Horezm Wastewater Project

Location:

Uzbekistan

Project number:

50526

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

13 Nov 2019

Status:

Passed Final Review, Pending Board Approval

PSD disclosed:

14 Feb 2019

Translated version of this PSD: Russian | Uzbek

Project Description

The provision of a sovereign loan of up to US$ 90 million (€80.3 million) to the Republic of Uzbekistan for the benefit of the State Unitary Enterprise Horezm Suvokova (the "Company") to finance the rehabilitation of Horezm Oblast's wastewater infrastructure (the "Project") under the Integrated Cultural Heritage Framework (the “Framework”).

Project Objectives

The project is expected to increase the number of people connected to the wastewater network by 121,000, and the volume of wastewater treated to EU standards by 4.8 million m3 per year.

Transition Impact

Primary Quality – Competitive: The Project is expected to improve the Company’s operational and financial performance through a corporate development programme, to contribute to the stronger competitiveness of the tourism sector in the region in the long-term.

Secondary Quality – Well-Governed: The Project will enhance the efforts in integrated coordination of tourism development between the private, public and institutional sector stakeholders, by integrating municipal service provision into the tourism development efforts in the region. The Project is also aligned with the action plan prepared for Uzbekistan under the Framework, which envisages capacity building in infrastructure service providers.

Client Information

UZBEKISTAN SOVEREIGN

EBRD Finance Summary

USD 90,000,000.00

Total Project Cost

USD 108,000,000.00

Environmental and Social Summary

Categorised B (ESP 2014). The Project involves replacement and construction of sewer networks, wastewater pumping stations and a major reconstruction of existing wastewater treatment plants (‘WWTPs’) in Urgench, Khiva, Pitnak and Gurlen. The capacity of the WWTP in Urgench will be 30,000 m3/day, designed to serve the city’s population of 140,000. The capacities of the three other WWTPs will be only 5,000 m3/day each, designed to serve the population of 25,000 in each town. An independent Environmental and Social Due Diligence (ESDD) was undertaken as part of a wider Feasibility Study. The ESDD identified that the existing facilities are dilapidated and out of service due to the age of facilities and lack of maintenance and repairs. This poses high environmental and health risks due to the discharge of untreated wastewater into surface water bodies. Therefore, the implementation of the Project is highly expedient and will bring long-term environmental and community health benefits. The Project is consistent with the GET approach, as wastewater will be treated up to EU standards, and the GET share is 100 per cent.

Potential environmental and social impacts will be site-specific and readily mitigated through the implementation of the Construction Environmental and Social Management Plans and other contractors’ management plans. There will be temporary impacts during the construction associated with increased dust and noise levels, waste disposal and temporary restrictions of access during excavation works. The Project will require national EIAs and obtaining relevant permits. Completion of the EIA and permitting process will be a part of condition precedent to the first drawdown of the capex portion of the loan.

Currently, the Company does not have sufficient capacity and resources to manage environmental and social issues and will be required to establish and train a task force to effectively implement and comply with both national legislation and the EBRD’s Performance Requirements, and implement the Environmental and Social Action Plan (ESAP). Labour regulations are well-developed and a collective agreement is in place. Construction labour force requirements have not yet been identified, and while construction will offer short-term employment opportunities, the issues of potential labour influx and accommodation will be assessed by the PIU. The introduction of fully-automated processes during the commissioning of the new facilities may potentially trigger retrenchment of the low-skilled and unskilled labour force, and will need to be properly managed. A workers’ grievance mechanism will be required for and made available to the whole workforce, including contractors.

The design and engineering documents for the proposed investment programme have not yet been developed and the Project Implementation Unit will need to ensure that relevant EU requirements for resource use and wastewater treatment quality are incorporated in the tender specifications. The design of the modernised and new wastewater treatment plants will also need to take into account the ultimate disposal of the treated wastewater and sludge.

Any community impacts will be mainly beneficial, as the project will provide access to improved sanitation services and reduce environmental and health risks. It will be possible to mitigate temporary restrictions of access through adequate traffic management plans and advance notice.

The Project will not trigger any resettlement. There is a slight possibility that temporary economic displacement may occur during the connection of new customers to the expanded sewerage network. The PIU consultants will be required to ascertain the exact location of the new sewage networks and identify land take requirements. Should any temporary land take be required, the borrower will be required to develop and implement a Livelihood Restoration Plan.

While the current discharge of untreated wastewater into the transboundary Amudaria River and Sarykamysh Lake potentially affects biodiversity, this issue will cease once the modern wastewater treatment plants are operational.

The Horezm Oblast and, in particular, Khiva are rich in cultural heritage, therefore a Chance Find Procedure, a tool for the protection of unidentified cultural heritage resources, will need to be established and implemented.

A Stakeholder Engagement Plan will need to be implemented by the borrower to ensure stakeholders are provided with the timely information on the Project, its potential impacts, implementation of mitigation measures and benefits for the community.

Technical Cooperation

Pre-singing:

TC 1: Technical, financial, environmental and social due diligence. The assignment's cost is up to €175,000, funded by Infrastructure Project Preparation Facility (IPPF).

Post-signing:

TC 2: Corporate Development Programme for Horezm Suvokova will be implemented as part of Horezm Water Project (Project number: 49358).

Company Contact Information

Aziz Erkaboev
a.erkaboev@mjko.uz
+998 71 235-85-79
http://mjko.uz
1 Niyozbek Yuli street, Tashkent City, 100035, Uzbekistan

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