EBRD is considering providing a senior loan for up to EUR 30 million to Citygas Bulgaria AD (“Citygas”), the holder of a concession to develop and operate the gas distribution network in the Bulgarian region of Trakia. Citygas is 90.22% controlled by Gruppo Societa’ Gas Rimini Spa (“Gas Rimini”), an Italian gas distribution and supply utility. The project’s objective is the construction and operation of 1,700km of gas distribution pipelines and associated infrastructure that will provide a gas connection to over 1,000 industrial clients, 1,500 commercial clients and 96,000 domestic users. The project will contribute to the gasification of Bulgaria, providing the background for economic growth and market development in the region of Trakia, as well as contributing to move the country away from the use of less efficient and more polluting fuels.
Through this project, the Bank will support the privatisation of gas distribution and liberalisation of the gas market in Bulgaria. As such, the project will support a privately-owned company in fulfilling its concession agreement and expand its gas distribution network. Furthermore, the project is expected to support higher standards of business conduct in the Bulgarian gas distribution segment since Citygas will apply best international practices in its environmental, health and safety action plan.
The EBRD will provide financing to Citygas, the holder of the concession. The Sponsor of the project will be Gas Rimini, which has a long established track record of constructing and operating gas distribution networks in several municipalities in Italy.
EUR 30 million.
Up to EUR 125 million to build the gas distribution network in the Company’s concession area.
The project has been categorised as B since the project has limited environmental and social potential adverse impacts, which can be readily identified and addressed through mitigation measures. Most potential impacts have been avoided since the project design phase through proper gas pipelines routing.
Due Diligence Carried Out and Results
An assessment of risks and environmental and social impacts has been carried out for the project, with level of details appropriate to the scale of the potential impacts associated to the project activities.
In addition to this, Citygas, in line with local regulations, has verified whether the project can affect protected areas (e.g. Natura 2000). To date, only for one specific project where there was interaction with two protected areas – “Reka Blatniza” (River Blatniza) and “Reka Sazliika” (River Sazliika), a specific “Ecological Report” was required and produced to verify whether specific permanent adverse effects associated to the project activities were expected. It was demonstrated that no specific permanent environmental and social adverse effects associated to the project activities were expected and construction permit was granted.
The potential adverse environmental and/or social impacts from the project are covered in the Environmental and Social Analysis report. The potential impacts, mainly limited to the construction phase where excavations activities will be carried out, include:
- potential pollution and soil degradation for the agricultural land affected;
- solid waste (mainly inert material) management and disposal;
- increase in air and noise emissions due to the equipments and machineries operations and traffic disturbance during construction;
- socio-economic impacts (mainly traffic increase due to temporary diversions, road closures);
- possible cultural heritage and natural habitat disturbance, although unlikely.
The gas pipes corridors are designed to follow as much as possible the existing road network. All potential environmental impacts associated to the project activities are addressed through the adoption of good international construction practices in line with EU requirements, and a number of mitigation measures to address environmental, health and safety issues. In addition, Citygas has committed to a project specific Environmental and Social Action Plan to meet EBRD Environmental & Social Policy (2008) requirements, covering the following:
- Establish a specific internal structure devoted to Environmental and Social Management and Obtain ISO 14001 and OHSAS 18001 Certifications;
- Establish a Corporate ESHS contractor management procedure, to define and monitor ESHS provisions in contracts, roles and responsibilities, monitoring and reporting requirements;
- Establish and implement monitoring procedures to measure compliance with environmental and social requirements, as well as implementation of the ESAP and contractor monitoring provisions;
- Establish a grievance mechanism for workplace concerns and develop a formal documentation on this issue;
- Develop technical procedures in case of findings of any asbestos material during the trench excavation. Implement specific training for Contractors’ workers on asbestos handling and disposal;
- Develop a “Chance Find Procedure” relevant to the excavation phase to provide for a set of instructions, and to assign responsibilities to identify, manage and communicate in the event of a chance find of cultural/ archaeological significance, including restrictions/ modifications to the execution of the site construction activities.
Disclosure of Information
The environmental and social information on the project and, specifically:
- This Environmental and Social Non-Technical Summary; and
- Stakeholder Engagement Plan, (SEP), including Grievance Procedure
will be disclosed in accordance to the EBRD requirements through the Company websites: www.citygas.bg
The SEP includes more detailed information on the current and future stakeholder consultation activities.
Monitoring and Review
The Company will establish and implement monitoring procedures to measure compliance with environmental and social requirements, as well as implementation of the ESAP and the Contractor monitoring provisions.
More specifically, the Company will monitor its own and Contractors’ activities and periodically report to the EBRD with respect to the following key aspects:
- Soil, air, noise and water potential impacts and mitigation measures implementation;
- Waste management;
- Heath and Safety issues including incidents, if any;
- Social impacts.
In addition, the Company will establish, through its Environmental and Social management System, a mechanism to improve performance, where inadequate (i.e. setting monitoring project specific Key Performance Indicators). The monitoring reports will be made available to the public.
Demis Diotallevi - Chief Financial Officer
Gruppo Società Gas Rimini S.p.A. - Rimini, Via Chiabrera 34/b - 47900, Italy
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