The EBRD is considering providing a sovereign loan of up to €5.35 million to finance the construction of a wastewater collection system and treatment plant and modernisation of the water supply system in Danilovgrad.
The objective of the Project is to improve the water supply and wastewater situation in the area of Danilovgrad Municipality by the construction of new or rehabilitation of existing assets and improved management of the existing systems to comply with municipal and national environmental requirements. The over-riding drivers of the project are to fulfil the requirement of the municipality to comply with relevant national legislation which is aligned with EU directive requirements and treat wastewater before it is discharged to the Zeta River, improve the water supply system and reduce water losses.
The proposed Project is expected to result in transition impact in the following areas:
- Restructuring and Commercialisation through creation of a water and wastewater entity separate from other utility services, revision of the organisational structure, improvements in the revenue collection procedures, reduction in technical losses and associated costs through the implementation of investments in physical assets, improvements in the environmental management; and improvements in customer relations.
- Transfer of Skills: Involvement of international consultants under the TC assignments will provide the Municipality and the Company with a training-on-the-job access to international financial, corporate, managerial, procurement and engineering skills and knowledge transfer.
- Setting standards for corporate governance: The Company will apply internationally accepted accounting standards (IFRS). The Financial and Operational Performance Improvement Programme (FOPIP) will be implemented with a focus on cost reductions and efficiency gains.
- Demonstration of new replicable behaviour and activities: The project will demonstrate to other municipalities and the Government how to prepare projects on operating, maintenance and depreciation cost recovery basis.
The Government of Montenegro
Up to €5.35 million sovereign loan
The project has been categorised B in accordance with EBRD's 2008 Environmental and Social Policy. Environmental and social due diligence (ESDD) for the project has been carried out by ESD and independent consultants and consisted of a site visit, E&S audit/review of the Company's existing corporate management systems, facilities and operations, and analysis of the E&S impacts and benefits of the priority investments to be financed by the Bank.
The investigations confirmed that the Company's existing EHSS capacity, management systems and procedures are inadequate and require significant improvements to be compliant with the Bank’s PRs. The existing quality of water delivered to consumers is in compliance with the EU and local requirements, except for very rare cases of increased water turbidity during heavy rainfall or intensive snow melt. However, the wastewater collection system in Danilovgrad is seriously underdeveloped and there is currently no wastewater treatment. While the existing pollution from the sewer system is low, due to low number of inhabitants and industries connected, pollution of Zeta River and especially Skadarsko Lake is noticeable and deteriorates the local ecosystems.
The due diligence concluded that the project will entail significant environmental benefits associated mainly with improving the quality and safety of water supply, expanding the wastewater collection system and a new wastewater treatment plant of up to 12,000 PE capacity which will prevent untreated effluent from contaminating ground and surface waters, support protection of the Skadarsko Lake and improve community health and safety in Danilovgrad. The project has been structured to comply with relevant EBRD PRs and to bring wastewater treatment into compliance with the EU Directives. The project is in the early stages of the development and will still need to obtain required permits in accordance with local law.
The implementation of PIP involves construction works that will result in limited, localised and short-term adverse environmental impacts, which can be mitigated or prevented by adhering to good construction practice. The planned tariff increases are expected to affect the lower income households, however, the associated grant components and subsidies will mitigate and address affordability constraints.
An Environmental and Social Action Plan (ESAP) has been developed for mitigation of identified E&S issues and impacts during preparation, construction and operation phases, and to bring the Client's operations into compliance with the EBRD's PRs. ESAP includes improvements to the Company's EHSS management systems and procedures, conducting any necessary studies and public disclosure in accordance with national permitting requirements, specific water and waste management improvements, OHS related measures for own staff and the contractors, improvements to the labour and working conditions, fire and emergency response procedures, implementation of a Stakeholder Engagement Plan (SEP) and grievance mechanism prior to the start of construction works.
The Client will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank will commission a completion audit and may also conduct monitoring visits, as required.
It is envisaged that the technical cooperation support will provide assistance with the following:
1) Procurement and implementation support (est. €375,000); and
2) Financial and Operational Performance Improvement Programme (est. €200,000).
For business opportunities or procurement, contact the client company.
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