Bursa Light Rail

Project Description

The EBRD is considering providing a senior loan of up to €70 million to the City of Bursa to finance the Bursa Light Rail (LRT) project.

The Project will finance investments of the second phase of the Bursa LRT system to extend the existing LRT as the backbone of the City’s sustainable urban transport approach. The Project includes construction, mechanical works and procurement of new rolling stock.

The project will address the need for the enhanced environmental infrastructure, energy efficiency via monetisation of carbon credits and institutional developments towards quality improvements and commercialisation of municipal services.

Transition Impact

The proposed Project is expected to result in transition impact in the following areas:

• Monetisation of Carbon Reductions: The investment in the project will lead to a significant shift away from cars and diesel buses to clean LRT. Specialist consultants will prepare under TC Funds all necessary documentation to achieve the monetisation of the carbon savings on the VER market
• Improvement of Public Service Contract: Specific service standards that are common under best practice contracts will be introduced to the new contact. Key performance indicators related to operations and customer satisfaction will be included in the amended contract.
• Demonstration effect for successful restructuring: Through a corporate development effort several improvements will be established. Firstly, municipal bus operating department will be restructured under Burulas (urban transport company owned by BMM) which will consolidate the public transport operations. Secondly, the establishment of an asset management approach to rolling stock versus fixed assets (track, signals, stations, depot, etc.) to be managed in future by two distinct divisions with separate cost lines within Burulas with the support of Bank’s technical assistance. Thirdly, a business plan will be developed to lay out a strategic vision for the coming 5 year period for Burulas. Finally, e-ticketing system penetration rate will be expanded through increased marketing efforts supported by TC consultants.

The Client

Bursa Metropolitan Municipality (“BMM”).

EBRD Finance

Senior loan of up to €70 million.

The EBRD loan will be part of a multi-source financing package for the project which includes a €100 million EIB loan already signed. The Agence Francaise de Developpement (AFD) is considering a €30 million loan, with the remaining cost of the project to be covered by BMM.

Project Cost

€247 million.

Environmental Impact

The potential adverse environmental and/or social (E&S) impacts of the project are likely to be site specific and can be readily identified and addressed through adequate mitigation measures. Therefore, the Project has been categorised “B” as per the 2008 Environmental and Social Policy. The project was screened by the Turkish Ministry of Environment and Forestry (MoEF) and no EIA was required for the project.

The E&S due diligence of the project was carried out by independent consultants and covers a significant portion of PR1’s project appraisal requirements. The client and its operations are generally in compliance with the applicable Turkish environmental, health and safety and labour requirements. The following issues and gaps that have not been addressed during the project E&S due diligence will be introduced in the revised due diligence report, which is currently under preparation:

• The revised study will include the potential risks and liability issues related to the Area of Influence.
• The revised study will include more specific mitigation measures and the mitigation measures proposed will be presented in form of an Environmental and Social Action Plan (ESAP).
• Mitigation measures to reduce noise levels to EU limits, social impacts such as congestion and delays, restriction of access; pedestrian and road safety during operation; potential nuisance including restriction of access during construction and the operational phase of the project; and reinstatement of the right of way will be considered in the revised study.

The ESAP will be part of the legal agreements between the City of Bursa and the EBRD. This PSD will be revised once the due diligence and ESAP are finalised.

Technical Cooperation

It is envisaged that the technical cooperation support will provide assistance with the following:

1) Environmental and Social Due Diligence and Gap Analysis (Est €20,000, client funded)
2) Technical Review of Service Contract and Benchmarking Improvement (Est €17,000)
3) Carbon Monetisation of Clean Urban Transport (Est €70,000)
4) Corporate Development of Burulas (Est €350,000)

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