BRUA Pipeline

Location:

Romania

Project number:

49149

Business sector:

Natural resources

Notice type:

Public

Environmental category:

A

Target board date:

13 Dec 2017

Status:

Signed

PSD disclosed:

14 Jul 2017

Translated version of thie PSD: Romanian

Project Description

The provision of debt financing to SNTGN Transgaz SA (Transgaz or the company), the gas transmission system operator in Romania. The project consists of the construction of a new 478 km natural gas trunk pipeline on the Romanian territory, part of Bulgaria-Romania-Hungary-Austria gas pipeline (the BRUA pipeline) and three compressor stations. Initial capacity of the pipeline is set at 1.75 bcm per annum, which will be further increased in the future to 4.4 bcm per annum.

Project Objectives

The proposed project is part of the European Commission's Projects of Common Interest "Gas pipeline from Bulgaria to Austria via Romania and Hungary" (with approximate total length of 1,318km). The project would ensure the interconnection of the gas transmission systems in Bulgaria and Hungary with the gas transmission system in Romania. BRUA pipeline aims to enhance regions energy security by diversifying gas supply routes. Proposed project on the Romanian territory would allow access to the future major gas infrastructure projects such as TAP, gas sources from Central European gas hubs and potential gas transportation from Black Sea deposits. The project is also in line with the Green Economy Transition (GET) initiative of the Bank as it will result in direct and indirect energy efficiency and carbon emissions reductions by modernising the Romanian gas infrastructure and contributing to the switch to gas from more polluting energy sources.

Transition Impact

The project targets the "competitive" and "integrated" transition qualities. The BRUA pipeline will help to diversify the regional gas supply from its current limited number of major pipelines by connecting the area with future major gas infrastructure projects such as TAP, gas sources from Central European gas hubs and potential gas transportation from Black Sea deposits. Greater integration of European gas markets will allow competition to develop across borders, producing important economic benefits for consumers and increased security of supply. The project has been designated as European Commission's Project of Common Interest and forms part of the North-South Gas Interconnections in Central Eastern and South Eastern Europe (NSI East Gas) priority gas corridor which includes gas infrastructure for regional connections between and within the Baltic Sea region, Adriatic and Aegean Seas, eastern Mediterranean Sea and Black Sea.

Client Information

SNTGN TRANSGAZ SA

Transgaz was established in May 2000 as a joint stock company. It is the sole Transmission System Operator of the National Gas Transmission System in Romania. Transgaz is 58.5 per cent owned by the Romanian state with the rest of shares on free float on the Bucharest Stock Exchange.

EBRD Finance Summary

60,000,000.00

Total Project Cost

EUR 479,000,000.00
Aprt from the EBRD loan the Project costs will be financed via Transgaz contribution, an EU grant under Connecting Europe Facility (CEF), loans from financial institutions.

Environmental and Social Summary

Category A (2014). The 32" BRUA pipeline project will cross 79 administrative units in 11 counties, and will include new Gas Compressor Stations (GCS) at Podisor, Bibesti and Jupa. The route selection for this project relied upon the principle of impact avoidance, and accordingly primarily passes through arable lands, pastures, meadows and a very limited amount of orchards or vineyards, with over 70 per cent of the route going through agricultural areas. Around two thirds of the route will also follow existing infrastructure corridors.

The pipeline itself has been designed to meet the requirements of Romanian Energy Regulatory Authority Order no. 118/2013, with a burial depth of 1m below ground level, increased to at least 1.5m at infrastructure crossing points. It has also been designed in line with the Code for Seismic Design (P 100 - 1/2013) and will use a "SCADA" electronic surveillance to allow real time monitoring of various parameters indicative of structural integrity. The project's Environmental Agreement (2016) defines a specific working strip width (or Right-of-Way) of 21m in agricultural areas and/or "unproductive lands"; 14m in vineyards, orchards, forests and "difficult areas"; and 10m in areas with high cross slopes terraces will be constructed.

A number of route options were reviewed during the national Environmental Impact Assessment (EIA) scoping phase to identify a route that was (i) as short as practical, (ii) avoided major settlements and (iii) where possible, followed existing infrastructure, thereby avoiding new impacts. In particular, the crossing of the Carpathians Mountains (the most environmentally sensitive and technically challenging area of the route) was extensively assessed and the option with the least significant environmental footprint selected. Care was also taken to minimise construction works within Natura 2000 sites, although the route does cross a number of these protected areas as well as other existing linear features including pipelines, communication routes (utilities, roads and railways), rivers and other water bodies.
Construction is planned to run from Q3 2017 to Q4 2019, with commissioning in December 2019. The operational phase is expected to be at least 40 years without any requirement for major overhaul or non-routine maintenance works.

The project received its national construction permit in February 2017 which addressed the requirements of both relevant Romanian and EU legislation (namely the EU EIA and Habitats Directives). The national construction permit also included a regulatory Environmental Agreement based upon potential impacts and mitigation identified in the 2016 Regulatory EIA.

As part of the EBRD's environmental and social due diligence, an independent consultant was retained to supplement the Bank's internal review to ensure that the project is developed in accordance the Bank's Performance Requirements (PR) (2014). Specifically, this due diligence identified a number of areas that Transgaz needed to address prior to seeking EBRD financing. As a result, Transgaz retained national and international Environmental and Social Impact Assessment (ESIA) consultants to prepare a Supplemental Lenders Information Package (SLIP), comprising of a (i) Non-Technical Summary (NTS), (ii) Supplemental EIA (SEIA), (iii) Environmental and Social Scoping Report, (iv) Rapid Social Impact Assessment (SIA), (v) Land Acquisition Framework and (vi) Stakeholder Engagement Plan (SEP). Copies of these documents (in both Romanian and English) can be found on the company's website. The company further developed a series of framework environmental and social management plans (ESMPs) that outline the approaches to be adopted by its contractors during construction to ensure compliance with Romanian, EU and EBRD requirements.

Whilst the SLIP addresses all relevant EBRD Performance Requirements, particular attention was paid to PR5 (Land Acquisition, Involuntary Resettlement and Economic Displacement) and PR6 (Biodiversity Conservation and Sustainable Management of Living Natural Resources). BRUA will result in direct impacts on land owners and users along the right-of-way. In total, approximately 20,500 land plots will be directly affected by construction, with most of the impacts related to (I) temporary land acquisition associated with temporary restrictions of land use rights for owners and users and the possible loss of crops and income; (ii) limited permanent land acquisition for Above Ground Installations (AGIs); (iii) permanent land use restrictions in the pipeline corridor (e.g. planting of trees or building of structures) potentially associated with decreased property values; and (iv) deforestation, for the purpose of route clearance (loss of current and future wood mass).

In order to mitigate these impacts, Transgaz has developed a Land Acquisition Framework (LAF) that identifies impacted persons, eligibility criteria and compensation entitlements for different types of impact, as well as principles of engagement with the affected population. The LAF has been developed in line with the Romanian legal framework, Transgaz internal procedures and EBRD PR 5 requirements and it forms the basis of the Land Acquisition Plan to be developed for the project.

Regarding the project related impacts to biodiversity, the national EIA and SLIP identified that much of the habitat within the pipeline route corridor is already heavily modified (e.g. 70 per cent agricultural lands), although some areas of semi-natural habitats and priority biodiversity features are present, including natural forest, riparian corridors as well as small areas of semi-natural rassland and exposed rocky outcrops. In total, 7 Natura 2000 sites, one Geopark and one National Park will potentially be directly affected by the BRUA project.

As part of the national EIA process, an Appropriate Assessment (in line with the EU Habitats Directive) was completed and confirmed that no significant adverse effects on the designated sites and/or protected species will occur. Nevertheless, the SLIP identified additional mitigation measures to be implemented by Transgaz, including the need to implement the project's Framework Biodiversity Management Plan during construction and to develop and implement a Biodiversity Action Plan and Biodiversity Offset Strategy to ensure No Net Loss of Priority Biodiversity Features and Net Gain for Critical Habitats.

Finally, an Environmental and Social Action Plan (ESAP) has been agreed between EBRD and Transgaz. The ESAP includes future actions that the company will need to implement during construction and operations. Actions addressed in the ESAP, include but are not limited to: (i) Appoint and train a Community Relations Manager (CRM) within its BRUA project Implementation Unit to manage a team of dedicated Community Liaison Officers (CLOs), (ii) Require its contractors to employ biodiversity specialists to ensure commitments in the Biodiversity Management Plan, including pre-construction/pre-clearance surveys, are carried out in accordance with project commitments, (iii) Develop an overarching project commitments register, as part of the BRUA Environmental and Social Management Systems (ESMS) that captures all Environmental, Health and Safety Standards (EHSS) requirements included in the national EIA, and related permit requirements, as well as the SLIP, (iv) Ensure that the primary contractor(s) have an effective grievance mechanism in place that is accessible to all their workers and those of sub-contractors, and ensure that the primary contractor(s) have a policy ensuring responsibility for the dissemination, implementation, monitoring of this/these mechanism(s), (v) Develop a Land Acquisition Plan and sign a new protocol or amendment to the existing agreement with the ANCPI (National Cadaster Agency) to ensure the accelerated registration of all affected land plots in the Land Book (cadaster) and define joint measures to support this effort, (vi) Develop site specific method statements/execution plans for watercourse crossings (e.g. HDD, coffer dam, open cut) that aims to avoid/minimize impacts to the environment during construction (vii) Develop site specific method statements/execution plans for construction works near Tibiscum and Ulpia Traiana Sarmizegetusa cultural heritage sites (viii) Implement and update annually the Stakeholder Engagement Plan and Grievance Mechanism and establish a Stakeholder Engagement and Grievance Log / Database to record all stakeholder
engagement activities and grievances received related to the BRUA project.

The EBRD will retain an independent environmental and social consultant to supplement the Bank's monitoring during construction and initial operations.

There is an Environmental and Social Impact Assessment available for this project.

Technical Cooperation

None.

Company Contact Information

Cornel Mihai (inquiries from the general public), Cora Stavarescu (inquiries from public instritutions)
cornel.mihai@transgaz.ro; cora.stavarescu@transgaz.ro
+40269803333
+40269839029
http://www.transgaz.ro/ro
1 Piata C. I. Motas, City of Medias, Sibiu County, 551130, Romania

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