R2CF Satu Mare Sub-Project

Location:

Romania

Project number:

43216

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

04 May 2012

Status:

Repaying

PSD disclosed:

28 Mar 2012

Translated version of this PSD: Romanian

Project Description

The EBRD is considering providing a local currency loan of up to RON 33.2 million (EUR 7.8 million equivalent) to SC Apaserv Satu Mare SA 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”) (Project ID 41666). The project summary document for the Framework was published on 23 September 2010.

The proposed project, which is part of a EUR 126.4 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 Satu Mare as well as to improve water and wastewater services in seven local communities in the County, namely: Satu Mare, Carei, Negresti Oas, Tasnad, Livada, Ardud and Capleni. Investments are expected to significantly reduce water losses, optimise operating costs and expand water supply and wastewater collection and treatment services in Satu Mare County in line with relevant EU directives.

Transition Impact

R2CF Satu Mare together with other sub-projects under the Framework will support environmental improvements, efficiency gains from continued regionalisation of water and wastewater services and transfer of commercial and managerial skills in water and wastewater operations to less-developed localities. Compliance with the European Union relevant water legislation is also envisaged.

The Client

S.C. Apaserv Satu Mare SA, a regional operating company providing water and wastewater services in the County of Satu Mare, located in north-west Romania.

EBRD Finance

A local currency loan up to RON 33.2 million (EUR 7.8 million equivalent) for R2CF Satu Mare.

Project Cost

RON 536.5 million (equivalent EUR 126.4 million).

Environmental Impact

Categorised B in accordance with the EBRD Environmental and Social Policy 2008. 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 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 included a site visit, review of 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 assessment of the project against EU environmental requirements and the EBRD PRs.

The ESDD showed that the competent environmental authorities undertook EIA screening procedure for individual project components in accordance with applicable Romanian EIA legislation that is harmonised with the EU EIA Directive, concluding that none of the components to be implemented in Satu Mare, Carei, Negresti Oas, Tasnad, Livada, Ardud and Capleni requires an EIA. Only one component (Satu Mare) involves a WWTP with capacity of more than 150,000 p.e., however there will be no increase to the existing capacity and tertiary treatment will be added, which will result in improved quality and efficiency of effluent treatment. None of the components falls under category A in accordance with the Bank's Environmental and Social Policy.

The Company has obtained all the environmental approvals required for the implementation of the project, such as Environmental Notifications, Water Management Approvals, and Natura 2000 Declarations. Before these 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 Land Planning Certificates issued in the project framework are valid, and the Company is in the process to obtain the Construction Authorisations.

The ESDD showed that the project will result in significant environmental benefits and improve the quality of the local environment and mitigate public health risks by extending the drinking water supply and wastewater collection networks, improving drinking water treatment and quality, improving sewage collection and wastewater treatment systems. Investments are expected to significantly reduce water losses, optimise operating costs and expand water supply and wastewater collection and treatment services in Satu Mare County in line with relevant EU directives and result in an increase of connection rates to 95 per cent from the current averages of 86 per cent for water and to 91 per cent from current 73 per cent for wastewater. As a result of this Project, about 188,000 people (or ca 51 per cent of the total population of the County) will benefit from improved water and wastewater services. Following negotiations, the EU and the Romanian Ministry of Environment have agreed that the connection rate to the centralised water systems above 90 per cent is considered compliant with the EU Directives. This is because there are some sparsely populated rural areas where connection to the centralised networks is not cost-efficient.

The Project will reduce wastewater discharges and have positive impacts in the receiving natural water bodies. At present, the Company is not in compliance with EU wastewater discharge standards. The implementation of the components will help the Company 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).

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 practice. The project is not expected to require significant land acquisition or cause any significant displacement or resettlement impacts. However, some temporary disturbance may occur during the construction phase. The Environmental and Social Action Plan (ESAP) includes the requirement for relevant procedures and a compensation action plan/policy to be established by the Company so as to meet the requirements of PR5, in the event of any such impacts. The planned tariff increases are not expected to generate affordability challenges for the average and lower income households.

According to Natura 2000 declarations, the components are not likely to have significant impacts on Natura 2000 sites, therefore it is not necessary to carry out an appropriate assessment. For the Livada component, some components of the wastewater system are located within Natura 2000 - ROSCI0214 (Tur River) and ROSPA0068 (River meadow of Lower Tur River) that are important for conservation of different species of animals and plants. However, the works will be carried out on areas already occupied, and the execution of the project will not affect the protected bird species and will not split or affect their habitats. The works on the discharge pipe are along an existing road. The bird species which nest prefer the wet areas that are not affected by the works. Moreover the works will not be carried out during the breeding season of the birds. The proposed activities will not have significant impact on the integrity of the site providing that good construction practices are adhered to. The screening decision, environmental notification and 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 contracts. For each component, the contractor will be required to develop a specific Environmental and Social Management Plan (ESMP), which will include all the mitigation measures as required in the Natura 2000 declaration and environmental permits as well as any other measures that are required for complying with the EBRD PRs.

The ESDD established that the Company’s existing EHSS management system is a well developed Integrated Management System (IMS) designed based on ISO 14001 (Environment), ISO 9001 (Quality) and OHSAS 18001 (Occupational, Health and Safety) standards. However, further improvements to the Company’s contractor management practices are needed to meet the Bank’s PRs.

An ESAP has been developed for mitigation of identified E&S issues and impacts during preparation, construction and operation of the project, and to bring the Company'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 site specific construction ESMPs for each component; enhancing the Company’s EHS training programmes; establishment of procedures for performance monitoring, land acquisition, compensation, cultural heritage chance finds, handling and disposal of materials containing asbestos; and adopting and implementing Stakeholders Engagement Plan (SEP) compliant with EBRD PR 10 including a grievance mechanism.

The Company 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.

Technical Cooperation

The Satu Mare 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).

In addition, the Satu Mare sub-project includes two technical assistance contracts of approximately EUR 8 million for design, implementation, supervision and project management. They are co-financed by the EU, Romanian government and EBRD.

 

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