Istanbul Metro Project II

Location:

Turkey

Project number:

49825

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

IESE

Target board date:

13 Mar 2019

Status:

Signed

PSD disclosed:

10 Jan 2019

Translated version of this PSD: Turkish

Project Description

A syndicated A/B loan of up to EUR 97.5 million to Istanbul Metropolitan Municipality ("IMM" or the "City") to co-finance the construction of 13 kilometres of the new Umraniye-Atasehir-Goztepe Metro line, including 11 stations. The supervision of construction that will support the engineering works of the main project components worth EUR 7.0 million is expected to be financed by the city of Istanbul.

Project Objectives

The project is essential for further expansion of public transport infrastructure in Istanbul and will connect Umraniye, Atasehir and Kadikoy districts of the Asian side of Istanbul. It will also link up the underground Marmaray commuter rail line and the Kadikoy-Kartal and Uskudar-Sancaktepe metro lines. The new line will provide safer and more reliable transport services for 400,000 passengers daily. The project is also expected to significantly reduce high traffic congestion and noise pollution. It will also help achieve a shift to a more environmentally friendly transport in Turkey's largest city.

Transition Impact

Good.

The project's transition impact is expected to be derived from promoting youth and gender inclusion as well as Green Economy Transition (GET). These areas will be explored during the due diligence studies and an action list will be agreed with the city prior to execution of the loan agreement.

  • Youth inclusion: The project will explore opening up of work-based learning opportunities for young people at the level of contractors during the construction phase. It is expected that the city will establish a youth employment programme with the support of the EBRD and in collaboration with the city's learning and vocational training centre (ISMEK). The scale and scope of the proposed programme (number of students to be trained, partnerships with local schools, certification and demonstration) will be confirmed following the completion of due diligence studies. In addition, subject to due diligence confirmation, it is expected that the city (through ISMEK) will contribute to the EBRD's on-going policy engagements in Turkey, by participating in the public private steering group established under the programme, to support the development of improved training and skills standards.
     
  • Gender inclusion:The project is expected to promote women's participation in a male-dominated sector and occupation. The company is expected to adopt significant improvements in its Human Resources and other policies in line with a gender action plan. It will also endeavour to join a recognised national equal opportunities accreditation scheme (i.e. KAGIDER FEM). The project will also explore ways to support women's access to services, through a potential Technical Cooperation (TC) which will provide gender-responsive transport services and will help the institutional strengthening of the municipality from the gender equality perspective.
     
  • Green Economy Transition: The project will promote sustainable transport by providing an alternative solution to the use of more polluting buses, minibuses, taxis and private vehicles. Given its integration into a much larger network, the new line is expected to result in a shift from high to low-carbon modes of transportation. It will also contribute to improved air quality through the reduction of nitrogen oxides and particulate matters in addition to climate change mitigation benefits.

The full impact of the project will be confirmed following the due diligence and prior to the execution of the loan agreement.

Client Information

MUNICIPALITY OF ISTANBUL

Istanbul is the largest city in Turkey with a population of around 15 million inhabitants. The city is a public legal entity established and governed under municipal laws of Turkey. IMM provides municipal services in Istanbul. It will finance and implement the project. Istanbul Metro Company, which is fully owned by IMM, will operate the proposed metro line.

EBRD Finance Summary

EUR 77,500,000.00

A/B loan of up to EUR 97.5 million to the city, and will aim to syndicate EUR 20 million of the loan under the Bank's A/B loan structure.

Total Project Cost

EUR 410,650,000.00

EUR 410.6 million

Environmental and Social Summary

The Project has been categorised B under Environmental and Social (“E&S”) Policy (2014). Environmental and Social Due Diligence (“ESDD”) was undertaken by independent consultants and comprised and an E&S Analysis of potential E&S issues associated with the proposed investments and an E&S review of the corporate environmental, health and safety management systems and practices including the past construction activities that continued from April 2017 till September 2018.

The Project is expected to contribute to the abatement of traffic related air emissions of 41,300 tCO2-eq, 84.5 tNOx, 15.2 tHC and 1.3 tPM per year (starting in 2023), as well as contribute to the reduction of other air pollutants, noise, road accidents and congestion by shifting approximately 35,000 passengers to the metro from private cars and buses during normal operating hours and 43,000 at the peak travel hours for both directions.

The Project falls within the Annex II of the Turkish Environmental Impact Assessment Regulation, and required the screening of the project by the competent authority. Upon review of a Project Description File (“PDF”), an “Environmental Impact Assessment (“EIA”) Not Required Decision” was issued by the competent authority on 21.10.2015.

The ESDD showed that the City is generally in compliance with national health, safety and environment and labour requirements. The Company has established environmental (ISO 14001), health and safety (OHSAS 18001), Customer satisfaction (ISO 10002) and energy (ISO 50001) management systems.  However, the City will need to strengthen their Contractor management capacity and improve their project monitoring mechanisms to ensure their Contractors and subcontractors will comply with IMM standards and the Bank’s E&S requirements.

The majority of the 13 km metro line alignment and the 11 stations will be constructed underground. The Project is not expected to result in physical resettlement, encroach on protected areas or cultural heritage sites. All past excavation works have been observed by experts from the Archaeology Museum Directorate and there have been no chance finds during the past construction works. There might also be short term loss of income around Sahrayicedid and Atakent stations due to road closure.  Environmental Social Action Plan (“ESAP”) requires the claims of local businesses to be investigated and if deemed necessary, a Livelihood Restoration Plan (“LRP”) to be developed. Also, in case of damage to any buildings caused by the project, a Resettlement Action Plan will need to be prepared to mitigate resettlement impacts in compliance with EBRD’s PR5. The technical due diligence concluded that the safety features and design are adequate to minimise any risks in case of seismic events and to the stability of nearby buildings. However, a high level of sensitivity was detected at 19 residential buildings located in a close proximity from the tunnel and shaft construction sites. To manage this risk, there will be continuous monitoring of ground movement and deformation and vibration at these buildings.

The Company has established clear Human Resources policy and procedures in line with the national Labour Code and PR2 requirements. Workers of the Company are members of a workers’ union. The Collective Bargaining Agreement renewed in May 2017 for 1,820 workers is valid for a 2 year period.  The Construction Contractor has a personnel regulation which needs to be revised to comply with PR2 and shared with the employees. Reviewed documents and employee interviews indicate that compensations of dismissed employees were duly paid upon the termination of contracts. There has been no labour claim against the Construction Contractor despite of collective dismissals during the time the project construction works were suspended.

ESDD showed that, although there are a number of management plans adopted by the Contractor (e.g., waste management, emergency response management, Occupational Health and Safety (“OHS”) management plans), the Contractor  needs to prepare a robust E&S management system for the Project covering all potential risks and impacts.  The pollution prevention and abatement practices of the Contractor needs to be improved in a number of areas including environmental permits, noise control measures, surface runoff management, environmental monitoring, and handling and management of hazardous materials. OHS practices also require further improvement including revision of risk assessment documentation to cover third party access to the construction areas, handling of fuels, tunnel boring machinery, emergency response, etc. Other potential adverse impacts are temporary disruption to traffic, road safety and accessibility, and other community safety issues due to transportation of excavation materials and waste, will need to be addressed under a Traffic Management Plan.

IMM has a strong Community Relations team and a Public Relations Programme for its infrastructure projects. Project information is communicated to various stakeholders and affected communities through IMM’s website, bill boards, media advertisements, leaflets and face to face interviews. Both IMM and the Company also have active grievance mechanisms. IMM will be required to develop a project specific Stakeholder Engagement Plan for the Project in compliance with EBRD PR 10.

IMM will be required to address the above issues identified during the ESDD through the ESAP. Other key requirements in the ESAP include improvement of worker accommodation camps and camp management, formalisation of the chance finds process, security management, and obtaining required permits.
The Project will be monitored through quarterly external E&S monitoring visits and E&S reports during construction and annual reports during operation. Additional monitoring visits by the Bank will be carried out when deemed necessary.

NTS: English | Turkish

SEP: English | Turkish

Technical Cooperation

Pre-signing: Technical, Financial, Environmental and Social Due Diligence will be carried out for the project (EUR 150,000) via the Infrastructure Project Preparation Facility (IPPF). A review of the existing procurement process for the project (EUR 50,000) will also be carried and is to be financed by EBRD Shareholder Special Fund (SSF).

Post-signing: The EBRD is exploring the following post signing TC assignments: lender's supervision (up to EUR 150,000) from SSF, as well as gender-sensitive service provision (up to EUR 300,000) expected to be financed by the multi-donor funded Gender Advisory Services Framework.

This assignment is envisaged to include (a) development of gender-responsive transport services and institutional strengthening of the municipality from the gender equality perspective and (b) promotion of equal opportunities and practices in the company's workforce.

Company Contact Information

Nuri Sezgin
nuri.sezgin@ibb.gov.tr
+902124494000
www.ibb.istanbul
Osmaniye Mahallesi Çobançeme Kouyolu Bulvar No:5 34568 Bakrköy/ISTANBUL

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