Industrial Zones Infrastructure

Location:

Lebanon

Project number:

49759

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Target board date:

19 Sep 2018

Status:

Concept Reviewed

PSD disclosed:

02 Mar 2018

Translated version of this PSD: Arabic

Project Description

Sovereign loan of up to USD 36.7 million (or EUR equivalent) to finance the construction of Phase 1 of the infrastructure for three industrial zones in Lebanon ("Project") with a total project cost of USD 97.9 million for Phase 1, co-financed by the European Investment Bank ("EIB") and the Italian Government and EUR 4 million EIB Technical Assistance grant for detailed design and implementation support.

The Project is part of the Ministry of Industry's ("MoI") vision for the industrial sector and the United Nations Industrial Development Organisation's ("UNIDO") Lebanon country Programme (2015 - 2018), which both call for the creation of environmental friendly, inclusive industrial zones and associated infrastructure upgrades. The Project is included in Lebanon's National Investment Plan.

Project Objectives

The Project involves investments in three industrial zones located in

(i) Baalbek municipality

(ii) Tourbol-Koussaya (Eastern Zahleh Districit), and

(iii) Qaa-Hermel.

The industrial zones were selected in line with the strategic plan of the MoI and correspond to the specific demands in the region to provide for a balanced development in areas

(i) in close proximity to Beirut or to the Lebanese borders and transport opportunities,

(ii) with weak economic development and high burden from refugee influx, and

(iii) with high economic potential.

The Project will entail investments in main municipal infrastructure (roads, water and sewage, and solid waste management, electricity and telecommunications), associated equipment and other site service infrastructure in the three identified industrial zones.

The Project is designed to help accelerate economic growth and overcome barriers of entry for local SMEs by providing needed, cost-effective, high quality basic infrastructure for private industrialists. Construction of the industrial zones will be phased with the Project being the first of three phases, fora total of USD 118.6 million, expected to create around 4,726 direct jobs and over 22,000 employment opportunities at full operation.

Transition Impact

Moderate Good

  • Foster market structures that will ensure competition among firms and increase capacity of firms to generate value added services by advancing towards the productivity frontier: the Project will create a business friendly environment through the provision of high quality, competitively priced infrastructure for local businesses, thereby decreasing market entry barriers and increasing competitiveness of local companies. The clustering of different industries and service providers in an industrial zone will allow for the stimulation of partnerships between these sectors, promoting sharing of cross-sectorial best practise and expertise. The three industrial zones are intended to be pilot zones that take into consideration environmental standards and protect the local social fabric and the cultural environment in addition to stimulating local development, thereby establishing a standard for future replication.
     
  • The Project will contain activities that can qualify as Green Economy Transition ("GET"): the Project will contribute to improve service delivery to industries in the regions, which is expected to significantly decrease environmental pollution and GHG emission, in particular through the provision of controlled disposal of industrial hazardous waste, recycling and proper water treatment of industrial remains. A further and more detailed review of the GET benefits will take place during due diligence.

Client Information

LEBANON SOVEREIGN

Government of the Republic of Lebanon

The loan will be administered by Lebanon's Council of Development and Reconstruction ("CDR"), an autonomous institution endowed with extended jurisdiction and directly accountable to the Council of Ministers through the Prime Minister. CDR is responsible for planning, managing and executing public infrastructure projects on behalf of the Government of Lebanon.

On a national level, the Ministry of Industry is responsible for the licensing and oversight of the industrial zones, which it manages through the Department of Establishment and Management of Industrial Zones.

The Ministry of Industry has undertaken Project preparation with the support of the United Nations Industrial Development organisation ("UNIDO") and the Italian Agency for Development Cooperation.

EBRD Finance Summary

USD 36,700,000.00

Total Project Cost

USD 97,900,000.00

Environmental and Social Summary

The Project is at early stage of E&S due diligence and has intially been categorised as "IESE" meaning an Initial E&S Examination is required to define the project categorisation and scope due diligence accordingly.

From an Enviromental and Social ("E&S") viewpoint the Project may be considered as three discrete sub-projects, each of which has the potential to present a number of E&S opportunities, benefits, risks and impacts.

Each industrial zone has a relatively large footprint and a significant amount on land take will be required. At the time of this document, limited information regarding current land use or potential sensitivities is available.

As a result an initial E&S Examination ("IESE") will be undertaken by EBRD in collaboration with the co-financiers.

The first stage of the IESE will be to discuss with the CDR the strategy for the master plan, including site selection, and to understand whether any E&S studies have been completed to date.

This PSD will be updated following the completion of the IESE exercise.

Technical Cooperation

Pre-signing

Due diligence review of the technical, financial, environmental and social components of the Project, including review of existing detailed design, technical specifications and tender strategy prepared by UNIDO, in case any gaps are identified that need further assessment. The estimated cost of the assignment is up to EUR 300,000, proposed to be financed by an international donor or the EBRD Shareholder Special Fund ("SSF").

Post-signing

Implementation support is expected to be provided by the EIB. However additional post-signing assignments could be considered by the Bank if required.

Company Contact Information

Council for Development and Reconstruction
infocenter@cdr.gov.lb
+961 (1) 980096
+961 (1) 981252 - 981253 - 981381
www.cdr.gov.lb
Tallet Al-Serail- Beirut - Lebanon P.O. Box: 3170/11

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