The EBRD is considering providing a loan of up to €17.6 million to S.C. Apa-Canal Sibiu as sub-project under the framework for Romania EU Cohesion Fund Co-Financing for regionalised water companies (the “Framework”), approved on 23 November 2010. The project involves two components. The first component would consist of a loan of €10 million and would be co-financed by a regional investment programme of up to of €131.7 million, which will include significant grant funding from the European Union, the Government of Romania and the local governments under Romania’s Cohesion Fund Programme. The €10 million loan would be used for an upgrade to, and the extension of, water and wastewater infrastructure in line with relevant EU directives. The second component of €7.6 million would be used to re-finance the Bank’s existing Municipal Environmental Loan Facility, signed on 27 April 2004.
The Project 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.
In addition, the transition impact potential for this Project will be further enhanced based on the fact that the Company is expanding to smaller and less developed communities, resulting in a greater scope for institutional capacity building.
S.C. Apa-Canal Sibiu: the water and wastewater utility which provides water and wastewater services to the City of Sibiu and neighbouring communities.
Senior loan up to €17.6 million.
Up to €131.7 million.
Categorised B. The potential E&S impacts of construction/rehabilitation of wastewater treatment plants and extension and rehabilitation of water distribution and sewerage networks are likely to be site-specific and can be readily identified and addressed through adequate mitigation measures. 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. The sub-project to be implemented in Sibiu and Avrig were required to undergo EIA procedure according to applicable Romanian legislation. For other sub-projects to be implemented in Ocna Sibiului, Apa Secaselor, and Fagaras areas, only Technical Memorandums were required. None of the sub-projects involves increasing of the current WWTP capacity by more than 150,000 p.e.. Therefore none of the sub-projects fall under category A in accordance with the Bank's Environmental and Social Policy.
Environmental and social due diligence (ESDD) has been 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 concluded that the implementation of the sub-projects for water supply and wastewater discharge and treatment will ensure compliance with national and EU requirements within the transition period 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 area size). 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. No other 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 planned tariff increases are not expected to generate affordability challenges for the average and lower income households.
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, improve sewage collection and wastewater treatment systems. As a result of the Project, compliant and reliable potable water will be made available to a population of over 21,500 inhabitants, including 5,400 people to be connected to the potable water for the first time. In addition, the Project will connect more than 25,200 new customers to the wastewater network.
The Company’s coverage will extend from 90.8 per cent to 99.7 per cent for drinking water and from 87.8 per cent to 99.6 per cent for wastewater by 2015. The Project will increase provision of wastewater treatment services according to the Directive 91/271/CEE in the project are from 0% in 2008 to 99.6% at the end of 2013.
Part of the project components for Avrig area will be implemented in the vicinity and within a NATURA 2000 site (bird protection area) due to the fact that 27% of Avrig area is located within the Natura 2000 site. For the Avrig area, an Environmental Impact Assessment was carried out both for the construction phase and the operational phase. The EIA also assessed the projects potential impacts on the integrity and conservation objectives of the Natura 2000 site. Each bird species identified in the area was analysed and it has been concluded that there will be no significant negative impacts and that no appropriate assessment is required of the project. The study identified some specific protection and mitigation measures to be implemented during the construction and operation periods. The Natura 2000 declaration has been issued conditional to the implementation of these specific measures.
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, improvement of environmental training programmes and appraisal of sub-contractors in terms of compliance with environmental standards is needed.
An Environmental and Social Action Plan (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 amongst others developing site specific E&S Management Plans for each sub-project; social assessments aimed to define the success of the Project from social perspective; enhancement of EHS training programmes; establishment of relevant procedures and a compensation action plan/policy so as to meet the requirements of PR5, in the event of involuntary resettlement or economic displacement impacts occurring, performance monitoring, cultural heritage chance find, handling and disposal of materials containing asbestos; revision of sludge management plans; and adopting and implementing Stakeholders Engagement Plan compliant with EBRD PR 10.
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.
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 (€125,100 - financed by Spain), institutional and financial due diligence (€74,800 - financed from the EBRD’s own resources) as well as a benchmarking and FOPIP programme (€750,000 - financed by the EBRD’s Shareholder Special Fund).
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