Naryn Water Sub-Project

Location:

Kyrgyz Republic

Project number:

45358

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Status:

Signed

PSD disclosed:

03 Jun 2014

Translated version of this PSD: Russian

Project Description

The EBRD is considering supporting the Naryn Water Sub-Project. The EBRD would extend a sovereign loan of up to €2 million to the Kyrgyz Republic, to be transferred to Naryn City for the benefit of the Naryn Water Company for improvement of water supply and selected wastewater services.

The EBRD will also seek an investment grant from an international donor of €3 million to facilitate implementation of the sub-project which will address urgently needed water and wastewater infrastructure rehabilitation needs.

This support will be extended under the existing EBRD sovereign framework of up to €20 million, established by the Bank to co-finance with international donors priority water and wastewater rehabilitation sub-projects across the Kyrgyz Republic. The framework envisages sovereign loans that would be transferred to the cities for the benefit of the water companies involved and would address urgently needed water and wastewater infrastructure rehabilitation needs.

The overall objectives of this sub-project are to: (a) rehabilitate the water supply and selected wastewater improvements; and (b) improve financial and operational management.

Transition Impact

Transition Impact of the sub-project would be:

  • Access to basic public utilities;
  • Introduction of tariff reform within affordability limits;
  • Increased collection rates;
  • Establishment of a contractual arrangement between the city and the company;
  • Improvement of operational and financial management of the Naryn Water company (including preparation and publication of IFRS and a business plan, training on procurement, etc.); and
  • Introduction of a formal consultation process with water users in form of a community based stakeholder participation programme.

The Client

Government of the Kyrgyz Republic, transferred to Naryn City for the benefit of the Naryn Water Company.

EBRD Finance

Sovereign loan of up to €2.0 million to the Kyrgyz Republic, transferred to Naryn City for the benefit of the Naryn Water Company.

Project Cost

The total sub-project cost is €5.9 million including technical cooperation. The sub-project will be co-financed by an investment grant from an international donor.

Environmental Impact

The sub-project has been categorised B under the EBRD Environmental and Social Policy. An Environmental and Social Review of the Water Company’s current Environmental Health and Safety, and Social (EHSS) management practices, operations and facilities, and an Environmental and Social Analysis of the proposed priority investment programme has been carried out as part of the Feasibility Study by independent consultants. Based on the findings of the Feasibility Study, the implementation of the proposed priority investment project is expected to significantly improve efficiency, reliability and quality of the water supply and wastewater collection in Naryn, thus contributing to the provision of access to safe drinking water, prevention of ground and watercourses pollution and improvement of public health. The priority investment programme components will mostly involve rehabilitation of water and wastewater systems. The implementation of the priority investment programme involves construction works that will result in limited, localised and short-term adverse environmental impacts, which will be mitigated or prevented by adhering to good construction practice.

The results of due diligence investigations has shown that the Water Company has weak EHSS management capabilities and underdeveloped EHSS management systems, and that their current occupational health and safety and stakeholder engagement practices require further improvement to meet EBRD's Performance Requirements (PRs).

The Water Company’s facilities are currently in poor operating condition resulting in unreliable and low quality water supply, high water losses and energy consumption. Currently only a limited part of the city is served by a piped sewerage network and large scale extensions will be necessary to reach the long term objectives. The existing wastewater treatment plant is operating at around 30 per cent treatment efficiency and the discharge to Naryn River is non-compliant with local regulatory and EU requirements.

The results of the due diligence indicate that the reliability and quality of the drinking water supply will be significantly improved, however additional long-term investments into water networks would be required to bring it in full compliance with the EU standards. The priority investment plan will include limited expansion of the sewer network renovation of a small wastewater treatment plant which will serve a limited area. Further expansion and renovation of wastewater infrastructure needs to be included in the long term investment programme due to affordability reasons. At this time the financing for the long-term investment programme from the Company’s own revenues cannot be confirmed and no potential sources of external funding have been identified. Therefore, on account of constraints arising from affordability and limited financial resources, derogation will be sought from the EBRD’s Environmental and Social Policy.

The results of the Environmental and Social Due Diligence (ESDD) show that the sub-project will have a significant positive impact on public health and the environment despite the sub-project not being able to achieve full EU compliance in the short term. The human health implications of the shortfalls from EU standards are assessed to be minor compared to the benefits of the priority investment programme implementation resulting in safer and more reliable water supply to the local population. However, untreated wastewater discharges will remain in the short term, and although the Naryn river has a high assimilative capacity, these discharges will continue to present health risks to the local communities. Awareness raising programmes to prevent risks of water borne diseases will be developed and implemented as part of mitigation plans.

An Environmental and Social Action Plan (ESAP) has been developed to bring the Water Company into compliance with national regulations and to meet EBRD's PRs, where financially feasible. A Stakeholder Engagement Plan is also under development for the Naryn Water Company.

Technical Cooperation

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

  • Sub-Project Implementation Support. International consultants to assist the sub-project implementation unit with engineering design, procurement, preparation and evaluation of tenders, contract award and administration, financial control, sub-project management and reporting. (€500,000 to be financed by an international donor, the Shareholders Special Fund or the ETC Fund).
  • Corporate Development and Stakeholder Participation Programme: (i) support institutional development in the form of operational improvements and financial improvements to secure sustainability of the water company; and (ii) implement a Stakeholder Participation Programme. (€400,000 to be financed by an international donor or the Shareholder Special Fund).
 

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

Public Information Policy (PIP)

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Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

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.