Kharkiv Metro Extension

Location:

Ukraine

Project number:

46411

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

29 Nov 2017

Status:

Signed

PSD disclosed:

13 Jul 2017

Translated version of this PSD: Ukrainian

Project Description

Provision of a EUR 160 million sovereign loan to Ukraine (co-financed with a sovereign loan to Ukraine from the EIB for the same amount). The proceeds will be used to finance the extension of Metro Line III in Kharkiv by 3.5 km to the southern districts of the city and construction of two stations, construction of a new depot and connecting rail and the purchase of rolling stock to service the extended line. Kharkiv is Ukraine's second largest municipality and a major industrial centre.

Project Objectives

The project will address key challenges in the public transport infrastructure development of the city of Kharkiv, including improving access to clean urban transport and increasing the capacity and efficiency of public transport services. The investment is expected to result in significant economic and environmental benefits through the expansion of clean, zero-emission urban rail mass transit as the backbone of Kharkiv's public transport system to ensure sustainable mobility.

Transition Impact

Good.

The project is expected to create the following transition impacts:

  • Green Economy: The project supports a modal shift and expansion to clean, zero-emission urban rail mass transit as the backbone of the urban transport system in the second largest city of Ukraine. The project qualifies as Green Economy Transition (GET) as it involves the implementation of technology that contributes to mitigating climate change. Due to the reduction of Greenhouse Gases (GHG) and significant air quality improvement (including, inter alia, particulate matter (PM) and nitrous oxides (NOx) reduction) the project meets or exceeds the quantitative physical scale thresholds that have been agreed in the GET TI assessment methodology
     
  • Competitive: The project aims to support the Kharkiv municipal metro operator CE "Kharkivsky Metropoliten" in operational and financial restructuring through a Corporate Development Programme (CDP) and a Public Service Contract (PSC) that will allow the company to improve its financial and operational sustainability. Furthermore, the investment will benefit the company and its users through the expanded coverage of the southern districts of the municipality thereby increasing revenues.

Client Information

UKRAINE SOVEREIGN

The project will be implemented by Communal Enterprise "Kharkivsky Metropoliten", the company operating the metro system in the city of Kharkiv.

EBRD Finance Summary

EUR 160,000,000.00

The Bank will provide up to EUR 160 million to Ukraine, as part of a EUR 320 million financing package expected to be co-financed by the European Investment Bank.

Total Project Cost

EUR 320,000,000.00

Environmental and Social Summary

The project has been Categorised B in accordance with EBRD's 2014 E&S Policy. The project will result in significant environmental and social benefits through the improvement of quality of transport services, urban infrastructure and air quality. However, the Project related construction activities and operation of the metro extension line will require physical and economic displacement and will impose restrictions on the land use affecting 42 private households, 3 block houses and 246 residents. Comprehensive Environmental and Social Due Diligence (ESDD) and a Resettlement Action Plan (RAP) to identify risks and mitigate adverse impacts have been developed by independent international consultants and endorsed by the City. Implementation of the Resettlement Action Plan (RAP) will be covenanted in the Project Agreement and closely monitored by an independent third party consultants as part of the project implementation with the support of the PIU consultant.

The ESDD has been performed in line with EBRD and EIB requirements also covering the Client's corporate procedures for contractor management and monitoring, public health and safety, emergency response plans and procedures on traffic management plans during construction works.

It specifically focused on people with disabilities to promote accessibility as one of the integral elements of sustainable urban public transport systems.

The ESDD confirmed that potential adverse environmental and social impacts will be related to the construction activities, including land acquisition and resettlement, alteration of the groundwater table, stability of the nearby buildings, and safe disposal of the potentially contaminated excavated material. The construction works will also be associated with OHS risks, temporary disruption to residents' transport, road safety and accessibility.

The land acquisition and resettlement are mainly associated with the construction of the over ground stations and established Technical Safety Zone along the line route with the restricted land use requirements. Different alternatives have been considered to minimise the resettlement impacts and to make sure that the vast majority of the underground line alignment will be constructed under the existing roads.

The RAP includes socio-economic survey of the Project Affected People, development of the entitlement matrix, resettlement and income restoration plan, public consultation and grievance mechanism processes. As part of the RAP, specific monitoring plan has been developed requiring monthly reporting from the Client, continuous review and quarterly site visits by the independent consultant with the first monitoring report to be developed in the form of a public consultation report to focus on consultation and stakeholder engagement implementation as per the RAP. The RAP completion audit will be carried out, including a survey of the resettled persons to verify the outcomes and/or identify corrective actions if any. The RAP and monitoring plan has been agreed with the City and EIB.

The RAP will be disclosed upon the City Council's formal decision about officially initiating the project and thus setting the legal cut-off date in line with local legislation to start the resettlement process.

Setting the cut-off date will provide clarity as to eligibility for compensation and assistance, and prevents potential fraud schemes with land use registrations. The public disclosure and consultation mechanisms are described in the RAP and Stakeholder Engagement Plan (SEP), and will be closely coordinated and monitored in order to fulfil Bank's requirement.

The project implementation is limited to the urban area within the boundaries of the City and no sensitive ecological receptors or protected zones will be affected. The project will reduce the amount of polluting air emissions, especially particulate matter (PM), including black carbon, and nitrous oxides (NOx). For the period 2022 to 2052, up to 302 thousand tons CO2 equivalent will be saved; approximately 10,100 tons CO2 equivalent per year. PM is expected to be reduced by up to 21.9 tons per year and NOx by up to 125.4 tons per year.

The ESDD also identified that the EHS management system of the Company needs to be improved to meet all necessary requirements from EBRD and EIB and ensure timely implementation of all identified mitigation measures. In order to ensure effective management and control over the project implementation and to provide continuous support, the City has developed a working group with the representatives from all involved state organisations and the City council departments. The working group has clear roles and responsibilities assignments and communication mechanisms.

The local Environmental Impact Assessment (EIA) and Project Design have been completed, passed through the state expertise and got all required construction permits and approvals. The formal requirements for the public disclosure of the project information have been fulfilled as part of the City Master Plan and City Metro system development plans and updates since early 90s and as a part of a recent local EIA process. However, the ESDD identified that stakeholder engagement needs to be improved and that disclosure of the RAP will require an additional procedure and consultations with the affected people.

An Environmental and Social Action Plan (ESAP) has been developed for the Company and the City to bring the Project into compliance with the EBRD's PRs and to address the potential risks and implement necessary improvements in the Company's EHS management systems and capacity, in managing construction activities, implementation of the RAP and SEP, so as to avoid, minimise and mitigate the potential adverse E&S impacts of the project.

The project will be monitored in terms of its environmental and social performance and implementation of the ESAP, SEP and RAP through monthly reports from the Client and quarterly monitoring visits by the independent consultants during the resettlement period, and then later through the annual E&S reports and site visits when deemed necessary.

NTS: English | Ukrainian SEP: English | Ukrainian

Technical Cooperation

Technical, financial, and environmental and social due diligence has been carried out for the project.

This technical co-operation assignment (EUR 500,000 in total) is financed by the Government of Japan.

In the post-signing stage two technical co-operation assignments are foreseen:

(1) Corporate Development Support Programme. Assistance to the Company with re-organisation, heavy rail management techniques, business and capital investment planning and preparation and signing of a performance i based Public Service Contract. The estimated cost of the assignment is EUR 250,000, proposed to be financed by an international donor or the EBRD's Shareholder Special Funds.

(2) A Lender's Technical Monitor (to be used by both EBRD and EIB) to monitor implementation of the investments. The estimated total cost of the assignment is EUR 300,000 proposed to be financed by an international donor or the EBRD's Shareholder Special Funds.

(3) Monitoring of implementation of RAP. The estimated total cost of the assignment is EUR 25,000 financed by the EBRD.

Company Contact Information

Ihor Terehov, First Deputy Mayor
terehov@city.kharkov.ua
+380577607676
+380577607950
http://www.city.kharkov.ua/
7 Maydan Konstytutsii, Kharkiv, 61200, Ukraine

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