Kyzylorda Waste Management

Location:

Kazakhstan

Project number:

46938

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

07 Sep 2016

Status:

Cancelled

PSD disclosed:

22 Jun 2016

Translated version of this PSD: Russian

Project Description

A senior loan in the total amount of up to KZT 4.5 billion (EUR 12.0 million equivalent) in two tranches (the "Loan") to LLP Kyzylorda Tazalygy (the "Company"), a municipal company responsible for solid waste management and street cleaning services in the city of Kyzylorda (the "City"). The proceeds of the loan will be used to finance the Priority Investment Programme ("PIP") involving the development of a modern integrated mechanical-biological treatment facility in the city based on "waste-to-energy" technology, the construction of a new sanitary landfill and the procurement of waste collection and transportation equipment including containers, vehicles and special equipment for the facilities' operations.

The project will be developed in two phases starting with the development of a new sanitary landfill, the construction of a mechanical waste treatment plant and the procurement of containers, vehicles and special equipment for the landfill operations ("Phase I"). The closure of the existing landfill in the city is part of the Phase I priority investment programme and will be financed by the Akimat of Kyzylorda Oblast (the "Oblast Akimat"). The next phase will focus on further development of the waste treatment facility in order to complement it with waste biological treatment technology based on a "waste-to-energy" concept ("Phase II"). The completion of Phase II, planned by 2020, will result in the establishment of a fully functional mechanical and biological treatment plant (the "MBT") which will enable the company to achieve a recyclable waste recovery rate of 82 per cent.

Project Objectives

The project will result in better environmental standards due to reduced landfilling, lower CO2 and methane emissions and increased re-use and recovery of resources. The project will be complemented by a TC package that will include project preparation and implementation support, as
well as a corporate development programme.

Transition Impact

The transition impact of the project is expected to include:

  • Introduction of market-based behaviour patterns through the demonstration effect. The project involves the construction of one of the first modern integrated waste management plants with a fully integrated waste disposal process (separation, recycling and green energy generation).
     
  • Introduction of higher enhanced environmental standards through energy efficiency improvements in the city. The project will allow for the generation of green electricity from waste, hence will contribute to lesser emissions.
     
  • Introduction of commercial waste and street cleaning tariffs covering the full costs of service for all customer groups as part of the PIP agreed with the tariff regulator and the commercialisation of the company by means of introduction of a public service contract with the City Akimat.

Client Information

LLP Kyzylorda Tazalygy, a municipal company fully-owned by the Akimat of the city of Kyzylorda responsible for solid waste management and street cleaning services in the city of Kyzylorda and its vicinity.

EBRD Finance Summary

KZT 4,500,000,000.00

A senior loan in the amount of KZT 4,500,000,000 (EUR 12 million equivalent) to be provided in two tranches:

1. Tranche A: KZT 2,550,000 (EUR 6.7 million equivalent)

2. Tranche B: USD 6,000,000 (EUR 5.3 million equivalent)

Total Project Cost

KZT 10,100,000,000.00

The project's PIP will be co-financed by the Clean Technology Fund for the amount of up to USD 5 million (EUR 4.4 million), the Government of the Republic of Kazakhstan (the "GOK") under the Enhanced Partnership Framework Agreement ("EPFA") for the amount of up to KZT 2.3 billion (EUR 6.3 million), and the Oblast Akimat for the amount of up to KZT 1.1 billion (EUR 2.8 million).

Environmental and Social Summary

The Project has been categorised B in accordance with the 2008 EBRD Environmental and Social (“E&S”) Policy (since the Project was Concept Reviewed in September 2014, prior to 2014 ESP became applicable). The proposed investment is expected to result in environmental and social benefits through improvements in solid waste management and disposal practices in the city of Kyzylorda and the surrounding areas, introducing better environmental and hygiene standards and reducing greenhouse gas emissions. Overall project impact is expected to be positive since it will move the City away from open dumping as means of solid waste management to a more environmentally sustainable integrated solid waste management system. Although not part of the Bank’s financing part, closure of the existing landfill in an appropriate manner in line with good international practice is one of the Project’s PIP components to be fully financed by the Oblast Akimat.

The current situation with the solid waste management in the City requires urgent attention. The existing municipal landfill located 5 km east of the City was initially planned in area of 20 ha but by now it has grown to occupy ca 40 ha area, which presents a source of constant pollution, unpleasant odours and a hazard to the nearby population.

The environmental and social due diligence (“ESDD”) for the Project has been undertaken by independent consultants as part of the feasibility study process. ESDD included an independent E&S audit of the Company's current operations, facilities and management capabilities, an analysis of potential E&S issues associated with the proposed PIP and tariff affordability issues, livelihood and gender-related impacts. The due diligence was carried out in a participatory manner that fully engaged stakeholder groups and included two public consultations. The ESDD showed that the Project has been structured to fully meet EU requirements. In particular, a new landfill will be designed to comply with the EU Landfill Directive. The Project will include an installation of a modern integrated facility for solid waste separation and extraction of recyclable materials, and a biogas CHP plant. The Project will not finance separate collection and separation of hazardous wastes from households or businesses, including waste oils or mercury lamps, however the City will have a contract in place with private operators for those waste streams, and the Company will work with the City to achieve full compliance with EU Waste Framework Directive requirements in these areas.

The new landfill will be located in a distance of 3.7 km to the east from the existing old landfill that would be closed as a condition of the Project, and it has been identified that about 10-20 people from the nearby village carry out waste picking of recyclable materials. Their livelihoods would be affected by the closure of the existing landfill; therefore a Livelihood Restoration Plan (“LRP”) has been prepared and agreed with the Company. It includes consideration of the new employment and training opportunities, thus mitigating any negative impact on people livelihoods.

The waste tariff increase for the population will be kept at a minimum possible level and will be mitigated by targeted support from the authorities to reduce any negative impacts on the most vulnerable parts of the population. Land acquisition for the new landfill and project facilities will not require any physical resettlement or displacement, and the project will not affect any environmentally or socially sensitive areas.

Once the Project is fully implemented, it is expected that 60 per cent of green bio-waste fraction would be removed from overall waste stream, and a recyclable waste recovery rate of 82 per cent would be achieved. The Project completion will lead to the overall average annual reduction of GHG emissions at 15,500 tonnes of CO2 equivalent.

An Environmental and Social Action Plan (“ESAP”) has been prepared for the Project to address the environmental and social impacts identified during ESDD as well as to ensure that it is structured to meet the EBRD PRs. ESAP includes the necessary improvements in the Company’s Environmental, Health and Safety, and Social Standards (“EHSS”) management systems and practices. A Non-Technical Summary (“NTS”) have been prepared and released to the Project stakeholders through the City’s website. Two open public consultations with the stakeholders have been arranged in Kyzylorda during the preparation of the feasibility study and ESDD, and for that purpose the NTS, LRP and Stakeholder Engagement Plan (“SEP”) have been disclosed on the local website in English, Russian and Kazakh.

E&S considerations have also been incorporated into the associated post-signing TCs including CDP to assist the Company in the building of its EHSS management capacity and implementation of the ESAP, LRP, SEP and the annual environmental and social reporting to the Bank. The project components will be monitored in terms of their environmental and social performance and implementation of the ESAP and SEP through regular engagement of the Bank’s E&S specialists to oversee the work of PIU and CDP consultants, also through annual E&S reports and independent implementation audits when deemed necessary.

Non-technical summary

Technical Cooperation

The following technical co-operation ("TC") funds are envisaged as part of this project:

Project Preparation

  • TC 1: Preparation of the Project Feasibility Study - EUR 295,000 funded by the Government of Finland.

Project Implementation

  • TC 2: Project Implementation Support ("PIU") for the project management, design, procurement, engineering, works supervision and staff training - up to EUR 750,000; financing from the GOK under the terms of EPFA.
     
  • TC 3: Corporate Development Programme ("CDP") to support operational and financial improvements to secure sustainability of the Company operations, implement a Stakeholders Participation Programme in Kyzylorda, and the development and introduction of a Public Service Contract and management contract - up to EUR 400,000; financing from the GOK under the terms of EPFA.

Company Contact Information

Talgat Kulmagambetov Bekmurzayevich
+7 7242 22 38 71

LLP "Kyzylorda Tazalygy"; Akmechit microdistrict, Makhanbetova street, Kyzylorda, Kyzylorda oblast
 

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