Corridor Vc in FBH - Part 3

Location:

Bosnia and Herzegovina

Project number:

49058

Business sector:

Transport

Notice type:

State

Environmental category:

A

Approval date:

05 Sep 2018

Status:

Disbursing

PSD disclosed:

02 Aug 2017

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 three 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 two 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. 

Tranche 2 was uncommitted at the time of approval. The commitment of Tranche 2 was approved by the EBRD's Board of Directors on 25 February 2021.

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

ETI score: 65

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

BOSNIA AND HERZEGOVINA SOVEREIGN

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.

The project will benefit from investment grants from the European Union under the Western Balkan Investment Framework.

Total Project Cost

EUR 462,678,016.00

The total project cost is estimated at EUR 316.5 million.

2021 update

Total financing package has increased by EUR 83.1 million to EUR 462.6 million following and pending the approval by EU Western Balkans Investment Framework ("WBIF") of investment grants as follows:

-          EUR 41.1 million for Poprikuse i Nemila section (approved grant)

-          EUR 11.4 million for Tunnel Ivan section (approved grant) and

-          EUR 30.6 million for Mostar South i Tunnel Kvanj section (grant application submitted for approval)

Environmental and Social Summary

Tranche 1

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) were subject 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 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 the 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  covering all components of the Project, Environmental and Social Action Plan , Stakeholder Engagement Plan , supplemental Biodiversity Assessment, Land Acquisition and Resettlement Plan for Tunnel Zenica section .

2021 Update

Tranche 2

Categorised A (ESP 2014). EBRD environmental and social due diligence ("ESDD") on the section Mostar South i Tunnel Kvanj was finalised in 2020. It included a gap assessment of the draft national environmental and social impact assessment ("EIA") prepared in 2017 to meet national requirements based on the selected alignment against the EBRD Environmental and Social Policy ("ESP") 2014 and Performance Requirements ("PRs"). This national EIA was never submitted to the competent authority for permitting.

The ESDD concluded that no significant issues were identified, which cannot be readily mitigated, however the draft national EIA was substantially supplemented to meet the EU EIA Directive and the Bank's PRs. At the request of the Bank, in 2020, the EIA was further updated and supplemented by independent consultants in line with EBRD PRs, and the ESIA, inclusive of a disclosure package (Stakeholder Engagement Plan ("SEP"), Non-Technical Summary ("NTS"), Environmental and Social Action Plan ("ESAP"), Biodiversity Management Plan ("BMP"), Land Acquisition and Livelihood Restoration Plan ("LALRP")) was publicly disclosed on 22 July 2020.

The Environmental Permit for the project was issued on 17 February 2021.

Additional site surveys included air quality, water and noise measurements, biodiversity surveys and a critical habitats assessment. A socio-economic survey of the affected population was also undertaken and potential cumulative and residual impacts of the Project were assessed. The ESAP includes mitigation measures which will structure the Project to comply with the Banks PRs.

As part of the ESIA preparation, independent consultants reviewed and summarised the alternatives considered for the proposed alignment and design, including the no project alternative. The ESIA includes a section on the alternative alignments considered for the project and has sought to clarify the processes followed and stakeholder engagement undertaken in relation to the alignment selection, which was officially adopted by the Parliament of the FBiH in 2017. The FBIH Authorities have confirmed that the route selection was subject to stakeholder consultation processes in line with national legalisation and the Prime Minister recently reconfirmed this to the EU and EBRD in 2020. 

There are no officially designated protected areas ("PAs") in the Project area and in the Project area of influence. However, the Project is considered to trigger critical habitat considerations for aquatic ecology related to the Buna and Bunica streams and a biodiversity management plan has been prepared in line with PR 6. The ESAP and ESMP also contain provisions for avoidance of any construction activities in the riverbed and on the banks of Buna and Bunica.

A total of 381 land plots (some 55.3 ha), will be acquired for the Project, mostly comprising of privately-owned agricultural and cultivated land. Five dwellings and three businesses will be affected by the Project and will require physical relocation. A Land Acquisition and Resettlement Plan in line with PR 5 was prepared for the Project.

FBiH legislation is still not in line with the EU Directive on Road Infrastructure Safety Management (2008/96/EC) and, therefore, FBH Motorways needs to complete a road safety audit ("RSA") as required by the ESAP.

A stakeholder engagement plan ("SEP") was prepared for the Project in 2017 and for the section Mostar South i Tunnel Kvanj in 2020 outlining all previous engagements and public consultations conducted in line with national law and EBRD requirements. Public consultations with government authorities, ministries, other public institutions and the general public were conducted to disclose information and solicit feedback on the design and spatial plans and to obtain environmental permits. In response to some concerns by local stakeholders, the project adopted design changes and micro realignments. Dedicated resources within the Project Implementation Unit are tasked with implementing the SEPs including a grievance redress mechanism.

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 and Grant Financing

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

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

PSD last updated

02 Apr 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP 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 following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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