The provision of up to EUR 392.5 million for a framework of investments targeting municipalities and municipal entities in northern Jordan and southeast Turkey most severely affected by the Syrian refugee crisis.
Both Jordan and Turkey are experiencing significant population growth caused by the refugee influx since the start of the civil war in Syria. Based on recent estimates, some 1.3 million refugees live in Jordan and 3 million in Turkey, placing a huge toll on host communities which are struggling to provide services. This is particularly the case in areas close to the Syrian border, which are frequently the first point of settlement.
The refugee influx has strained key municipal services in the areas of water, waste water, urban transport and solid waste operations. Although both governments have established refugee camps, the majority of refugees live in cities. 50 per cent of the refugees are women and youth under 18. Municipal entities do not have the capacity to meet growing demand for services, and face increasingly strained budgets.
In response to the crisis, the Bank developed a refugee response plan, which focuses on building the economic resilience of host communities. The plan identifies municipal and environmental infrastructure as a priority.
Under the framework, projects will be designed to promote resilience and sustainability and reflect the Bank's transition mandate, including increased private sector participation in municipal services through outsourcing part of the operations to the private sector.
Loans provided under the Bank's refugee response will finance critical infrastructure investments. These loans will benefit from grant-based co-financing to ensure affordability as well as technical assistance to support implementation, transition objectives and long term sustainability.
The framework is part of the Bank's refugee crisis response and is focused on helping municipal services cope with the sudden population rise. The framework aims to achieve sustainable funding of municipal services through ‘Resilience’ and ‘Well-Governed’ Transition Qualities. In addition and more specifically, Transition impact will be derived from:
A. Infrastructure service financial sustainability: introduction of sustainable funding sources for the operation and maintenance of the infrastructure sector (e.g. tariffs or multi-year local budget allocations to cover the difference between costs and tariff revenues).
B. Improvements in governance: public service contracts or a simplified version based on key performance indicators adopted by the service provider.
C. Additional infrastructure capacity: additional infrastructure capacity added (in equivalent population number) to be set at project approval.
D. Private sector involvement: involvement of private sector in infrastructure operations or outsourcing support services where possible.
The clients will include municipal administrations and companies, including service providers and operators, both public and private, in the water and wastewater, solid waste, urban transport and renewable energy for water facilities sectors. In addition, in Turkey the team will explore working with Il Bank, a state-owned lender specialised in municipal financing.
EBRD Finance Summary
A framework of up to EUR 392.5 million, for Turkey and Jordan.
Eligible instruments could include sovereign, municipal and corporate loans. Risk mitigation products could also be considered. In addition, the Bank could consider dedicated credit lines to reach out to smaller municipalities where direct lending would not be possible.
Total Project Cost
The EBRD will seek grant-based co-financing to cover the remaining amount.
Environmental and Social Summary
The framework is not categorised; however, each sub-project under the framework will be categorised and will undergo separate Environmental and Social Due Diligence (ESDD). Due to limited financial resources and affordability constraints it is anticipated that it will not be possible to structure several of the sub-projects to ensure full compliance with EU environmental standards in respect of drinking water quality, wastewater treatment or solid waste operations. Therefore, a "blanket" derogation from the E&S Policy for the sub-projects under the framework will be sought from the EBRD's Board of Directors. All sub-projects categorised "A" will be submitted to Board for approval regardless of size of the loan. Adequate resources for ESDD and post-signing project implementation will be required.
This framework will cover sub-projects, including those in the public sector and under public-private scheme. It will facilitate the extension and modernisation of the key municipal services in water, wastewater, urban transport and solid waste operations in various cities affected by the influx of refugees in Jordan and Turkey. The critical issues for the due diligence will be land acquisition, potential associated physical and/or economic displacement and any associated livelihood related impacts, contractor management, labour issues, community and worker health and safety, gender impacts, stakeholder engagement and grievance management with a specific focus on vulnerable groups including refugees, affordability and ensuring adequate environmental monitoring arrangements. Overall municipal capacity to implement projects in line with EBRD performance requirements will need to be understood. These sub-projects will be expected to reduce the health hazards associated with low quality drinking water, poor sanitation and inadequate solid waste management and disposal. It will also enhance energy efficiency, quality, safety and reliability of these key municipal services as well as their overall resilience to climate change. The ESDD for each sub-project will be carried out by independent consultants as part of the feasibility study and will include at minimum an assessment of potential E&S impacts and benefits and an E&S audit of the corporate management systems, contractor management mechanisms, environmental, health, safety and social resources, operations and facilities of each participating municipality to help structure priority investment programmes and gender assessment. Corrective environmental and social action plans, as well as gender-sensitive stakeholder engagement plans will be prepared, where necessary, to ensure that sub-projects are structured to meet EBRD performance requirements.
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