GrCF: Sofia Electric Buses Acquisition

Location:

Bulgaria

Project number:

49559

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Approval date:

24 Jul 2018

Status:

Repaying

PSD disclosed:

03 Oct 2018

Translated version of this PSD: Bulgarian

Project Description

Provision of EUR 14.7 million loan to Sofia Electrical Transport Company EAD ("SETC"), a joint-stock company and urban transport operator, wholly-owned by the City of Sofia. The loan will be used to finance the enhancement of the bus fleet through the purchase of 30 electric low floor buses with fast charging technology and 12 charging stations, as well as the related spare parts and services. The electric bus fleet will be deployed in two lots of 15 each over 2018-2019. Accordingly, the loan will be split in two equal tranches of EUR 7.35 million each. Half of the overall investment and, thus, each respective tranche will be financed from the Bank's capital while the other half from Green Economy Special Fund ("GESF").

Project Objectives

Sofia is continuing to invest in its transport infrastructure and services in order to incentivise the use of public transport as a sustainable, safer and more environmentally friendly means of meeting mobility demand in the city. To that end, Bank's financing will contribute to improvement of the reliability, energy efficiency and quality of public transport services for users and the SETC by reducing fuel costs and noise levels, and improving air quality through reduced greenhouse gases and other harmful emissions.

Transition Impact

Strong Good

The key sources of transition impact of the project are consistent with the Green Cities Framework ("GrCF"). Bank's financing promotes the transition objectives of the GrCF in the following ways:

Green. The new electric bus fleet will operate on six routes currently using EUR III diesel buses. As a result, once implemented the Project is expected to reduce CO2 emissions from 3,127 tonnes per year to 1,445 tonnes per year, a reduction of approximately 54 per cent.

Well-governed. The Project will covenant and support development of a comprehensive Green Cities Action Plan ("GCAP") for Sofia. The GCAP will require the City to measure, benchmark and prioritise environmental issues and identify appropriate mitigation actions and investments. Such a plan will set a vision and benchmarks for the sustainable development of the City and help authorities to prioritise and make informed decisions regarding investments and reforms aimed at addressing identified challenges.

Client Information

PUBLIC TRANSPORT COMPANY OF THE CITY OF SOFIA

SETC is a joint-stock company incorporated in 1997 and fully owned by the City of Sofia. It forms an integral part of the overall public transport system in Sofia as its sole tram and trolleybus operator on 14 tram lines and 9 trolleybus lines in total. Company's key responsibilities include transportation of passengers by trolleybuses and trams, routine maintenance and repair of the fleet, collection and control of revenues, and maintenance and repair of the tram tracks and electric energy supply infrastructure for the traction power needs of trolleybuses and trams.

Once the Project is implemented, SETC will then take over an additional six bus routes and its responsibilities will be enhanced accordingly.

EBRD Finance Summary

EUR 7,350,000.00

A senior loan of up to EUR 14.7 million to SETC. The loan will be split in two equal tranches of EUR 7.35 million each, with the first tranche to be committed at signing and the second tranche within 18 months. Half of the overall investment will be financed from the Bank's capital while the other half from GESF.

Total Project Cost

EUR 14,700,000.00

Environmental and Social Summary

Categorised B (ESP 2014). The environmental and social impacts associated with the modernisation of vehicle fleet with innovative, zero-emission buses is mainly positive and will result in upgrade of service quality, improvements in energy efficiency of bus transport, improvement in ambient air quality and noise reduction. Environmental and Social Due Diligence ("ESDD") was carried out as part of the Feasibility Study, by independent consultants, to carry out an E&S analysis of the proposed project, review corporate E&S management systems and assess the company's compliance with the EBRD's Performance Requirements ("PRs"). The ESDD identified limited impacts associated with the acquisition of new buses and these will arise during the operation and the maintenance of the new buses.  These impacts are site specific and can be addressed through the mitigation measures to be agreed in the Environmental and Social Action Plan ("ESAP") as a Condition Precedent to disbursement.  

ESDD confirmed that SETC has appropriate resources and capacity to manage environmental and health and safety risks, and that their procedures are in line with the national law. An occupational health and safety management system has been developed and approved by the company's senior management.

Environmental management focuses on waste management, and is well documented. Formalised health and safety risk assessments and task-specific work instructions are in place.  Provisions related to community health and safety and labour management were judged to be largely in compliance with the relevant PRs. SETC has a number of procedures and provisions related to drivers competency, health, code of conduct, and safe driving rules. Periodic trainings are delivered as well as systematic health and psychological checks are conducted to the drivers. Accidents and incidents are all subject to detailed reporting and appropriate emergency response plans are in place.

Opportunities for improvement in line with best practice, and relating to further formalising the current procedures were noted, including improvement in storage containment of hazardous materials and hazardous waste, and improvement in PPE usage and signage at the depots and the charging stations. The company will need to develop risk assessments and work instructions in relation to the operation of the electric buses and disseminate those appropriately both to SETC's employees and the general public. Additionally, a contractor management framework with an emphasis on the environmental, health and safety aspects will need to be developed.

The above actions, among others, are included in an ESAP which has been agreed with the Company. ESD will monitor the implementation of the Project through the review of annual performance reports.

NTS | SEP

Technical Cooperation

The following Technical Cooperation ("TC") have been provided for this project:

  • TC 1: Technical, environmental and social due diligence and advance procurement support (EUR 272,270);
  • TC 2: Preparation of an annex to the Public Service Contract (EUR 9,500);
  • TC 3: Development of GCAP for Sofia (EUR 299,870).

Company Contact Information

Orlin Prandjev
orlin.prandjev@gmail.com
00 359 92 36 219
www.elektrotransportsf.com
Stolichen Electrotransport EAD 30 #Podpolkovnik Kalitin# Str. 1233 Sofia, Bulgaria

Business opportunities

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