Lviv Wastewater Biogas Project

Location:

Ukraine

Project number:

45779

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

16 Dec 2015

Status:

Signed

PSD disclosed:

16 Oct 2014

Translated version of this PSD: Ukrainian

Project Description

The EBRD is considering providing a loan to the Lviv Communal Enterprise “Lvivvodokanal”, a municipally owned water and wastewater utility operating in the city of Lviv, to finance the rehabilitation and upgrade of the wastewater treatment infrastructure, as well as the installation of a biogas production capacity in the City (the “Project”). The project aims at improving wastewater treatment in Lviv, reducing the pollution discharged into the Poltva River (the Baltic Sea Basin), enabling the City to reduce greenhouse gas emissions and achieving significant energy saving by installing the biogas production capacity.

Transition Impact

The transition impact of the project is expected to derive from:

  • Framework for markets: The Project will support (i) the introduction and maintenance of a national tariff setting framework ensuring full cost recovery including investment costs in the medium term and (ii) the implementation of the model Public Service Contract (“PSC”), which will clearly define the City and the Company’s rights and obligations regarding the water provision and waste water treatment services and capital improvements including the tariff setting rules and policy.
     
  • Demonstration of successful restructuring: The project, focused on energy efficiency and environmental effects, will help the Company to reduce energy costs and improve its operational and financial performance. The project will help the Company to improve operating, technical and financial management through the introduction of the Corporate Development Programme (“CDP”). The CDP programme will provide substantial training for the key staff thus enabling commercial skill transfer.
     
  • Demonstration effect of new technologies: The installation of a pilot wastewater biogas combined heat and power (“CHP”) plant will have a significant demonstration effect and replication potential for other utilities and municipalities in Ukraine. The gains from the reduction in electricity consumption will be internalised in lower costs and hence better operational and financial performance but will also produce important positive externalities.
  • The expected transition impact rating is ‘strong to good'.

The Client

Lviv Communal Enterprise “Lvivvodokanal”, a municipally owned water and wastewater utility operating in the city of Lviv.

EBRD Finance

€15 million EBRD loan to the Company, secured by a municipal guarantee of the City.

The project is expected to be co-financed by a grant of up to €7.5 million from the Eastern Europe Energy Efficiency and Environment Partnership (E5P).

The project will be also complemented with a parallel €5 million loan to the Company from the Nordic Environment Finance Corporation (“NEFCO”).

The project is expected to be co-financed by a local contribution from the Company of up to €4.0 million.

Project Cost

Up to €31.5 million.

Environmental Impact

Categorised B. The environmental and social impacts associated with the modernisation of the wastewater infrastructure and construction of the biogas plant on the existing facilities are expected to be mainly positive and result in significant environmental benefits, upgrade of service quality, improvements in energy efficiency and reduction of greenhouse gases. Any potential adverse impacts are likely to be site-specific and can be readily identified and addressed through mitigation measures. Potential environmental and social issues can include standard EHS construction risks, disruptions to waste water services during the modernisation programme and air emissions related biogas plant operation.

The environmental and social due diligence will include an analysis of the proposed Project and a review of the Company's current operational activities, facilities, compliance record and the Company's corporate management systems and capacity to implement the Project in accordance with the Bank's Performance Requirements. The ESDD will also focus on ascertaining whether the proposed investments will suffice to bring wastewater discharge levels in compliance with EU standards and also assess if the Project meets the requirements of EU IPPC BAT and SEVESO II Directives and is in compliance with other EU environmental regulatory standards.

Due diligence will also need to assess corporate policies, procedures and monitoring of the occupational health and safety (OHS) issues by the Company and its contractors undertaking the construction works. The OHS issues may include employees and workers exposure to noise, dust, electricity, physical and other risks during construction works.

An Environmental and Social Action Plan and a Stakeholder Engagement Plan will also be developed for the project to address any required corrective, improvement and mitigation measures.

Technical Cooperation

Pre-signing

  • Feasibility Study updated (€70,000), financed by the Bank’s own resources;
  • Environmental and Social due diligence (€30,000), financed by the Bank’s own resources;
  • IFRS audit (€20,000), financed by the Bank’s own resources.

Post-signing

  • Corporate Development Programme to improve financial and operational performance of the Company (€230,000), to be financed by an international donor;
  • Project Implementation Support covering procurement advisory services, implementation support and contract supervision (€650,000), to be financed by an international donor.
 

Business opportunities

For business opportunities or procurement, contact the client company.

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Email: procurement@ebrd.com

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