Petropavlovsk Water

Location:

Kazakhstan

Project number:

46955

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Approval date:

02 Oct 2015

Status:

Repaying

PSD disclosed:

18 Jun 2015

Translated version of this PSD: Russian

Project description and objectives

The EBRD is providing a loan equivalent of up to USD 9 million to Kyzylzhar Su LLP (the “Company”), a water supply and wastewater management company in the city of Petropavlovsk (the ”City”) in Kazakhstan to support the rehabilitation and upgrade of the water and wastewater system in the City.

The loan will allow the replacement and modernisation of parts of the obsolete water supply and wastewater management infrastructure operated by the Company. This will reduce energy consumption and water losses, increase reliability and quality of provided water services, reduce maintenance and operating costs, as well as a reduction in the negative environmental impact.

Transition impact

This project would deliver:

 (i) Energy efficiency improvements in the operations of the Company through the modernisation of the water supply and wastewater management facilities;

 (ii) Introduction of commercial water tariffs covering the full costs of service for all customer groups as part of the priority investment programme (“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 and business planning;

(ii) Higher environmental standards.

Additionally, the transaction aims to increase transparency and improve business standards through the introduction of International Financial Reporting Standards (“IFRS”) and the implementation of an Environmental and Social Action Plan (“ESAP”).

The client

Kyzylzhar Su LLP, municipally owned water and wastewater company in the city of Petropavlovsk, Kazakhstan.

EBRD finance

A senior loan to the Company in the equivalent amount of up to USD 9 million.

Total project cost

USD 17 million including co-financing from the Government of the Republic of Kazakhstan under the Enhanced Partnership Framework Agreement (EPFA), related technical cooperation to support the Company with the project preparation and implementation.

Environmental and social categorisation, impact, and mitigation

The Project has been categorised B under the 2008 Environmental and Social Policy. The Project will enable the Company to improve its water and wastewater services through the rehabilitation and modernisation of the water supply and wastewater collection and treatment infrastructure in the City. The planned priority investment programme (“PIP”) is expected to result in enhanced energy and water efficiency, reduction in losses and improvements in environmental standards. Any adverse future environmental and social impacts associated with the project are site-specific and can be readily addressed through mitigation measures.

The Environmental and Social Due Diligence (“ESDD”) was carried out by external consultants as part of the Feasibility Study and included an independent environmental and social audit/review of the Company's current operations and facilities, Company’s existing EHS management systems and policies/procedures, and an analysis of potential environmental and social impacts associated with the PIP. The ESDD confirmed that the implementation of the PIP will reduce water consumption by more than 6 million m³ and energy consumption by about 4.4 million kWh annually by 2019. Greenhouse gas emissions have been estimated to be reduced by over 2,000 tonnes of CO2 equivalent per year. An assessment of the climate change risks identified increased risk of flooding of some of the project-related assets. A flood risk assessment for the water abstraction site and monitoring of this issue has been included in the PIP. Moreover, a requirement for the Company to develop a flood response plan and provide adequate training to its workers on flood risk mitigation has been included in the Environmental and Social Action Plan (“ESAP”).

The ESDD confirmed that the Project has been structured to bring drinking water quality and distribution services in compliance with both national and EU standards. Wastewater currently first undergoes a mechanical treatment and then a biological treatment in a system of retention ponds, before it is discharged into the Ishim River. The existing wastewater treatment plant (“WWTP”) is currently being reconstructed with government budgetary funding to introduce modern biological treatment and sludge dewatering facilities. The reconstruction is expected to bring effluent quality in compliance with EU standards by the end of 2016.

The ESDD consultants have developed an ESAP to address the necessary improvement and mitigation measures and corrective actions identified during due diligence. Specifically, the ESAP requires the Company: to develop an environmental Management System in line with ISO 14001 and an Occupational Health & Safety Management System in line with OHSAS 18001 standards; to develop and implement a retrenchment procedure for the planned labour restructuring programme; to incorporate Environmental Health & Safety and Social requirements into construction contracts and to monitor contractors compliance; to improve chlorine management, handling and storage; to develop a plan for managing industrial wastewater discharges; to improve wastewater sludge management and disposal; and to develop a land acquisition policy/procedure including a compensation mechanism in case of any economic displacement during PIP implementation. The Company also needs to finalise and implement a Stakeholder Engagement Plan, including a grievance mechanism, to ensure adequate information disclosure and media announcements prior to commencement of works. This will be further supported by a Stakeholders Participation Programme in the City, which will be carried out as part of the Corporate Development Support TC.

The Bank will monitor the project’s environmental and social performance and compliance with EBRD PRs by reviewing annual reports prepared by the Company on environmental and social matters, and implementation of the ESAP. The TC funded Project Implementation Support consultants will also monitor day-to-day E&S performance and issues and provide assistance in the implementation of the ESAP. The Bank may also undertake monitoring site visits.

Technical cooperation

Pre-Signing

  • TC 1: Project due diligence including the water supply and wastewater PIP and the development of a comprehensive ESAP (EUR 295,000, funded by the EU Investment Facility for Central Asia (“IFCA”) Framework for Technical Assistance in Kazakhstan);


Post-Signing

  • TC 2: Project Implementation Support including assistance with procurement of goods and services under the PIP and implementation of the ESAP. The estimated cost of the assignment is up to EUR 565,00,  proposed to be financed under the EU IFCA Framework for Technical Assistance in Kazakhstan

 

  • TC 3: Corporate Development Programme to support operational and financial improvements of the Company, including introduction of a Management Contract between the City Akimat and the private operator. The estimated cost of the assignment is up to EUR 320,000, proposed to be financed under the EPFA.

Company contact

Mr Yerzhan Bazhenov, Chief Financial Officer

LLP Kyzylzhar Su
2 Proezd Kirovskiy
150007, Petropavlovsk City
Kazakhstan

E-mail: petropavlsu@mail.ru

Phone: +7 (7152) 53 59 96
Fax: +7 (7152) 53 59 92

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)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

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