Kant Water sub-project

Location:

Kyrgyz Republic

Project number:

43465

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Approval date:

25 Jan 2013

Status:

Repaying

PSD disclosed:

06 Dec 2012

Translated version of this PSD: Russian

Project Description

The EBRD is considering financing the Kant Water Sub-Project. The EBRD would extend a sovereign loan of up to €1.5 million to the Kyrgyz Republic, to be on-lent to Kant City for improvement of water supply services. Water supply services in Kant are managed by a private operator under a lease agreement.

The EBRD will also seek an investment grant from an international donor of up to €3.6 million to facilitate implementation of the project which will address urgently needed water infrastructure rehabilitation needs as well as metering of water consumption.

This support will be extended under the existing EBRD sovereign framework of up to €20 million, established by the Bank to co-finance with international donors priority water and wastewater rehabilitation sub-projects across the Kyrgyz Republic. The framework envisages sovereign loans that would be on-lent to the cities for the benefit of the water companies involved and would address urgently needed water and wastewater infrastructure rehabilitation needs.

The overall objectives of this sub-project Priority Investment Plan (PIP) are to:

(a) rehabilitate the water supply network; and
(b) improve financial and operational management through the implementation of a city-wide metering programme to bring water production and consumption under control.

Transition Impact

Transition Impact of the sub-project would be:

  • Access to basic public utilities;
  • Introduction of tariff reform within affordability limits;
  • Metered consumption and billing;
  • Increased collection rates; and
  • Improvement of water supply management by enhancing the capacity of Kant City to monitor the implementation of the lease agreement for provision of water services with a private operator.

The Client

Government of the Kyrgyz Republic, with on-lending to Kant City.

EBRD Finance

Sovereign loan of up to €1.5 million to the Kyrgyz Republic, on-lent to Kant City.

Project Cost

The total sub-project cost is up to €6.1 million including technical cooperation. The sub-project will be co-financed by an investment grant from an international donor.

Environmental Impact

The project has been categorised B under the 2008 Environmental and Social Policy. An Environmental and Social Audit/Review of the operator’s current Environmental, Health and Safety, and Social (EHSS) management practices, operations and facilities, and an Environmental and Social Analysis of the proposed PIP were carried out as part of the Feasibility Study by independent consultants. The implementation of the PIP is expected to significantly improve efficiency, reliability and quality of water supply and wastewater collection in Kant City, thus contributing to the provision of uninterrupted access to safe drinking water, prevention of ground and watercourses pollution and improvement of public health.
The PIP components will mainly involve the rehabilitation of the existing assets, such as rehabilitation of the existing supply networks and well fields. It will not involve any new developments. Any adverse future environmental and social impacts associated with the project are site-specific and readily addressed through adequate mitigation measures. The implementation of the PIP involves construction works that will result in limited, localised and short-term adverse environmental impacts, which will be mitigated or prevented by adhering to good construction practice.


The due diligence investigations showed that the private operator has a good record of obtaining the required permits and passports that address its operations and environmental safeguards. Under these circumstances, the operator works on a “best efforts” approach, i.e. within the frames of operational and financial capacity. While in terms of drinking water quality, the operator is largely compliant with national and EU legislation, for wastewater management is far from being compliant. Overall, the project will have mainly positive long-term environmental and social impacts such as the protection of natural resources, a cleaner water environment, provision of reliable water supply and wastewater disposal services, minimised risks to public health, improved sustainability of the water and wastewater operations, and reduced energy consumption.

As a result of the PIP implementation full compliance with national and international standards for water supply will be achieved through the proposed measures. However, the wastewater system can only be brought to compliance status if the full catalogue of long-term investments (LTIP) is implemented. To reach full compliance with Performance Requirements/EHSS requirements and EU standards, additional investments of the magnitude around $23 million would be required to bring wastewater standards to fully meet EU requirements. At this time the financing for the long-term investment programme from the operator’s own revenues can not be confirmed and no potential sources of external funding have been identified. Therefore, on account of constraints arising from affordability and limited financial resources, a derogation from the EBRD’s Environmental and Social Policy will be sought.

The Environmental and Social Due Diligence (ESDD) showed that the project will have a significant positive impact on health and the environment despite the project not being able to achieve full EU compliance in the short term. The human health implications of the shortfalls from EU standards are assessed to be minor compared to the benefits of the PIP implementation to deliver a safer and more reliable water supply to the local population. However, untreated wastewater discharges will remain in the short term and continue to present health risks to the local communities.
Taking into account the findings of the environmental and social appraisal and the result of consultations, the Environmental and Social Plan (ESAP) has been developed for the project which contains mitigation and performance improvement measures and actions that address the identified social and environmental issues. Mitigation measures included in the ESAP are designed to ensure the project’s compliance with the relevant local laws and regulations, as well as EBRD’s Environmental and Social Policy (2008). The ESAP includes the necessary improvements in the operator’s EHSS management and capacity, improvement for water monitoring practices, formalising HR practices and developing better Occupational Health and Safety practices, fire safety and emergency response procedures, improving solid waste management practices.
The operator is responsible for implementing the ESAP in accordance with the proposed measures and defined time schedule. The operator will establish procedures to monitor and measure compliance with the environmental and social provisions of the legal agreements including effective implementation of the ESAP and improvements achieved over time against the baseline established during appraisal.

The project will be monitored in terms of its environmental and social performance and implementation of the ESAP through annual Environmental and Social reports and visits when necessary.

Technical Cooperation

The following technical co-operation (“TC”) assignments form part of this project:

Pre-signing

  • Feasibility Study (€195,000, financed by the EU Investment Facility for Central Asia).
  • Feasibility Study extension for the metering component (€68,865, financed by the Bank’s own resources).
  • Corporate Development for the metering component (€53,575, financed by the Bank’s own resources).

Post-signing

  • Sub-Project Implementation Support. International consultants to assist the sub-project implementation unit with engineering design, procurement, preparation and evaluation of tenders, contract award and administration, financial control, sub-project management and reporting. (€580,000, to be financed by an international donor).
  • Stakeholder Participation Programme: support to implement a Stakeholder Participation Programme (€110,000 to be financed by an international donor).
 

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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