ESIF: Smolyan Water Subproject

Location:

Bulgaria

Project number:

50819

Business sector:

Municipal and environmental infrastructure

Notice type:

State

Environmental category:

B

Approval date:

17 Dec 2019

Status:

Approved

PSD disclosed:

21 Mar 2019

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

Provision of a EUR 4.1 million loan to the Smolyan Water Supply and Sanitation Company (the "Company"), a state-owned water utility based in the town of Smolyan, Bulgaria. The loan will be funded with EBRD capital resources, the European Structural and Investment Funds ("ESIF") and the national budget of the Republic of Bulgaria (the latter two are jointly referred to as "ESIF contributions"). The ESIF contributions will be used in the form of repayable financial instruments.

The proceeds of the loan will co-finance the construction of new and the rehabilitation of existing water and wastewater infrastructure, jointly with investment grants from the EU Operational Programme Environment 2014-2020 (the "Project").

Project Objectives

The main objectives of the Project are: (a) to help the Company achieve full compliance with the EU Urban Waste Water Treatment Directive in all agglomerations of more than 10,000 people serviced by the Company and (b) improve the efficiency of water supply services, reduce the share of non-revenue water and fulfil the requirements of the EU Drinking Water Directive.

Transition Impact

ETI score: 60

The Transition Impact stems from the strong environmental benefits of the Project (reducing water losses, connecting more people to centralised sewage and waste water treatment, and introduction of wastewater treatment in compliance with EU Directives), the reduced dependence on full grant-based financing of investments as well as the strengthening of the Company's financial and operational performance through technical cooperation (TC).

Client Information

WATER SUPPLY AND SANITATION COMPANY OF THE CITY OF SMOLYAN

Smolyan Water Supply and Sanitation Company is a regional state-owned utility that provides waste supply and wastewater services to 10 municipalities (Banite, Devin, Borino, Dospat, Zlatograd, Madan, Nedelino, Rudozem, Smolyan and Chepelare) on the territory of the Smolyan region in Bulgaria.

EBRD Finance Summary

EUR 3,100,000.00

The loan will amount to up to EUR 4.1 million, of which EUR 1.5 million will be funded with EBRD's ordinary capital resources (the "EBRD Tranche") and EUR 2.6 million in ESIF contributions from the EBRD-EU Special Fund (the "ESIF Tranche"). The ESIF financial resources are being managed by the EBRD pursuant to an operational agreement between the Bank and the Fund Manager of Financial Instruments in Bulgaria ("FMFIB") signed in October 2018.

The two tranches will have the same tenor but different repayment profiles and pricing. Specifically, the EBRD Tranche will be extended at market terms, whereas the ESIF Tranche will be provided at concessional terms, which will make it possible for the Company to service the loan. This may not have been possible in the absence of concessional lending.

Total Project Cost

EUR 39,280,664.00

The total project costs will be majority-financed with EU investment grants and co-financed with the proceeds of the loan.

Environmental and Social Summary

The Project is categorised B in accordance with the 2014 Environmental and Social Policy. The key environmental and social risks and impacts are mainly construction related i particularly health and safety of workers and public during excavation activities; temporary restrictions of access; increased noise, dust and vibration levels; and contractor management. Permanent resettlement is not anticipated. The environmental and social due diligence will be undertaken by TC funded consultants and the identified risks will be mitigated via an Environmental and Social Action Plan for the Project. This section will be revised with the results of the environmental and social due diligence.

 

Technical Cooperation and Grant Financing

EBRD has envisaged the following donor-financed technical cooperation (TC) for the Project and the Company:

  • TC that covers the following activities: (1) technical and operational review of the Project; (2) analysis of the key contractual arrangements; (3) financial modelling and analysis; (4) environmental and social due diligence and gap analysis; (5) procurement review and (6) and confirmation regarding the Project's compliance with EBRD's Green Economy Transition (GET) framework. This TC will be funded by EBRD's Sustainable Infrastructure Advisory.
  • TC for preparation of a diagnostic analysis of the Company and development of a financial and operational performance improvement programme aimed to strengthen the Company's operations and improved its long-term credit worthiness. This TC will be potentially financed with funding from Operational Programme Environment 2014-2020.

Company Contact Information

Mariyan Nikolov
vik_sm@abv.bg
+359 301 625 98
+359 301 626 29
https://www.vik-smolyan.com/
2 P.R. Slaveykov Street 4700 Smolyan, Bulgaria

PSD last updated

20 Feb 2020

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 how to submit a Request for review through our confidential online form, by emailmail or telephone. IPAM is available to discuss your concerns and answer any questions you may have about the submission or handling of Requests, which follow the Project Accountability Policy and Guidance. Requesters’ identities may be kept confidential, upon request.

 

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