Plava Voda Regional Water Supply Project

Location:

Bosnia and Herzegovina

Project number:

46201

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

A

Target board date:

22 Jul 2015

Status:

Disbursing

PSD disclosed:

22 May 2015

Translated version of this PSD: Bosnian

Project Description

The EBRD is providing a sovereign loan to Bosnia and Herzegovina (“BiH”) towards financing of the following:
 
(a) The construction of water intake structures at the Plava Voda spring, together with the construction of a pipeline, about 33 kilometres long, from the spring in Travnik through Novi Travnik, Vitez and Busovaca to the city of Zenica. 
 
(b) The construction of supporting facilities to enable connections to the existing water distribution networks of the following five municipalities: Travnik, Novi Travnik, Vitez, Busovaca and Zenica.

Transition Impact

This project’s transition impact will include:
 
  • Demonstration effect, given that this will be the first project where several municipalities are working together with the two cantons and the Federal Environmental Fund to jointly address the long-term water supply needs in this region.
     
  • Enhanced framework for markets through the introduction of Public Service Contracts (“PSC”), elimination of cross-subsidies and introduction of full cost recovery principles.
     
  • Setting standards for corporate governance and business conduct with the Financial and Operational Performance Improvement Programme (“FOPIP”).
     
  • The expected transition impact rating is ‘good’.

The Client

Bosnia and Herzegovina.
The project will be implemented by the regional water supply company - Plava Voda
 

EBRD Finance

Sovereign loan of up to €11.0 million to the state of Bosnia and Herzegovina, to be on-lent to the SPV Plava Voda Water Company.
 
The Council of Europe Development Bank (“CEB”) will provide parallel financing of up to €11 million.
 
Grant financing is being sought from an international donor to finance the complementary investments in reduction of water leakages in the existing networks and the institutional strengthening of the municipal utilities (financial and operational). Project preparation costs and implementation support are funded by technical assistance funds.
 

Project Cost

€30 million.
 

Environmental and social categorisation, impact, and mitigation

The project has been categorised A under the 2011 ESP. The quantity of water to be supplied from the Plava Voda spring is 23.6 million m3/year, which exceeds the 10 million m3/year threshold in the indicative list of A-category projects in Appendix 1 of the Bank’s Environmental and Social Policy. In addition, the demographic mix of this canton's population and any actual and/or perceived disproportional impacts might pose a risk later to the project's implementation and therefore, need to be carefully assessed and addressed.
 
An Environmental and Social Impact Assessment (ESIA) fit for public disclosure purposes was prepared in accordance with the Bank's Environmental and Social Policy and Performance Requirements (PRs) in 2011 and this was disclosed locally and on the Bank's website on 25 July 2011. The ESIA continued to be disclosed on the respective websites of both the EBRD and the company and no major issues have been raised. The project will soon move into its construction phase. To ensure the baseline information and the impacts identified under the ESIA are up-to-date, the original ESIA disclosure package has been reviewed and amended by consultants. Moreover, the consultants prepared a Resettlement Action Plan (RAP). The review of the ESIA package has not identified any major changes to the original project conditions. A public consultation meeting will be organised prior to commencement of the works to update the affected people.
 
The environmental and social due diligence (ESDD) confirmed that the project will bring significant  public health benefits as by improving the quality of the drinking water and providing a long-term solution for drinking water supply in five municipalities with a total population of 250,000 people.
 
It is expected that under normal conditions, the necessary environmental flow downstream of the Plava Voda water intake will not be endangered and will be sufficient to maintain natural balance and ecosystems in Plava Voda waters. To avoid any significant impacts on downstream ecosystems, it will be necessary to carry out continuous monitoring of flow rates and seasonal monitoring of upstream and downstream ecosystems/populations starting before the construction and continuing during the operation. The monitoring data will be used to establish biological minimum flows and develop and implement an adaptive management regime. This regime would not only ensure a safe minimum ecological flow but also mitigate any risks that might arise from future changes in the water flow due to climate change. Furthermore, it shall address the concerns of the citizens of Travnik some of whose livelihoods and culture are dependent on the sounds and sights of the flowing water.
 
The project will require permanent expropriation of 8 privately owned and 3 state-owned land plots in the municipality of Zenica and temporary expropriation of 1040 land plots along the pipeline route. Temporary use of a number of private and state-owned land plots for purpose of access roads, construction camp, machines and material storage may also be necessary. A small number of businesses may also be affected. A resettlement compensation framework and resettlement plan have been prepared in line with the Bank’s requirements and are currently being agreed with the client.
 
The main actions in the Environmental and Social Action Plan (ESAP) which has been developed to address issues identified during the due diligence include:
 
  • Obtaining relevant environmental, health and safety (EHS) permits;
  • Further studies to estimate the minimum environmental flow and design river regulation regime of the Plava Voda, taking into consideration the long term observations and biological studies;
  • Continuous monitoring of flow rates and seasonal monitoring of selected upstream and downstream representative species of the ecosystem;
  • Implementation of the defined mitigation measures during construction;
  • Environmental, social, health and safety (ESHS) training for workers;
  • Development and implementation of an EHS management system;
  • Development of a leak detection study and reconstruction of the network according to recommendations from the study;
  • Fish planting
 
The company will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP and RAP. The Bank may also conduct monitoring visits, as required.
 
For Category A projects, this section will need to be updated on an annual basis.
 
There is an Environmental and Social Impact Assessment available for this project.
 

Technical Cooperation

Pre-signing
 
  • €1 million  from the European Union Infrastructure Project Facility (“EU IPF”) to finance the pre-feasibility and feasibility studies, including the preparation of detailed design, leak detection study and ESIA.
     
  • €70,000 from the Government of Germany to finance procurement support and engineering supervision.
     
  • €30,000 from the Bank’s own funds to prepare an update of the ESIA.
 
Post-Signing
 
  • Institutional strengthening, including the preparation of FOPIP and PSC arrangements for the utilities in the five municipalities and procurement support for the potential grant financed component. The estimated cost of this assignment is up to €500,000 (€100,000 per utility company), proposed to be financed by an international donor or the EBRD’s Shareholder Special Fund (“SSF”).
 

Company Contact

Mr Ernad Granić, General Manager
JP RV "Plava Voda" d.o.o. Travnik,
Zenjak bb Travnik 1,
Travnik, Bosnia and Herzegovina
Telephone: +387 30 511 132
 

Business opportunities

For business opportunities or procurement, contact the client company.

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