Proposal to co-finance with the Kaunas Water Company and the EU Cohesion Fund (formerly ISPA) programme for improvements to water and waste-water services in the City of Kaunas. Phase Two of the Kaunas Water and Environment Project complements an ongoing water and waste-water improvement programme that started in 1995 which is known as Phase One.
The project aims to improve water and waste-water services in the City of Kaunas by co-financing a facility to remove iron from the potable water supply and to undertake network extensions and rehabilitation. The Kaunas Water Company and the EU's Instrument for Structural Policies for Pre-accession (ISPA) Facility will co-finance secondary treatment capacity for the waste-water treatment plant.
This is the first loan to a water and waste-water utility in Lithuania without a sovereign guarantee. It will demonstrate to other cities and banks that self-financing municipal services can be financed without recourse to sovereign or full municipal financial guarantees.
Kaunas Water Company
Loan of US$ 12.5 million (€14.7 million) plus an extension of the loan by €5.0 million in total €19.7 million.
Total project costs are estimated at €53.3 million.
The project has been screened B/0, requiring an environmental analysis of the proposed investment programme. Further investment in improving drinking water and effluent will significantly contribute to reducing negative environmental impact and will reduce public health hazards and pollution of surface water sources in the city of Kaunas.
The environmental analysis will provide information on the environmental impact associated with the physical investments in construction, commissioning, operation and maintenance of iron removal facilities, rehabilitation and extension of drinking water distribution networks, biological waste-water treatment and extension of sewerage collection networks. It will also cover protection for workers' health and safety, procedures and copies of environmental permits, approvals and agreements and compliance with standards of adequacy. In addition, it will identify the best way to improve information and communication with the public. No separate environmental audit is required at this stage.
TC funding will be used to finance:
completion of a feasibility study for some of the investment components;
institutional development for the Kaunas Water Company and the City of Kaunas.
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