Provision of a sovereign loan of up to EUR 10 million to the Government of Kosovo to be on-granted to the regional water company Hidromorava ("RWC HM" or the "Company") to finance a proportion of the extension and rehabilitation of the wastewater collection network and construction of a new wastewater treatment plan ("WWTP"). The loan will address critical wastewater treatment needs in the City of Gjilan and neighbouring communities and will benefit an estimated 110,000 inhabitants.
The project will be co-financed with the European Investment Bank ("EIB").
The financing will enable the Company to rehabilitate, upgrade and extend its wastewater network, and construct a new centralised WWTP in order to collect and treat the wastewater to the relevant EU environmental standards. Implementation of the project will result in significant environmental benefits to local freshwater resources by considerably reducing the volumes of raw wastewater, and its associated pollutant loads, that will be discharged straight into the river. The Project is expected to increase the number of people connected the sewage network in the service area of the Company.
The sources of transition impact are:
1) Green. The Project is expected to increase the number of connections to the wastewater network and achieve compliance with the EU environmental standards in the treatment of wastewater. The Project fully supports the Bank's Green Economy Transition agenda approach by financing investments that bring environmental benefits and mitigate the effects of climate change.
2) Well-governed. The Bank will mobilise technical assistance to improve the existing Public Service Contracts ("PSCs") between the Company and the municipalities it serves. The Project will also support improvements of corporate governance via Financial and Operational Improvement Programme (FOPIP) with the objective of raising managerial performance.
The Beneficiary of this Project is the RWC HM, which a joint stock company wholly owned by the Government. The Company manages and operates the water and wastewater systems in seven municipalities (Gjilan, Kamenica, Vitina, Novoberde, Kllokot, Ranilluge, and Partesh) serving approximately 30,000 households and commercial and institutional customers, covering a service area with a population of around 170,000.
EBRD Finance Summary
A sovereign loan to the Government of Kosovo to be on-granted to the RWC HM.
Total Project Cost
Environmental and Social Summary
Categorised B in accordance with the EBRD's Environmental and Social Policy 2014. The Environmental and Social Due Diligence ("ESDD") for the Project was carried out as part of the Feasibility Study by independent consultants. It included a review of current practices, an assessment of the Project's potential Environmental and Social ("E&S") impacts and a review of the Company's E&S management systems and capacities. The Project is designed to achieve compliance with national and EU wastewater treatment standards and the EBRD Performance Requirements ("PRs"). An Environmental and Social Action Plan ("ESAP") has been developed and agreed for the Project. A Stakeholder Engagement Plan ("SEP") and a non-technical summary ("NTS"), including outline of key environmental mitigation and management measures, have also been developed and disclosed by the Company locally on its website.
The Project will provide substantial environmental and health benefits compared to the existing situation by improving the wastewater management services in the Municipality of Gjilan through the construction of a new WWTP with the capacity of 76.000 P.E. (Phase I) and the extension of the wastewater network in the Municipality of Gjilan and several neighbouring communities. There are no centralised wastewater systems currently in the rural settlements, and the untreated wastewater is currently being discharged directly into the Mirusha and Morava rivers and eventually into the Danube. The Project will result in a significant reduction in pollution of the local water resources due to improved wastewater collection and treatment. The Project will result in 3.3 million m3 wastewater treated per year after Phase I. The total population benefitting from improved access to wastewater services will be 110,000 people, with additional 10,000 citizens that will be connected to the wastewater network. Future Phase II, which is not part of the current Project, is anticipated to increase the total capacity of the WWTP to 114.000 PE, introduce enhanced nutrient removal and increase the volume of treated effluent to estimated 4.5 million m3/year.
The Project is not expected to have significant impact on biodiversity due to the use of mainly agricultural land. The location of the Project is neither within nor in the vicinity of any protected area of high ecological value, and no sensitive areas are involved. The affordability assessment carried out by the consultant did not identify significant wastewater tariff affordability concerns from the implementation of the Project.
No physical resettlement will be required for the project, and no residential premises are situated within the 500 m radius of the WWTP. The project involves permanent land acquisition (approximately 37 privately owned agricultural land plots) for the purpose of construction of the WWTP and the access road on the site near the village Uglara at the Morava River, which will give rise to some economic displacement. A Land Acquisition and Livelihood Restoration Framework ("LALRF") in line with the national legislation and EBRD PR5 has been prepared and disclosed for the Project, including an entitlements matrix, public consultation and grievance mechanism. The Project's land acquisition process is not progressed enough to develop a Land Acquisition and Livelihood Restoration Plan ("LALRP"), so this needs to be prepared ahead of actual implementation of the land acquisition and construction activities for the Project, as required by the ESAP. Post-signing implementation assistance will be provided to the Company to support overall ESAP implementation, including LALRP preparation.
Any adverse impacts will be localised and temporary, and prevented or mitigated by adhering to good construction practices. The identified impacts include noise, air pollution, restricted access to buildings and roads, possible effect of vibration on buildings, soil and landscape disturbances during excavation works, debris, spoils, and traffic congestion. All potential adverse impacts can be managed through appropriate mitigation measures. Emergency response plan will be in place to handle accidental pollution and/or natural disasters. Dust emissions will be minimized by optimizing construction traffic, maintaining speed limits and use of water as dust suppressant.
The RWC HM has no proper environmental and social management system and lacks competent Environmental, Health and Safety ("EHS") staff at the corporate level. In order to achieve compliance with EBRD PRs it is necessary that the Company establishes an effective Environmental and Social Management System ("ESMS") which covers environment, social, health and safety issues in line with good international practice, such as ISO14001 and OHSAS 18001/ISO 45001. The Company will need to develop a corporate E&S Policy and basic EHS standards (for risk and impact assessment, planning, monitoring and reporting). The implementation of a more systematic approach to the management of the environmental, social and labour risks is required to ensure that the Company will implement the Project in line with the national environmental requirements and EU urban wastewater standards.
The ESAP requires the Company to implement a number of improvements designed to meet the EBRD's PRs. The key ESAP actions are related to: increasing the Company's EHS capacity and development of EHS procedures relating to the main EHS risks; produce design documents and prepare local ESIA for the permitting procedure; obtaining construction permits for the WWTP and the collector pipes and effluent discharge permit; development of HR policies and procedures; improvement of worker grievance mechanism; development and implementation of LALRP prior to construction; development of construction phase E&S management and monitoring plan; excavation and trench Occupational Health and Safety ("OHS") procedures; improved waste water quality monitoring and laboratory facilities; commitment to implementation of the enhanced nutrient removal under Phase II WWTP; odour management at the WWTP premises; sludge management and disposal planning; implementation of the SEP together with a public grievance mechanism.
The Bank will monitor the implementation of the Project and the ESAP as well as the Company's environmental and social performance by reviewing the Company's annual environmental and social reports and undertaking monitoring visits as needed.
- TC1 - Gap Analysis of the Feasibility Study, including environmental and social due diligence. The assignment's cost is EUR 58,500, co-funded together with the EIB.
TC2 - Procurement and Implementation Assistance to the Project Implementation Unit (PIU). The assignment's cost is estimated at EUR 400,000, to be financed by the European Union Western Balkans Investment Framework - WBIF.
- TC3 - Financial and Operational Performance Improvement Programme, including revision of the PSC and the Infrastructure Asset Management Plan. The assignments cost is estimated at EUR 300,000, to be financed by an international donor or the EBRD Shareholder Special Fund.
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