Kobuleti Water

Location:

Georgia

Project number:

37560

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

10 Jul 2007

Status:

Repaying

PSD disclosed:

04 Apr 2007

Translated version of this PSD: Georgian

Project Description

The EBRD is providing a EUR 1.5 million sovereign loan to Georgia to be on-lent to the Kobuleti Water Company (the “Company”), the water and wastewater utility company of Kobuleti Municipality (the “City”). The Project objectives are to: rehabilitate and extend the water and wastewater networks, install water meters; construct a reservoir, construct a wastewater treatment plant; and, assist the Company to implement the project and to improve its financial and operational performance (the “Original Project”).

To cover a cost overrun that occurred during the construction of the wastewater treatment plant, the Bank is considering providing a loan extension of EUR 2.2 million (the “Extension Project”).

Transition Impact

The Project has the following key transition objectives: (i) commercialisation of the Company; (ii) framework for markets; and (iii) skills and knowledge transfer.  Namely, the transition impact of the Project has to derive from the potential to improve the operational and financial management of the Company as well as introduction of a public service contract, tariff reforms and consumption based billing.

The expected transition impact rating is ‘moderate to good’.

The Client

Sovereign loan to Georgia (the “Borrower”) to be on-lent to the Kobuleti Water Company (the “Company”), the water and wastewater utility company of Kobuleti Municipality (the “City”).

EBRD Finance

EUR 1.5 million sovereign loan, which will be on-lent to the Company.

The project extension envisages an additional loan amount of EUR 2.2 million.

Project Cost

The total cost of the Original Project was up to EUR 15.7 million, including technical cooperation.
With the proposed loan extension, the total project cost would increase by EUR 2.6 million including technical cooperation.

Environmental Impact

The project is categorised Categorised B/1  under the 2003 Environmental Policy. The extension of the loan will enable the completion of the construction of the wastewater treatment plant planned under the Original Project and the construction of a secondary clarifier and dewatering units which were part of the original design.

The 2003 Environmental Policy continues to apply to the Project, however, the environmental and social due diligence ("ESDD") for the Extension Project was carried out in accordance with the 2014 ESP and PRs, and included a review of the Kobuleti Water Company’s E&S management systems and practices and an E&S analysis of the proposed extension.

The construction of the WWTP will enable the Company to comply with the EU Urban Wastewater Directive (Council Directive 91/271/EEC) requirements. Completion of the Original Project is expected to result in significant environmental and social benefits by improving Kobuleti’s wastewater and sludge management, by contributing to water quality improvements in local rivers and the Black Sea, and by reducing environmental and public health risks associated with untreated wastewater discharges. Construction-related impacts will be localised and short term in nature, and they can be efficiently prevented or mitigated by applying good international construction practices and planning.

Water quality of the water supply network is continuously monitored by the Company through an established system. The measured parameters comply with the national and EU standards. However, the monitoring programme needs to be enhanced to include some missing parameters that are set in Drinking Water Directive (Directive 98/83/EC).

An Environmental and Social Action Plan (ESAP) has been developed to address the issues identified during the ESDD. The main requirements of the ESAP, among others include the following:

  • Improvements to EHS management and monitoring;
  • Defining contractual environmental, health and safety requirements and improving the monitoring of contractor performance;
  • Improvements to equipment/electrical safety and hazardous materials safety;
  • Grievance mechanisms for workers and stakeholders; and
  • Procedures and plans for construction and operation safety, waste management, emergency preparedness and response, assistance to people adversely affected by the project and information disclosure.

The Company will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank may also conduct monitoring visits, as required.

Technical Cooperation

For the Original Project

Pre-signing

  • TC 1: Feasibility Study. Full financial, technical and environmental due diligence on the proposed project. EUR 250,000, funded by the EU BSIF, completed.
     
  • TC 2: Preparation of Detailed Engineering Design and Supervision. Design of sewage treatment facilities. EUR 49,950, funded by Canada, completed.
     
  • TC 3: Audit of the accounts of the Kobuleti Water Company (jointly with the accounts of the Batumi Transport Company). EUR 47,973, funded by the Bank’s own resources, completed.

Post-signing

  • TC 4: Project Implementation and Procurement Support including Review of the Detailed Design (jointly for the water projects in Kobuleti, Borjomi and Rustavi). Assistance to the project implementation units for the Kobuleti, Borjomi and Rustavi water projects during the implementation period with tender evaluation, contract award and administration, financial control, project management, quality assurance and design review. EUR 444,622, funded by Sweden, completed.
     
  • TC 5:  Additional Detailed Engineering Design for the water supply and sewage systems. EUR 86,900, funded jointly by the Early Transition Countries (“ETC”) Fund and the EBRD Shareholder Special Fund (“SSF”), completed.
     
  • TC 6: Corporate Development and City Support Programme to (i) assist the Company to identify and implement the necessary corporate, financial and operational improvements (including MIS) to meet the related covenants included in the EBRD financing documents as well as ongoing corporate development and (ii) assist the City in assessing and addressing tariff impacts and to develop a service contract.  EUR 489,344, funded by the ETC Fund, completed.

For the Extension Project

Pre-Signing

  • TC1: Complementary Feasibility Analysis to assist the Bank with the technical review of the investment components, verification and validation of the increased costs, and development of a new financial and economic model for the project. EUR 74,400, funded by the EBRD Water Fund, completed.
     
  • TC2: Environmental and Social Assessment to carry out an Environmental and Social (“E&S”) Assessment of both the Extension Project investments and the Original Project. EUR 29,050, funded by the EBRD Water Fund, completed.
     
  • TC3: Restatement and Audit Services to assist the Bank with restatement and audit of the Company’s accounts in accordance with the International Financial Reporting Standards to provide the base data. USD 12,900 (EUR 11,630), funded by the Bank’s own resources, completed.

Post-Signing

  • TC4: Project Management and Implementation Support to facilitate the timely and effective implementation of the project by rendering assistance to MDF. EUR 295,000, funded by the Czech Republic.

 

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

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Text of the PIP

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Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.