Horezm Water Project

Location:

Uzbekistan

Project number:

49358

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

19 Sep 2018

Status:

Signed

PSD disclosed:

13 Jul 2018

Translated version of this PSD: Uzbek | Russian

Project Description

The Bank will provide a sovereign loan of up to US$ 60 million (€50 million) to the Republic of Uzbekistan ("RoU") to be on-lent and/or granted to the State Unitary Enterprise Horezm Suvokova ("Company") to finance the Company's Priority Investment Programme ("PIP"). The PIP includes such investments in water and wastewater infrastructure of Horezm oblast as construction of new water intakes and renewal of pumping stations, water and wastewater treatment facilities, and installation of household and bulk meters ("Project"). These components are aimed at improving water quality, access to safe drinking water and wastewater treatment services.

Project Objectives

The Project is expected to increase the number of people connected to the water and wastewater network by around 200,000 people, reduce water losses, enhance energy efficiency and quality of wastewater treatment.

Transition Impact

Good
The sources of transition impact are:

1) Green. The Project is expected to increase the number of people connected to water and wastewater network, reduce water losses and enhance the energy efficiency. The Project qualifies as a positive environmental activity.
2) Resilient. The Project will focus on financial and operational improvements to achieve cost recovery and sustainability of the Company.

Client Information

UZBEKISTAN SOVEREIGN

EBRD Finance Summary

US$ 60,000,000.00

Total Project Cost

US$ 60,000,000.00

Environmental and Social Summary

The Project has been categorised B in accordance with the EBRD's 2014 Environmental and Social Policy. The Environmental and Social Due Diligence (ESDD) for the proposed Priority Investment Programme (PIP) for the Project was carried out as part of the Feasibility Study by independent consultants engaged under the IPPF. It included a review of current practices, an assessment of the Project's potential E&S impacts and a review of the Company's current E&S provisions and management capacity. The PIP for the Horezm region is designed to achieve compliance with the national drinking water and wastewater quality standards, the EU Drinking Water Directive and Urban Waste Water Treatment Directive and EBRD PRs. All PIP components will be subject to local permitting procedures and EIA law (OVOS - Assessment of Environmental Impacts/EIA) in the future. An Environmental and Social Action Plan (ESAP) has been developed for the Project and will be agreed with the Company under a separate Project Agreement prior to Board approval. Stakeholder Engagement Plans (SEP) and a non-technical summary (NTS) have also been developed and will be disclosed.

The Company operates in line with the requirements of the local environmental authorities which at times differ from the national legislation. Non-compliances will be addressed with corrective measures in the ESAP. Currently 52 per cent of the Horezm oblast's population is provided with centralised water supply system, mostly only for 8-10 hours a day. Water is abstracted from two surface water intakes. Only 8 per cent of the region's population is connected to the centralized sewage system. Both systems in the Horezm oblast are old and in an extremely poor condition, which results in: low service reliability, water losses, non-existent waste water treatment process due to the deteriorated conditions of the three WWTPs, deteriorating working conditions for pumping station employees, an increasing accident rate.

To ensure the required degree of treatment the project provides for multi-stage, mechanical and biological treatment of incoming wastewater. The Project also assumes dehydration, post-treatment and maturing of the sludge. Tertiary treatment for nutrient removal is not required in line with the EU Urban Waste Water Treatment Directive, based on the capacities of the WWTPs and absence of sensitive receptors. ESDD has concluded that through connection of new customers to the wastewater system, accounting for and controlling the quality of wastewater entering the system, improvement of the wastewater treatment process (currently non-existent), the Project will reduce sanitary and epidemiological risks and adverse impacts on the environment and on water bodies. Reconstruction of the existing WTP will result in decreased H&S and environmental risks related to use of liquid chlorine, while allowing for connection of at least 150,000 people and increased reliability. Construction of underground water intakes will require relevant permits, but the aquifers are well studied, as they have been used in the past. Adverse E&S impacts associated with the implementation of the PIP will be limited, localized and temporary, and can be prevented or mitigated by adhering to good construction practices.

The affordability assessment carried out by the Feasibility Study Consultant did not identify significant water tariff affordability concerns from the implementation of the Project.

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 in respect of main EHS risks, development of HR policies, improvement of worker grievance mechanism, development of a contractor EHS and labour management programme; improved water supply and wastewater quality monitoring; development of a CESMP (Construction Environmental and Social Managements Plan) for contractors implementing the PIP; and 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.

NTS | SEP

Technical Cooperation

Pre-signing:

• TC 1: Technical, financial, environmental and social due diligence. The assignment's cost was €200,000, funded by Infrastructure Project Preparation Facility (IPPF).

Post-signing:

• TC 2: Corporate Development Support to the Company to enhance its institutional, operational and financial capacity. The assignment's cost is estimated at €200,000, to be
financed by an international donor or the EBRD Shareholder Special Fund.

Company Contact Information

Sevar Astanov
info@mjko.uz
+99871 234-07-28
+99871 234-06-08
http://mjko.uz
1 Niyozbek Yuli street, Tashkent City, 100035, Uzbekistan

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Text of the PIP

Project Complaint Mechanism (PCM)

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Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.