Tashkent Water Improvement Project

Location:

Uzbekistan

Project number:

49277

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Target board date:

19 Sep 2018

Status:

Signed

PSD disclosed:

13 Jul 2018

Translated version of this PSD: Uzbek | Russian

Project Description

The Bank will provide a sovereign loan of up to US$ 30 million (€25 million) to the Republic of Uzbekistan ("RoU") to be on-lent and/or granted to the State Unitary Enterprise SuvSoz ("Company") to finance the Company's Priority Investment Programme ("PIP"). The PIP includes such investments in water and wastewater infrastructure of the city of Tashkent as construction of a waste water collector, installation of pumps, valves and pressure regulators ("Project").

Project Objectives

The Project will rehabilitate and extend the wastewater and water infrastructure in Tashkent delivering multiple environmental benefits, including (i) the increase in the number of people
connected to water and wastewater networks by around 280,000 and 390,000, respectively, (ii) reduction of water losses and (iii) energy savings.

Transition Impact

Good

The sources of transition impact are:
1) Green. The Project is expected to increase the number of people connected to the wastewater and water networks, increase the amount of wastewater treated, reduce water losses and deliver energy savings through improved pumping regimes and reduced water losses in the system. Therefore, the Project qualifies as a positive environmental activity.

2) Resilient. The Project will focus on financial and operational improvements to achieve cost recovery and sustainability of the Company.

Client Information

UZBEKISTAN SOVEREIGN

EBRD Finance Summary

US$ 30,000,000.00

Total Project Cost

US$ 30,000,000.00

Environmental and Social Summary

The Project has been categorised B in accordance with the EBRD's 2014 Environmental and Social Policy. The Environmental and Social Due Diligence (ESDD) for the proposed Priority Investment
Programme (PIP) for the Project was carried out as part of the Feasibility Study by independent consultants engaged under the IPPF. It included a review of current practices, an assessment of
the Project's potential E&S impacts and a review of the Company's current E&S provisions and management capacity. All PIP components will be subject to local permitting procedures and EIA
law (OVOS) in the future. An Environmental and Social Action Plan (ESAP) has been developed for the Project and will be agreed with the Company under a separate Project Agreement prior to Board
approval. A Stakeholder Engagement Plan (SEP) and a non-technical summary (NTS) have also been developed and will be disclosed.

The investments under the PIP will increase the collection rate and connect a new area of Tashkent to the network. At present, wastewater is collected and treated at three WWTPs: Salar, Bozsu and Bektimir. The WWTPs have been recently renovated, which significantly improved their pollution load removal rate, but did not equip them for nutrient removal. The results of the ESDD show that all WWTPs are not compliant with the national requirements in terms of wastewater quality and the EU Urban Waste Water Treatment Directive, both in terms of treated wastewater quality and the requirement for tertiary treatment. The main reason for non-compliance with the national and the EU directive standards is the high discharge of untreated industrial wastewater to the WWTPs (approx. 30-50 per cent of the influent is of industrial origin for Salar and Bozsu, and 80 per cent for Bektimir). Although the catchment (river Chirchiq) has not been classified as sensitive according to the Urban Waste Water Treatment Directive, it is proposed to consider the receiving water bodies as sensitive since the discharge is to irrigation channels and a river with potential water reuse for domestic and agricultural purposes. Therefore, following a precautionary approach, it is assumed that the EU Directive standards for sensitive areas need to be achieved at all three WWTPs. An ongoing programme led by the National Environmental Committee and the Project Company relates to the enforcement of pre-treatment of industrial discharge. This will significantly improve the performance of the municipal treatment plants in the nearest future. While there are no measures in the PIP for investment in the WWTPs, the Long Term Investment Strategy is expected to bring the WWTPs' performance in compliance with the Directive.

Adverse E&S impacts associated with the implementation of the PIP will be limited, localized and temporary, and can be prevented or mitigated by adhering to good construction practices. Temporary
economic impacts related to construction of the Karakamish collector will be further assessed and managed under the Livelihood Restoration Framework prepared for the Project. The findings of the local EIA, which is yet to be undertaken, and resulting recommended mitigation measures, will need to be incorporated into the Environmental and Social Management Plan for the Project.

Achieving full compliance with the EU environmental standards for water and wastewater systems would require additional long-term investments estimated at over US$ 266 million. Therefore,
on account of constraints arising from affordability and limited financial resources, derogation from the EBRD's Environmental and Social Policy is sought in relation to the EU drinking water
quality and wastewater treatment and discharge standards. The human health implications of the shortfalls from the EU standards are assessed to be minor compared to the substantial benefits of
the implementation of the PIP, resulting in more reliable, efficient and better quality water supply to the local population as well as improved wastewater management. Expected results include
significant improvement of the sanitary conditions of the Yunusabad and Almazar districts, minimising the risk of water-borne diseases and decreasing the overall pollution load directly discharged to the environment, and improvements for the operational efficiency and health and safety of employees and contractors.

The ESAP requires the Company to implement a number of improvements designed to meet the EBRD's PRs. The key ESAP actions are related to: improved EHS and HR policies and procedures; implementing an E&S management system; contractors' EHS and labour management programme; improved water supply and wastewater quality monitoring; odour assessment and management plan; dry sludge management plan, development of H&S Plan for contractors; and implementation of the SEP together with a public grievance mechanism.

The Bank will monitor the implementation of the Project and the ESAP as well as the Company's environmental and social performance by reviewing the Company's annual environmental and social reports and undertaking monitoring visits as needed.

NTS | SEP

Technical Cooperation

Pre-signing:
• TC 1: Technical, financial, environmental and social due diligence. The assignment's cost was €344,000, funded by Infrastructure Project Preparation Facility (IPPF).

Post-signing:
• TC 2: Corporate Development Support to the Company to enhance its institutional, operational and financial capacity. The assignment's cost is estimated at EUR 200,000, to be financed by an international donor or the EBRD Shareholder Special Fund.

Company Contact Information

Sevar Astanov
info@mjko.uz
+99871 234-07-28
+99871 234-06-08
http://mjko.uz
1 Niyozbek Yuli street, Tashkent City, 100035, Uzbekistan

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Public Information Policy (PIP)

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Text of the PIP

Project Complaint Mechanism (PCM)

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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.