Split Wastewater Project

Location:

Croatia

Project number:

42168

Business sector:

Municipal and environmental infrastructure

Notice type:

Private

Environmental category:

B

Approval date:

12 Jul 2011

Status:

Cancelled

PSD disclosed:

24 May 2011

Translated version of this PSD: Croatian

Project Description

The EBRD is considering financing the investments of the final phase of the Kastela Bay Environmental Protection Project (“ECO Project”). The ECO project in Kastela Bay on the Adriatic cost is a regional project incorporating the cities of Split, Solin, Kastela and Trogir. The remaining investments in the ECO Project for extension and upgrades of wastewater collection network in Kastela Bay are necessary in order to achieve the full optimisation of the newly built system and to be compliant with the EU directives.

Transition Impact

The transition impact of the proposed transaction derives from:

  • Framework for markets: The Bank will seek that a Public Service Contract (PSC) be signed between the Company and the City of Split with the aim to set standards of operating services and introduce a transparent tariff formula with the clear adjustments for capital upgrade. The PSC will increase the financial and operational sustainability of the Company and set a transparent and clear relationship between the City and the Company.
  • Transfer of skills: The Bank will seek that the Creditworthiness Enhancement Programme is prepared for the City of Split. This will help the City to improve its financial management and budgeting capacity and introduce other measures designed to improve the City’s credit quality. This programme will also assist the City to respond to the economic crisis challenges.
  • Improved Standards for business conduct: The Bank will seek adoption of a Stakeholder Engagement Plan (SEP) as part of the Environmental and Social Action Plan that will allow the Company to improve its business conduct and external communications.

The Client

Vodovod i kanalizacija d.o.o., (“Company”, ViK), the municipal water and wastewater company providing services in area of the City of Split and surrounding municipalities. The Company is majority owned by the City of Split (57%) and surrounding 10 smaller municipalities (43%).

EBRD Finance

A senior loan of EUR 25.0 million to the Company.

Project Cost

Up to EUR 117 million.

Environmental Impact

Categorised B in accordance with the EBRD's 2008 Environmental and Social Policy. The project is expected to provide substantial environmental and public health benefits compared to the existing situation by significantly increasing the sewage networks coverage in the Split area to reduce pollution of the Split-Kastela Bay. The potential adverse future environmental and/or social impacts are likely to be site-specific and can be readily identified and addressed through adequate mitigation measures.

The environmental and social due diligence is on-going. It will review the existing facilities, operations and management systems in place, and assess the potential future environmental and social issues, impacts and benefits associated with the proposed priority investment programme.

It will also assess the sufficiency of WWTP capacity to treat the additional load resulting from project implementation, and the ability of the project to bring the existing company facilities and operations, including water, wastewater and sludge management/disposal into compliance with national and EU environmental requirements and EBRD Performance Requirements. An Environmental and Social Action Plan (ESAP will be prepared for the project, and a Stakeholder Engagement Plan will be developed that will include a grievance mechanism. and information on environmental and social performance and a summary of the agreed Action Plan will be released to stakeholders.

This PSD will be updated when the results of due diligence are known.

Technical Cooperation

A total of up to EUR 300,000 of TC funds will support evaluation of the project and assist in project implementation.

Pre-signing stage:

  • Technical, Environmental and Social Due Diligence, EUR 68,000, funded by the Government of France

Post-signing stage:

  • Creditworthiness Enhancement Programme: up to EUR 220,000, funded by an international donor, to support the City of Split to assist in improvement to the City’s budget planning techniques; capital programming processes and medium-term financial planning in order to result in better creditworthiness. In addition, the assignment will prepare the operating Public Service Agreement (PSA) between the City and the Company.

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Public Information Policy (PIP)

The PIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations. Please visit the Public Information Policy page below to find out how to request a Public Sector Board Report.
Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.