The EBRD is considering extending a loan of up to EUR 6 million to Hebros Bus, an urban transport company based in Plovdiv. The project would aim to assist Hebros Bus in becoming the first Bulgarian private transport company that provides high quality services according to EU environmental, health and safety standards. The loan financing would be used for the purchase of 30 new compressed natural gas (CNG) buses to service bus routes in the City of Plovdiv.
The Project would also assist the City of Plovdiv in adopting an EU-compliant Public Service Contract (“PSC”) for all public transport operators in the City (i.e. beyond the Company) and introducing an electronic ticketing system that will improve the transparency and accountability of the Plovdiv urban transport system.
Private sector participation
The project would promote private sector participation in the provision of public transport services by supporting a local private bus operator in the Plovdiv region and its transformation into a modern European urban transport operator. This would be the first EBRD project with a local private operator in the urban transport sector in Bulgaria.
Setting standards of business conduct
This transaction would continue the Bank’s efforts to foster market-based solutions in the sector, including accelerating improvements in corporate governance standards of the Company and increased financial reporting requirements, transparent business practices, introduction of IFRS reporting, and environmental, health and safety EU standards. Management Information Systems will be reviewed as part of the due diligence process for this transaction and specific measures, with implementation benchmarks and controls, will be established for addressing any potential areas where improvement is required.
Improved contractual basis for public transport services
EBRD’s involvement will be instrumental in assisting the City in introducing a well-designed electronic ticketing system that will improve significantly the accuracy and transparency in the sector. In addition, EBRD will provide support to the City to reform the public service contracts and regulatory regime currently employed by the City. An improved PSC for all operators would include multi-year contracts, indexation methodology, management incentives for improved operational performance, and a capital investment component. Introduction of service payments based on a fixed fee per kilometre, covering all operating and investment costs, will improve financial sustainability and creditworthiness of the operators. Once designed, the new best-practice PSC will be adopted between the City and its various operators, and in this way, become an important advancement in the way the sector is regulated.
Hebros Bus Ltd (the "Company"), a privately owned limited liability company based in the City of Plovdiv, providing urban and interurban transport services.
Loan of up to EUR 6 million
EUR 7.6 million.
1. Screening category
Screened B/1. Environmental impacts of the renewal of the Company's bus fleet will mainly be positive. Environmental impacts associated with the project have been identified, assessed and addressed through adequate mitigation measures. The project involves existing operations and, therefore, an environmental audit of the bus depots and workshops was carried out. A corporate environmental review of the bus company, including its current practice for disposal of old buses, was also undertaken.
2. Due diligence undertaken and outcomes
An environmental review and analysis of potential issues as well as an Environmental Audit of the Company's facilities has been carried out by independent consultants, POVVIK-OOS Ltd. The Environmental Analysis has confirmed that the new CNG buses will comply with Bulgarian standards as well as Euro 5 and EEV standards. The vehicles also include spacious areas designed for prams and wheelchairs including tilting platforms ensuring access to passengers with reduced mobility and wheelchair users. The Corporate review showed that the Company has been successfully certified under ISO 9001 and 14001 quality and environmental management standard as well as OHSAS occupational health and safety standard. The audit of the existing bus depot and garage facilities identified no significant issues, but resulted in recommendations for a range of minor improvement measures. Based on the results of the environmental due diligence, an Environmental Action Plan (EAP) has been prepared to mitigate potential environmental risks and liabilities related to the Client's bus depot/workshops and the practices for the disposal of old buses. The Company will need to disclose locally a summary of the relevant environmental issues associated with the project and the mitigation measures by the time of Final Review, in accordance with the Bank's public disclosure requirements for category B projects.
3. Implementation requirements
The Company will need to:
- carry out the Project in compliance with the applicable national environmental, health and safety regulations and standards and with pertinent EU environmental standards;
- comply with the national labour regulations and standards as well as with Core Conventions of the International labour Organisation related to child and forced labour and discrimination at work;
- adopt and implement the Environmental Action Plan (EAP);
submit to the Bank an Annual Environmental Report not later than 90 days after the end of each financial year in a format and contents satisfactory to the EBRD; and
promptly notify the Bank of any incidents or accidents that might have a material effect on environment, health and safety of the employees and/or the community.
Iliyana Tsanova, email@example.com
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