Corridor Vc in FBH - Part 3

Location:

Bosnia and Herzegovina

Project number:

49058

Business sector:

Transport

Notice type:

Public

Environmental category:

A

Target board date:

05 Sep 2018

Status:

Signed

PSD disclosed:

02 Aug 2017

Translated version of this PSD: Bosnian

Project Description

Provision of a sovereign-guaranteed loan of up to EUR 180 million to the Motorways of the Federation of Bosnia and Herzegovina (the "Company" or the "FBHM") to construct four new key sections of Corridor Vc with a total length of approximately 15.8 km (the "Project").

The loan is composed of two tranches as follows:

  • Tranche 1 in the amount of up to EUR 120 million to finance the construction of three motorway sections as follows:

    - EUR 50 million to finance the construction of Tunnel Ivan approximately 2 km in length; and
    - EUR 70 million to co-finance with the EIB the construction of a motorways section from Poprikusa to Nemila, approximately 5.1 km in length.
     
  • Tranche 2 in the amount of up to EUR 60 million to finance the construction of a motorway section from the Mostar South Interchange to Tunnel Kvanj, approximately 8.7 km in length.

The availability of Tranche 2 will be at the EBRD's sole discretion and will be subject to compliance with the Banks Environmental and Social Performance Requirements, achievement of implementation and transition milestones to be determined after due diligence.

The Project is a follow on operation to the Bank's previous projects for the construction of key motorway sections of Corridor Vc in Bosnia and Herzegovina (BiH) which connects Port of Ploce in Croatia with Budapest and is part of the Western Balkans Core Network.

Project Objectives

Support of BiH's economic development and contribution to its regional and European integration by improving connectivity between its main cities and between BiH and neighbouring countries.

Transition Impact

The Project will facilitate BiH's internal and regional integration by improving its key transport infrastructure. The Project will also promote inclusion through the introduction of apprenticeships and work-based learning programmes for young engineers/students to be employed during construction either as permanent employees or as interns.

Client Information

FBH MOTORWAYS

The Client is Motorways of the Federation of Bosnia and Herzegovina (FBHM), a public company wholly owned by the Government of the Federation of Bosnia and Herzegovina (FBH). The Company is responsible for the development, operation and maintenance of motorways and expressways in the FBH.

EBRD Finance Summary

EUR 180,000,000.00

A sovereign-guaranteed loan of up to EUR 180 million to FBHM with back-to-back guarantee from FBH.

Total Project Cost

EUR 316,500,000.00

The total Project cost is estimated at EUR 316.5 million.

Environmental and Social Summary

Categorised A (ESP 2014). The project involves construction of road and tunnel sections of the Corridor Vc which has the potential to result in significant adverse environmental and social impacts. Environmental Impact Assessments ("EIAs") for the entire road Corridor Vc (DTM ID 38716) weresubject to the Bank's Environmental and Social Due Diligence ("ESDD") prepared and disclosed to public in 2008 to meet national requirements and the Bank's Environmental Policy 2003. This follow-on project largely utilises the existing EIAs which demonstrated that the project would not have significant environmental and social impacts provided that appropriate mitigation measures are implemented. The Corridor Vc in BiH is divided into four main lots (known in Government documents as Lots 1 - 4) and components of this project are part in LOT 2 (Doboj South (Krause) - Sarajevo South (Tarcin) which includes tunnels Golubinja and Tunnel Zenica) and Lot 3 Sarajevo South (Tarcin) - Mostar North, including Tunnel Ivan.

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

The project is part of the Western Balkans Core Road Network and is expected to provide improved access to tourist and commercial activities; improved transport services, reducing traffic on local roads, especially M 17 resulting in positive impacts on local air quality, noise and road safety.

Furthermore, given that that Corridor Vc is a part of a greater Pan-European transport corridor, construction of the Project sections will lead to the better transport connectivity of South Eastern Europe.

The Environmental Permit for the entire LOT 2 was first issued in 2010, renewed in 2014 and is valid until 2019. The Environmental Permit for LOT 3 was issued in June 2012 and expired in June 2017.

The process to renew the permit is underway.

The Bank's environmental and social due diligence (ESDD) was supplemented by independent consultants for this follow-on project, which included documentation reviews and site visits to assess site-specific environmental and social impacts and any additional measures required to structure the project to meet the 2014 Environmental and Social Policy (ESP 2014). ESDD concluded that no significant issues have been identified, which cannot be readily mitigated. The ESAP includes mitigation measures which will structure the Project to comply with national legislation and the Banks Performance Requirements.

At the request of the Bank, additional social and biodiversity information has been collected and potential cumulative impacts of the project were addressed in the updated non-technical summary. The ESAP has included pre-construction surveys to obtain up to date information on air quality, ground and surface water and noise for the Project sections prior to construction activities. There have been some changes to national waste management legislation since the EIA's were finalised, which requires that Construction Waste Management Plans which has been included in the ESAP but also forms part of the Environmental Permitting process.

The original alignments were designed to avoid densely populated areas and reduce land acquisition impacts. There have been some design and micro realignments since the original EIA's were prepared as a result of technical requirements and in response to concerns raised by local stakeholder living alongside the routes. The realignment had not resulted in material changes that would require the preparation of new ESIAs.

The Land Acquisition and Resettlement Framework (LARF) for Corridor Vc was updated and disclosed in March 2017 in order to outline the general principles, procedures and entitlement framework with regard to the potential impacts of land acquisition required for the Project in line with PR 5. Permanent land acquisition and resettlement of households will be required in the settlement Ponirak located before the northern entrance into Tunnel Zenica. 19 land plots and 6 residential structures will be acquired, leading to physical resettlement of 3 households and economic displacement of affected land owners/users. Originally 38 land plots were expected to be affected but this was reviewed following feedback from the local community and the design altered to reduce the land impacts. The affected plots are predominantly cultivated agricultural land along with some meadows. The exact scope of land acquisition and resettlement is currently not known for the Poprikusa-Nemila section (LOT 2) or Tunnel Ivan (LOT 3), as the Expropriation studies required by local legislation have not yet been prepared for these sections. FBHM have confirmed, and it is included in the ESAP, that land acquisition will be carried out in line with the existing LARF for Corridor Vc and will include the development of Land Acquisition and Resettlement Plans in accordance with PR 5.

A Supplementary Biodiversity Assessment report has been prepared and publicly disclosed which includes an Appropriate Assessment scoping exercise for the River Bosna candidate Natural 2000 site. It confirms that no Priority Biodiversity features are affected. A Biodiversity Management Plan (BMP) has been further developed to capture additional mitigation measures and the ESAP requires that a suitably qualified biodiversity expert is appointed to co-ordinate the implementation of the BMP.

Although a road safety audit report will be undertaken as an integral part of the official review of the project by the state review commission, national legislation is not in line with the EU Directive on Road Infrastructure Safety Management (2008/96/EC); FBHM needs to complete a Road Safety Audit (RSA). Although previous design reviews have included road safety as a consideration a formal road safety audit will need to be carried out, which has been included in the ESAP.

A Stakeholder Engagement Plan (SEP) has been prepared for the project but ESDD identified the need to strengthen stakeholder engagement practices so that in addition to information disclosure, more resources are provided to engage and consult stakeholders. The lack of a dedicated resource to implement participation planning and consultations was identified as a gap which has been addressed in ESAP.

An Environmental and Social Action Plan (ESAP) has been agreed and is disclosed on the Bank's website. Actions addressed in the ESAP include but are not limited to: BMP; completion of preconstruction surveys; provisions of a worker grievance mechanism, undertake a road safety audit in accordance with the EU Directive on Road Infrastructure Management; provide a traffic management plan and Community Road Safety Awareness programme; provision and implementation of Land Acquisition and Resettlement Plan's (LARP) in accordance with PR5; implementation of a chance finds procedure and regular update of the SEP.

A disclosure package has been made public and comprises an overarching Non-Technical Summary (NTS) covering all components of the Project, Environmental and Social Action Plan (ESAP), Stakeholder Engagement Plan (SEP), supplemental Biodiversity Assessment, Land Acquisition and Resettlement Plan for Tunnel Zenica section (LARF).

The Bank will evaluate the Project's environmental and social performance in accordance with the Bank's PRs through review of reports and undertake periodic monitoring visits.

Technical Cooperation

The following Technical Co-operation assignment is envisaged as part of this project:

  • Adoption and implementation of by-laws and procedures for the Law on debt, debt issuance and guarantees in BiH;

Company Contact Information

Jasmin Buco
info@jpautoceste.ba
+387 33 277 900
+387 33 277 901
www.jpautoceste.ba
Sarajevo Office Dubrovacka 6 71000 Sarajevo Bosnia and Herzegovina

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