Sibiu Public Transport Project (City Loan)

Project Description

In 2006 the EBRD has provided €15 million to finance the purchase of up to 30 new large buses for the municipal public transport company in Sibiu – Tursib - (the Company), and to finance a street upgrading programme with the City of Sibiu (the City).

In 2009, the EBRD extended the financing to Tursib by an additional €2 million, to complement the existing loan signed in 2006. The operation was intended to enable the Company to purchase 10 new large buses in addition to the buses financed by the original loan.

The EBRD is now considering restructuring the €2 million loan extension signed with Tursib in 2009 (as yet undrawn) as well as further extending the financing by an additional € 2.8 million, for the relocation of the bus depot to the outskirts of the City, a location more appropriate for the transportation activity which the Company performs than the current City centre location.

Transition Impact

Incremental transition impact for the new loan extension is due to stem from:

• More widespreadprivate sector participation: Transition impact is delivered through the participation of the private sector in the form of a facilities management contract.

This will supersede the expected transition impact from the existing loan, which was due to be:

• Demonstration effect: The Team will structure the loan without a full financial guarantee from the City, which would be one of the first such municipal loans in Romania. As such the Operation would allow the Bank to lend directly to a municipal transport company in Romania.
• Support to the further corporatisation of the Company and organisational improvements: Transition impact is delivered through outsourcing of non-core operations to realise efficiencies and a twinning programme with a “best in class” public transport operator.
• Client-Supplier Relationship through the Public Service Contract (the “PSC”): The Operation supports the development of one of the first Romanian comprehensive PSCs for a public transport company. The PSC defines the scope of services provided by the Company and provides incentives for the Company to improve its financial and operational performance.

The Client

• Sibiu Public Transport Company – Tursib - (the “Company”)
• The City of Sibiu (the “City” or “Sibiu”)

EBRD Finance

€4.8 million loan extension, comprising €2 million restructured from the previous loan extension signed in 2009 (as yet undrawn) and another €2.8 million of new money.

The existing project comprised the following facilities:

1. Up to €5 million senior loan to the Company (signed 2006)
2. Up to €10 million loan to the City (of which EUR 5 million syndicated to a commercial bank) (signed 2006)
3. Up to €2 million first loan extension to the Company (signed 2009)

Project Cost

The total cost of the new project (bus depot relocation) is estimated at €8.1 million.

The total cost of the existing project was estimated at €20.4 million.

Environmental Impact

For the new project:

The new project has been categorised B in accordance with the Bank’s Environmental and Social Policy 2008. Environmental and social due diligence (ESDD) has been undertaken by the Bank’s Environment and Sustainability Department based on a review of the Company’s corporate management systems; relevant information provided by the Company; and a discussions with the Company’s personnel to evaluate the current operational performance and the risk management plans for the planned investment programme.

The investigation showed that the potential future adverse impacts of the project will be site specific and addressed through appropriate mitigation measures.

The transaction will enable the City to improve quality of public transport services and create tangible environmental and social benefits. The project implementation is limited to urban area within the boundaries of the City and no sensitive ecological receptors or protected zones are affected. It is confirmed that the project will not have adverse social impacts to local communities or other project affected parties, while a number of very tangible environmental and social benefits are likely to arise.

The due diligence confirmed that the Company has efficient public communication, consultation and disclosure policy that in general meets the EBRD's requirements. In order to avoid, minimise and mitigate the potential adverse environmental and social (E&S) impacts of the project and ensure full compliance with national regulations and EBRD's Performance Requirements (PRs) an Environmental and Social Action Plan (ESAP) has been developed to address the necessary improvements in the Company's E&S management systems.

The project will be monitored in terms of its environmental and social performance and implementation of the ESAP through annual E&S reports and site visits when deemed necessary.

For the existing project:

Categorised B (2008).

The environmental and social due diligence, which included an independent audit and analysis, confirmed that the environmental and social impacts associated with the street rehabilitation programme and construction of one small road bridge will be mainly positive. The due diligence also confirmed that there will be no physical or economic displacement as a result of the Project and concluded that the management capacity of the Company to manage EHS and social issues will need to be developed during project implementation.

There will be localised moderate impacts during the road improvement works related to noise, dust and vibration, generation and disposal of waste and temporary traffic restrictions. However, a comprehensive environmental and social action plan (ESAP) for Sibiu road rehabilitation has been developed to avoid, minimise and mitigate any potential adverse environmental and social impacts and liabilities arising from the project's construction and operation, and to ensure compliance with the respective EBRD's Performance Requirements (PRs).

The ESAP will form part of the Loan Agreement. A Stakeholder Engagement Plan is prepared to ensure that communication with the relevant stakeholders is handled properly throughout project preparation and implementation, including the appropriate grievance procedure. The Municipality will submit to EBRD annual reports on environmental and social matters including progress on the implementation of the environmental and social action plan.

Technical Cooperation

Post-signing of the extension

A procurement expert to assist the Company with the procurement of the construction of the new bus depot (€20,000 financed by the Bank)

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

 

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