Kotayk Solid Waste Management Project

Location:

Armenia

Project number:

46736

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

A

Target board date:

10 Dec 2014

Status:

Signed

PSD disclosed:

08 Dec 2011

Project Description

The EBRD is providing a €3.5 million sovereign loan to the Republic of Armenia for the construction of the first EU compliant regional landfill and relevant infrastructure in the country.

The landfill will be located in Hrazdan, capital town of Kotayk distrcit in the central part of Armenia, and will be used by eight municipalities in the nearby region - Hrazdan, Abovian, Charentsavan, Yeghvard, Nor Hachn, Tsakhadzor, Byureghavan and Sevan (Participating Municipalities).

The project will require the tendering out of waste collection to the private sector and the creation of a fully commercial solid waste management company (the “Company”).

The project will also include the acquisition of vehicles, bins and equipment for waste management.

To align with the Solid Waste National Strategy concept, the project coverage area is being extended, and the Bank is considering to providinge a loan extension of EUR 2 million, co-financed by a capital grant from an international donor of EUR 2 million. The extended area is the adjacent Gegharkunik region and would imply two additional Participating Municipalities. The loan extension would finance solid waste collection equipment and establish two transfer stations. The Kotayk landfill capacity would be enhanced to include the waste volumes from Gegharkunik.

Transition Impact

  • Framework for markets
    The Participating Municipalities will be charged a full cost recovery tipping fee as part of the project structure within two years of the landfill becoming operational. In addition, public service contracts defining the responsibilities of the Company and the Participating Municipalities will be developed.
     
  • Institutional building
    Technical co-operation services will be provided to assist participating municipalities in establishing a commercially driven solid waste company. Subsequent capacity building will be provided to implement efficient operations in accordance with a business plan, and in accordance with EU directives on solid waste.
     
  • Private sector participation
    Private participation in the collection of waste will be developed through the tendering of collection services.
     
  • Demonstration effect of new processes
    The Project will put in place the first sanitary landfill in Armenia to be built and operated in accordance with applicable EU Directives. Besides physical technology, the Project will also help develop better public awareness of the benefits of anti-littering and recycling through public promotion campaigns and incentives. This would be the first commercially driven approach in Armenia, with significant demonstration effects to other cities and solid waste companies.

The Client

Sovereign loan to the Republic of Armenia with on-lending to the Participating Municipalities, which will establish and own the company for solid waste management to operate the landfill.

EBRD Finance

€3.5 million sovereign loan, which will be on-lent to the Participating Municipalities. In addition, the European Union Neighbourhood Investment Facility (“NIF”) has approved a grant in the amount of €3.5 million to provide co-financing for the Project.

The project extension envisages an additional loan amount of €2 million, co-financed with a capital grant of €2 million from an international donor.

Project Cost

The project cost is €8.07 million, including post signing technical cooperation.

With the proposed loan extension, the total project cost would increase to €12.09 million including technical cooperation.

Environmental Impact

The Project has been categorised A in accordance with the Bank's 2008 Environmental and Social Policy. An Environmental and Social Impact Assessment (“ESIA”) fit for public disclosure purposes was prepared in accordance with the Bank's Performance Requirements (“PRs”) in 2011 and this was disclosed locally and on the Bank's website on 8 December 2011. No significant issues were raised during the disclosure process. Despite the Project’s automatic cancellation after a year-long delay in 2012, the ESIA continued to be disclosed on the EBRD website. The Board has been informed that the project was once again under consideration and the client has reactivated the ESIA on their website. Since the Project has now been reactivated, a public consultation meeting will be organised during the local EIA to re-inform the affected people about the Project. A Stakeholder Engagement Plan (“SEP”), which was developed in 2011, has been revised.

The Project will result in significant improvements with regard to the quality of solid waste management services in participating municipalities, improvements to public health by reducing the vectors (rats, dogs and insects) that can spread disease, elimination of current underground fires, and reduction in noise and odours. Furthermore, closure of existing dumpsites is an integral element for the establishment and sustainable operation of the new waste management system. Therefore, closure of existing dumpsites within 9 months of the new landfill becoming operational will be a condition of the EBRD loan. It is proposed to close all the existing dumpsites with a soil cover with a topsoil layer with grass (except for Byureghavan where the proposed cover consists of construction and demolition waste).

Several alternative locations were studied for the landfill site. A site selection report was prepared as part of the feasibility study and disclosed locally in the Armenian language. The site next to the existing dumpsite near Hrazdan was selected as the preferred site, because it meets all the set criteria. The landfill site and access road to it are located far from nature protection areas, rivers or lakes.

Following an assessment of different waste collection alternatives, an ordinary waste collection system including containers/hooting, bring banks and direct transportation of waste for disposal to the regional sanitary landfill was recommended by the consultants. Bring banks will form an adequate starting point for the stimulation of waste separation and prepare the ground for future dual waste collection systems.

The new landfill is designed to comply with national requirements and the relevant EU directives. Waste will be transported in closed trucks and along existing roads. The landfill will have a clay and geo-synthetic liner for protecting soil, surface water and groundwater from contamination. The leachate will be collected and treated. The new landfill will have a system for the monitoring of gas emissions, groundwater and surface water runoff. A gas collection system has been incorporated in the Project design. The system will be put into operation and the feasibility of a gas flare or a gas utilisation system will be considered, on the basis of a specific assessment of the gas generation and composition after 2-3 years of active operation of the landfill.

During the ESIA preparation, some informal waste pickers were identified at the existing adjacent dumpsite that will be closed after commissioning the new landfill. Additional social baseline data will be collected and mitigation measures will be developed to address the livelihood losses that will be incurred by the waste pickers as part of the post-signing TC covering supplementary E&S studies. The Hrazdan municipality is prepared to try and find alternative livelihoods for these people. The Bank will support the Client in implementing the livelihood restoration measures.

As part of the project two waste transfer stations will be built in Gerharkunik region. However, the locations for the two proposed transfer stations in the Gegharkunik Region have not been selected yet. Therefore, only the generic impacts associated with such facilities could be assessed. Site selection criteria for the Waste Transfer Stations and mitigation measures including further studies that might be required are included in the ESAP. Completion of the environmental and social studies required for the new transfer stations is a Condition Precedent to Loan Effectiveness.

An Environmental and Social Action Plan (“ESAP”) has been developed to structure the project to comply with the EBRD's PRs. Key actions include: development and implementation of an Environmental and Health and Safety Management System (“EHSMS”); development and implementation of construction management plans and regular audits and monitoring of construction contractors; completion of all required supplementary E&S studies for the Project and obtaining all environmental permits; development and implementation of management plans and programmes including, environmental monitoring, EHS training, energy monitoring and saving, emergency response, chance finds and traffic management; and implementation of the SEP.

Post-signing technical cooperation will provide support to the Company in the implementation of the ESAP and completion of supplementary environmental and social studies to complete the additional baseline studies and assessments required under the ESIA; preparation of the local EIA for local authority approval; billing and collection efficiency; financial and operational management; and implement full cost recovery tariffs within affordability limits. The Loan Agreement covenants tariff increases within affordability limits. Should affordability constraints limit the required tariff increases, a targeted subsidy mechanism in the Public Service Contracts between the Company and the Municipalities will protect vulnerable groups from economic hardship.

The Bank will monitor the environmental and social performance of the project by supervising the post-signing technical cooperation assignments. The Company will also 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

Pre-Loan Signing

  • Feasibility Study (€375,000 – financed by the EBRD Shareholder Special Fund (“SSF”))
  • Environmental and Social Due Diligence (€120,000 – financed by the EBRD SSF)
     

Post Loan Signing

  • Project Implementation and Procurement Support. The consultants will provide assistance with engineering design, preparation of tender documents, tender evaluation, contract award and administration, financial control, project management, and reporting services. (€600,000, financed by the Government of Austria).

    For the extension to include Gegharkunik, the budget for the PIU TC will be increased by €200,000, to be financed by an international donor. 
     
  • Corporate Development and Stakeholder Participation Programme to (i) help the Company establish corporate, financial and operational efficiency, which will enable it meet the related covenants included in the EBRD financing documents, as well as ongoing corporate development and (ii) implement a Stakeholder Participation Programme covering the Government of Kotayk province and assist the Company in developing, signing and implementing the Public Service Contract. (€400,000, financed by the ETC Fund).
     
  • Environmental and Social supplementary studies to
    (i) complete the additional baseline studies and assessments required under the ESIA prepared as part of the EBRD environmental and social due diligence; and

    (ii) to prepare the national EIA for the national authorities approval. (€70,000, financed by the EBRD SSF)
     
  • Supplementary Technical Study to cover the Gegharkunik area (€74,500, financed by the Government of Sweden)


 

 

Business opportunities

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Email: procurement@ebrd.com

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