Audit and restatement of Batken Water Company’s accounts. EUR 12,900, financed by the Bank’s own resources.

Post-signing

  • Implementation Support to the Company to assist with engineering design, procurement, preparation and evaluation of tenders, contract award and administration, financial control, project management and reporting. EUR 600,000, to be financed by an international donor;
  • Corporate Development and Stakeholder Participation Programme:

    (i) to support institutional development in the form of operational improvements and financial improvements to secure sustainability of the water company; and
  • (ii) to implement a Stakeholder Participation Programme. EUR 420,000, to be financed by an international donor.
 

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)

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

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.