Serbia Voz: TPS Zemun Project - Loan II

Location:

Serbia

Project number:

50043

Business sector:

Transport

Notice type:

Public

Approval date:

16 Nov 2017

Status:

Signed

PSD disclosed:

03 Aug 2018

Translated version of this PSD: Serbian

Project Description

Provision of a sovereign guaranteed loan in the amount of up to EUR 22 million of a programme of two loans to Srbija Voz JSC (the "Company" or "Serbia Voz") for the refurbishment and upgrade of the Technical Passenger Station Zemun ("TPS Zemun"), and acquisition and installation of various information technology systems (the "Project"). The first loan under the programme in the amount of EUR 30 million was signed on 7 December 2017 (Serbia Voz: TPS Zemun, OpID 48405).

The Project envisages refurbishment and upgrade of TPS Zemun, located on the outskirts of Belgrade, to enable maintenance of the new Bank-funded Electric Multiple Units (the "EMU"s) and classic locomotive-hauled coaching sets. The expansion and upgrade of TPS Zemun is essential for the uninterrupted maintenance process of the Company's rolling stock, following the closure of a maintenance facility in downtown Belgrade.

Project Objectives

The Project aims to provide additional maintenance capacity to support the Company's rolling stock growth and to respond to the closure of the facilities in downtown Belgrade, provide an adequate maintenance facility for the Company's new generation Swiss-made EMUs, as existing facilities do not meet the minimum requirements, and to reduce the empty coaching stock moves due to its location on the international Corridor X and proximity to Belgrade. Acquisition of information technology systems will allow the Company to improve its planning, controlling and resource management activities.

Transition Impact

The transition impact of the Project is expected to come from (a) Green Economy Transition ("GET") through the reduction of CO2 emissions and optimisation of the Project design in line with GET practices; and (b) enhancement of the Company's corporate governance practices.

Client Information

SRBIJA VOZ JSC

The client for the Project is Srbija Voz JSC, a state-owned railway passenger operator established in August 2015 as a result of unbundling of the vertically-integrated JSC Serbian Railways.

EBRD Finance Summary

EUR 22,000,000.00

Sovereign-guaranteed loan of up to EUR 22 million, being the second loan of the programme of two sovereign guaranteed loans in the total amount of up to EUR 52 million.

Total Project Cost

EUR 61.4,000,000.00

The total Project cost is estimated to be in the amount of up to EUR 61.4 million, expected to be co-financed via the Company's own contribution and grant funding of the technical cooperation assignments.

Environmental and Social Summary

Categorised B (ESP 2014).  The construction of the TPS Zemun and provision of information technology is associated with environmental and social impacts that can be readily addressed.

Environmental and Social Due Diligence ("ESDD") of the Project was carried by independent consultants and included a Corporate Environmental & Social review of Serbia Voz's management systems, facilities and operations including maintenance operations, and an analysis of the impacts of project, including land acquisition needs and access changes. The ESDD involved interviews with representatives from the Company and broader stakeholders including the Secretariat for Social Welfare of the City of Belgrade, NGOs, an affected business and the household living within the TPS Zemun compound.

The planned redevelopment of the TPS on the outskirts of Belgrade is expected to improve the reliability and quality of public transport services and reduce pollution through replacement of the old maintenance facility.  Impacts during the construction phase could potentially include noise, dust, access and traffic changes. There may also be environmental impacts associated with the disposal of some old rolling stock located at the site. Currently the site is partially fenced and as a result unauthorised public access is possible.

An Environmental Impact Assessment ("EIA") was prepared for the Project in line with national law and was approved by the Serbian Ministry of Agriculture and Environment in February 2017. The location permit has been obtained for the Project and the application for the building permit is in progress. The design documents needed for the building permit application have been prepared.

ESDD determined that Serbia Voz are in general compliance with national environmental and occupational health and safety legislation (including railway related laws), although there are some areas for improvement needed, particularly in the implementation of operational controls on site and contractor management.  The Company does not operate a formally recognised system for the management of environment or health & safety, but roles and responsibilities for Environment, Health, Safety, and Security ("EHSS") are assigned and it has procedures and systems in place to meet legal requirements, which includes the completion and update of risk assessments and emergency responses plans.

Labour and human resource issues are regulated by the Collective Agreement for JSC Serbian Railways and in addition there is an Ethical Code for employees that includes requirements to support diversity in the workplace, to refrain from any discrimination and rights for health protection and a grievance management procedure.   The Company has been implementing a voluntary retrenchment plan in cooperation with representative labour unions, the National Employment Agency of Serbia, in line with national and EBRD's Performance Requirement ("PR") 2 requirements.

All planned reconstruction works on TPS Zemun will be carried out within the Company's premises.  There is a process underway for the administrative transfer of the ownership of a small part of the land as it has been in use by one business for some time.  Overall, the Project is expected to require one household (a Serbian railways tenant) to be resettled as their vehicular access will be lost and the business will need to demolish two structures.  There will be a need for further engagement with relevant public authorities who will be in charge of resettlement of the household to develop a Resettlement Action Plan. Any resettlement is expected to be carried out in compliance with national legislation by relevant government authorities, which, in this specific case, should be largely compliant with EBRD's PR 5. Any gaps in relation to PR 5 will be described in the Resettlement Action Plan together with measures to address them.

Adjacent to the project site there is an informal Roma and refugee settlement consisting of approximately 60 households, located on land belonging to the City of Belgrade. Their current access is only through the TPS Zemun compound, although not in any of the locations which are needed for the Project. The households in the settlement are in the process of being resettled as part of a UNHCR funded project and it is expected that all will be relocated before the Project construction works begin. EBRD has reviewed information about the resettlement process and agreed that, as project construction activities are planned to start next summer at the earliest, by that time all households should be resettled. If the resettlement is not completed, appropriate Health & Safety measures will need to be implemented to avoid any negative impacts on the remaining households. Construction activities will have to be organised in a way to allow safe access for the households to their houses. In the event that this is not possible, the Company will have an obligation to develop and implement a Resettlement Action Plan, aligned with PR 5, in cooperation with relevant national authorities. This has been reflected in the Environmental and Social Action Plan ("ESAP").

A Stakeholder Engagement Plan ("SEP") including a grievance mechanism has been developed for the Project.  It places importance on the need for consultation with the individuals whose access to assets and properties are affected during construction and permanently.

The ESAP includes the requirement for: environmental, health and safety management systems in line with international standards; improvements to waste management procedures;  provisions in contracts to include the requirement for contractors and subcontractors to meet EBRD's PR 2 in relation to labour and human resources issues and designate specific staff to monitor contractors' and subcontractors' performance; provision of a Construction Environmental Management Plan and H&S Plan specific to the project and the need for special attention to be given to ensure safe access arrangements; preparation and implementation of a Resettlement Action Plan ("RAP"); provision of a Traffic Management Plan and chance find procedure; and the implementation of the SEP.

The Company will be required to ensure compliance with the Bank's PRs and also provide regular monitoring reports to the Bank.

2018 Update: Good progress has been made in addressing the resettlement impacts of the project with only six households from the informal settlement still living adjacent to the project site.  Plans to relocate the one business are also underway. The ESAP requirements have been included in tender documentation.  A monitoring visit is to be planned by the Bank to review the implementation of the ESAP.   

Technical Cooperation

The following Technical Cooperation support forms part of this Project:

  • Implementation support to the Project Implementation Unit and works supervision, including assistance with the procurement process;
  • Energy Audit of the Project design;
  • Legal review of the corporate governance regulations;
  • Assistance with the implementation of a Corporate Governance Action Plan.

Company Contact Information

Jugoslav Jovic, Director General
jugoslav.jovic@srbrail.rs
+381 11 3616 789
6 Nemanjina St. 11000 Belgrade

 

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