GrCF: Skopje Bus project

Location:

FYR Macedonia

Project number:

50185

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

23 Oct 2018

Status:

Signed

PSD disclosed:

12 Nov 2018

Translated version of this PSD: Macedonian

Project Description

The Project aims to improve and modernise bus operations in Skopje through the purchase of a new bus fleet of up to 35 low-entry Compressed Natural Gas ("CNG") buses with EURO VI engines to ensure improved environmental and operational performance.

For this purpose EBRD envisages provision of a sovereign-guaranteed loan of EUR 10.0 million ("the Loan") to the Javno Soobrakajno Preptrijatie Skopje ("JSP" or "the Company"). In addition, in line with the local legislation, the City of Skopje ("the City"), who is the owner of the Company, will also provide a guarantee.

EBRD's financing will be used for the capital expenditures (acquisition of up to 35 CNG low-entry buses and IT equipment) and it will be complemented by a Technical Cooperation ("TC") package for project preparation and implementation as well as improved efficiency and sustainability of the Company's operations, restructuring of the Skopje bus sector and development of a Green Cities Action Plan ("GCAP").

The proposed operation is a sub-project under the Green Cities Framework ("GrCF") which is established to provide loans to governments, municipalities, municipal owned and private companies providing municipal services. The over-arching aim of the GrCF is to serve as a sector-wide catalyst for addressing environmental challenges at the Municipal/City level. This is underpinned through the implementation of a GCAP, which is a strategic document whereby environmental challenges are benchmarked, priority areas for environmental improvements identified, environmental objectives defined and indicative investments  determined.

Project Objectives

The main purpose of the Project is to increase and enhance the level of public transport service and improve air quality in Skopje which is currently one of Europe's most polluted cities. As the new buses will replace old diesel Euro II buses, the envisaged investment has significant environmental and health benefits, and will considerably increase the quality and efficiency of services provided by the Company.

Transition Impact

Good.

The Bank's involvement in the Project carries transition impact potential both in terms of its environmental impact (through the investment itself and the preparation and implementation of the GCAP) and enhanced governance of the Company and improved organization of the bus sector in Skopje, through the associated Technical Cooperation.

Client Information

PUBLIC TRANSPORT COMPANY OF THE CITY SKOPJE

EBRD Finance Summary

EUR 10,000,000.00

Total Project Cost

EUR 11,800,000.00

Environmental and Social Summary

Categorised B (2014 ESP). The environmental and social issues associated with the provision and operation of up to 35 new CNG buses by JSP can be readily identified and managed. The new buses are expected to improve public transport reliability, safety and efficiency, while the CNG technology will reduce polluting air emissions: CO2 by 19 per cent, PM by 98 per cent and NOx by 81 per cent. Due diligence, carried out by Environmental and Social Department, focused on JSP's existing operations and has identified a number of issues: lack of environmental and social management systems, lack of formal grievance mechanism, no incentive to increase the number of female employees, poor housekeeping in the depots, inadequate traffic and Occupational Health and Safety ("OHS") management. An Environmental and Social Action Plan has been developed, and will be agreed with the Company prior to project signing. Measures include implementation of appropriate Environmental and Social and OHS management systems, training of all staff on Environment, Health, Safety and Security ("EHSS") issues, provision of PPE equipment, development of a Traffic Management Plan, implementation of good housekeeping measures and development of grievance mechanisms for employees and the public.

Technical Cooperation

Technical Cooperation for this operation will be provided to assist with: (i) technical due diligence and procurement support for the Company i financed by the Municipal and Environmental Infrastructure ("MEI") Team budget, as well as (ii) development of a Corporate Development Plan for the Company, (iii) preparation of a Public Service Contract between the Company and the City, (iv) development of a Bus Restructuring Strategy for the City, and (v) Development of the GCAP for Skopje - to be financed by the SSF or an international donor.

Company Contact Information

Danco Vodenicarski
danco.vodenicarski@jsp.com.mk
+ 389 2 3174264
+389 2 3174260
Javno Soobrakajno Pretprijatie Skopje Boulevard Aleksandar Makedonski, Skopje 1000

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