Ekibastuz Water

Location:

Kazakhstan

Project number:

48325

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

04 Dec 2018

Status:

Board Approved

PSD disclosed:

25 Oct 2018

Translated version of this PSD: Russian | Kazakh

Project Description

The provision of a loan of up to KZT 3,475 million (€ 8.1 million equivalent) to Gorvodokanal State Communal Enterprise (the "Company") located in the city of Ekibastuz. The Loan will be used to finance the reconstruction of one water and one waste water treatment plants and water pumping stations, as well as the purchase of repair vehicles, water supply meters and other essential components (the "Project").

Project Objectives

The Project is strategically focused on enhancing the operational reliability of the water and wastewater systems and adjusting their operational capacity to match current and future demand.

The Project also aims to implement resource-saving measures, reduce water losses, and develop automated monitoring and control systems.

Transition Impact

Good
The Project will contribute to the Well-governed quality through the signing of a PSC between the Company and the City Akimat, development of a set of KPIs for monitoring purposes, and implementation of a stakeholder participation programme.

The Project will support the Competitive quality through tariff increases to cost recovery levels, implementation of meter-based billing for at least 95 per cent of metered water connections, and by maintaining collection rates not lower than 94 per cent. The Company will also implement a Financial and Operational Performance Improvement Programmeto improve financial and operational performance.

Client Information

GORVODOKANAL SCE

Gorvodokanal SCE is a municipally-owned water and wastewater management company in the city of Ekibastuz, Pavlodar oblast of Kazakhstan.

EBRD Finance Summary

KZT 3,475,000,000.00

A senior loan to the Company of up to KZT 3,475 million (€ 8.1 million equivalent).

The loan will consist of two tranches:

1) Tranche A (committed) - a loan of up to KZT 2,004 million (€ 4.7 million equivalent);

2) Tranche B (uncommitted) - a loan of up to KZT 1,471 million (€ 3.4 million equivalent).

Total Project Cost

KZT 6,205,000,000.00

KZT 6,557 million (€ 15.3 million equivalent) including co-financing from the Government of the Republic of Kazakhstan ("GOK") under the Enhanced Partnership Framework Agreement ("EPFA"), support by the akimat of Pavlodar Oblast, and related technical cooperation to support the Company with preparation and implementation of the Project.

Environmental and Social Summary

The Project has been categorised B under the 2014 Environmental and Social Policy. The Project will enable the Company to improve its water and wastewater services through the rehabilitation and modernisation of the water supply, treatment and wastewater collection infrastructure in the City. The planned PIP is expected to result in enhanced energy and water efficiency, reduced losses and improvements in environmental standards. Any adverse future environmental and social impacts associated with the project are site-specific and can be readily addressed through mitigation measures.

The Environmental and Social Due Diligence ("ESDD") was carried out by external consultants as part of the Feasibility Study and included an independent environmental and social audit/review of the Company's current operations and facilities, as well as the Company's existing Environmental and Health&Safety (EHS) management systems and policies/procedures, and an analysis of the potential environmental and social impacts associated with the PIP.

The due diligence showed that the Company neds improvements of their  EHS management capabilities and systems, and that its current occupational health and safety and stakeholder engagement practices require further improvement to meet the EBRD's Performance Requirements (PRs).

The PIP forms part of a planned 15-year investment strategy intended to upgrade the entire system. Oskemen Water provides water supply services to 81 per cent of population (or 269,789 residents) in the City and neighbouring communities. Centralised wastewater disposal services are provided to 64 per cent of population (or 212,000 residents). Drinking water is supplied in conformity with Kazakh and the EU standard.

The technical state of sewerage pipelines is acceptable and almost 100% of WW pipelines have already been reconstructed or were at the final stage of reconstruction at the time of preparation of this Report. Ekibastuz Waste Water Treatment Plan was designed and built in 1980-s based on the conventional mechanical and biological treatment technological process, with a design capacity of 58,2 thousand m3/day, almost all concrete structures of WWTP are in critical condition and need urgent repair. The plant receives domestic wastewater from residential customers and industrial wastewater from various companies operating in the city area. Annual mean wastewater flow at the inlet of WWTP does not exceed the design treatment capacity.

Treated wastewater is discharged into the sedimentation reservoirs via the main pumping station for mechanical treatment and then into the evaporation pond system which is located 14 km away from the City, surrounded by vast areas of unused land. There is no direct discharge into any natural water bodies, and the clay layer under the evaporation ponds protects groundwater from contamination.

Treated wastewater quality meets the local requirements for discharge and also the quality of the effluents is also in compliance with the EU requirements (Directive 91/271/EEC) as the environment of discharge cannot be classified as a sensitive area, which are subject of eutrophication.

Reportedly, no additional land acquisition will be required for the project, since the proposed investments will be implemented mainly on the existing Company sites, or within the existing pipeline corridors.

The ESDD consultants have developed an Environmental and Social Action Plan ("ESAP") to address the necessary improvement and mitigation measures and corrective actions identified during due diligence. Specifically, the ESAP requires the Company: (i) to enhance the Company's environmental, health and safety policies and procedures for staff and contractors as part of their Environmental Management System in line with ISO 14001 and good international practice on occupational health and safety; obtain the required permits and approvals for the Project components in line with the national requirements; (ii) improve environmental monitoring and water quality monitoring; to incorporate Environmental Health & Safety and Social requirements into construction contracts and to monitor contractors compliance; ensure proper fencing of the construction sites; to develop a plan for managing industrial wastewater discharges. The Company also needs to finalise and implement a Stakeholder Engagement Plan ("SEP"), including a grievance mechanism, to ensure adequate information disclosure and media announcements prior to the commencement of works. This will be further supported by a Stakeholders Participation Programme ("SPP") in the City, which will be carried out as part of the CDP TC.

The Bank will monitor the project's environmental and social performance and compliance with EBRD PRs by reviewing annual reports prepared by the Company on environmental and social matters, and the implementation of the ESAP. The TC funded PIU consultants will also monitor the day-to-day E&S performance and issues as well as providing assistance in the implementation of the ESAP. The Bank may also undertake monitoring site visits.

Technical Cooperation

Pre-signing

Project Feasibility Study € 195,000, financed by EBRD  Shareholders Special Fund ("SSF").

Post-signing

Project Implementation Support ("PIU Support") including Procurement, Compliance control, Monitoring and ESAP. The consultants will assist the Company's PIU with technical design, procurement, contract award and administration, financial control, overall project management, and quality assurance. This assignment's cost is estimated at € 395,000, and it is proposed to be financed by the GOK under the terms of the EPFA.

Corporate Development Programme (the "CDP") to

(i) support operational and financial improvements via implementing the FOPIP and developing a Corporate Business Plan and MIS, and

(ii) assist in application for tariffs under a new methodology to be introduced for the sector in 2018-2019. This assignment is expected to be part of the CDP consultancy framework, and has an estimated cost of € 230,000, proposed to be financed by the GOK under the terms of the EPFA.

Company Contact Information

Olga Sendetskaya, Director
olgasendez@mail.ru
+7 777 940 62 27
78 Aliya Moldagulova st, Ekibastuz, Pavlodar Oblast, Kazakhstan.

 

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