The EBRD is considering providing a local currency loan of up to RON 55.5 million (EUR 13.2 million equivalent) to SC Apa Canal SA Galati for water and wastewater infrastructure improvements. The financing is a sub-project of the EUR 200 million Framework for Romania EU Cohesion Fund Co-Financing for regionalised water companies (the “Framework”). The project summary document for the Framework was published on 23 September 2010.
The proposed project, which is part of a EUR 129.8 million regional investment programme co-financed by significant grant funding from the European Union, the Government of Romania and the local governments under Romania’s Cohesion Fund Programme, will enable the Company to extend and rehabilitate its network in the County of Galati as well as to improve water and wastewater services in five main localities in the County, namely: Galati city, Tecuci, Targu Bujor, Pechea and Liesti. Investments are expected to significantly reduce water losses, optimise operating costs and expand water supply and wastewater collection and treatment services in Galati County in line with relevant EU directives.
The EUR 13.2 million equivalent loan project is a sub-project of the EUR 200 million R2CF Framework (Project ID 41666) approved by the Bank to co-finance projects in Romania’s water and wastewater sector alongside EU Cohesion Funds.
The sub-project will support environmental improvements and continued regionalisation of water and wastewater services in Galati County, which will result in efficiency gains and the transfer of commercial and managerial skills in water and wastewater operations to less-developed regions of the county. The Company will participate in a benchmarking programme alongside other borrowers under the Framework, which was approved by the Bank to co-finance projects in Romania’s water and wastewater sector alongside EU Cohesion Funds.
SC Apa Canal SA Galati, a regional operating company providing water and wastewater services in the County of Galati as well as to the capital City of Galati.
A local currency loan up to RON 55.5 million (EUR 13.2 million equivalent) for Galati Sub-Project.
Up to RON 545.8 million (EUR 129.8 million equivalent) for Galati Sub-Project.
Categorised B. The construction/rehabilitation of wastewater treatment plants and extension and rehabilitation of water distribution and sewerage networks will improve water and wastewater services and the Project is expected to result in significant environmental and community health benefits. Potential adverse environmental and social (E&S) impacts are site-specific and readily addressed through mitigation measures. Environmental and social due diligence (ESDD) was carried out by independent consultants. The ESDD reviewed the Company's existing E&S management systems, available technical and environmental documentation prepared in accordance with Romanian permitting requirements and the Project appraisal documents prepared for the EU Cohesion Fund application as well as assessed the Project against EU environmental requirements and the EBRD PRs.
The ESDD showed that the competent environmental authorities had undertaken EIA screening procedure of all sub-projects in accordance with applicable Romanian EIA legislation that is harmonised with the EU EIA Directive concluding that none of the sub-projects require an EIA. One of the sub-projects involves a WWTP with capacity of more than 150,000 p.e., however the project will not increase the existing capacity of the WWTP (369,868 p.e.), but introduce secondary/tertiary treatment and advanced sludge dewatering, which will result in improved treatment efficiencies.
The current wastewater collection systems in Galati County have a low rate of connection, high infiltration rates, and most of the wastewater is not treated. Where WWTPs exist they are either abandoned or outworn with both civil structures and electro-mechanical equipment in poor condition. The Project will reduce wastewater discharges and have positive impacts on receiving natural water bodies. At present, the Company is not in compliance with EU wastewater discharge standards. The implementation of the sub-projects will help the Company to achieve compliance with national and EU requirements within the transition periods agreed for meeting requirements of Directive No. 98/83/EC on drinking water quality (by 2015) and Directive 91/271/EC on urban wastewater (from 2013 to 2018 depending on the agglomeration size).
Investments are expected to significantly reduce water losses, optimise operating costs and expand water supply and wastewater collection and treatment services in Galati County in line with relevant EU directives and result in an increase of connection rates to 100 per cent from the current averages of 86 per cent for water and 78 per cent for wastewater services. As a result of this Project, about 397 thousand people (or ca 65 per cent of the total population of the County) will benefit from improved water and wastewater services.
No significant adverse impacts or non-compliances with the EBRD PRs have been identified. The construction works will have limited, localised and short-term adverse impacts, which can be mitigated or prevented by adhering to good construction practices. The planned tariff increases are not expected to generate affordability challenges for the average and lower income households.
Some sub-projects to be implemented in Galati involve rehabilitation of main water supply pipe and some water wells within Natura 2000 site - ROSPA0071 (River meadow of Lower Siret River). Once good construction practices are implemented, the construction works are expected to have no significant impacts on the integrity of the site. The ESDD verified that the Natura 2000 Declarations issued by the competent authority include measures for mitigating the impacts on the Natura 2000 sites during the construction and operation periods. These measures will be included in tender documents for the award of works contract. For each sub-project, the contractor will be required to develop a specific Environmental and Social Management Plan (ESMP), which will include all the mitigation measures included in the Natura 2000 declaration and environmental permits, as required by the Environmental Protection Agency, and any other measures that would be required to comply with the EBRD Performance Requirements (PRs).
Before the environmental permits, including Natura 2000 declarations, were issued by the competent authorities, the EIA and Natura 2000 screening decisions were disclosed to public for comment in accordance with pertinent Romanian law and permitting procedures aligned with relevant EU Directives. No comments were registered from Civil Society or NGOs in relation to the respective works.
The ESDD established that the Company’s existing EHSS management systems are well developed and it has an integrated ISO 14001, ISO 9001, and OHSAS 18001 management system in place. However, further improvements to the Company’s contractor management practices are needed to meet the Bank’s PRs.
An Environmental and Social Action Plan (ESAP) has been developed to mitigation of identified E&S issues and impacts during preparation, construction and operation of the Project, and to bring the Client's operations into compliance with the EBRD's PRs. The ESAP commits the Company to, inter alia, collecting basic social data about the project’s social impacts; developing a specific Social Management Plan (SMP) for each contract; monitoring the internal and external social and environmental impacts of the project; revising Sludge Management Action Plans; implementing construction waste management plans; implementing work instructions for handling and disposal of materials containing asbestos; implementing health and safety programmes including prevention of community exposure to disease; training for contractors; developing a specific land acquisition procedure to ensure that any permanent or temporary land take and possible economic displacement that may result from the sub-projects is carried out in accordance with the national requirements and EBRD PR 5; implementing chance finds procedure for managing cultural heritage chance finds; and implementing a Stakeholders Engagement Plan (SEP) compliant with EBRD PR 10 including the grievance mechanism.
The Client will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank will commission a completion audit and may also conduct monitoring visits, as required.
The sub-project will benefit from overall TC under the Framework, including an analysis of the environmental and social impacts, issues and risks and a gap analysis (EUR 125,100 - financed by Spain), institutional and financial due diligence (EUR 74,800 - financed from the EBRD’s own resources) as well as a benchmarking and FOPIP programme (EUR 750,000 - financed by the EBRD’s Shareholder Special Fund).
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