Tokmok Water Sub-Project

Location:

Kyrgyz Republic

Project number:

44828

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Approval date:

18 Jul 2014

Status:

Repaying

PSD disclosed:

04 Jul 2014

Translated version of this PSD: Russian

Project Description

The EBRD is considering supporting the Tokmok Water Sub-Project. The EBRD would extend a sovereign loan of up to €2 million to the Kyrgyz Republic, to be transferred to Tokmok City for the benefit of the Tokmok Water Company for improvement of water supply and selected wastewater services.

The EBRD will also seek an investment grant from an international donor of €3.1 million to co-finance implementation of the sub-project which will address urgently needed water and wastewater infrastructure rehabilitation needs.

This support will be extended under the existing EBRD sovereign framework of up to €20 million, established by the Bank to co-finance with international donors priority water and wastewater rehabilitation sub-projects across the Kyrgyz Republic. The framework envisages sovereign loans that would be transferred to the cities for the benefit of the water companies involved and would address urgently needed water and wastewater infrastructure rehabilitation needs.

The overall objectives of this sub-project are to: (a) rehabilitate the water supply and selected wastewater improvements; and (b) improve financial and operational management.

Transition Impact

Transition Impact of the sub-project would be:

  • Improved access to basic public utilities;
  • Introduction of tariff reform within affordability limits;
  • Higher collection rates;
  • Establishment of a contractual arrangement between the city and the company;
  • Improvement of operational and financial management of the Tokmok Water Company (including preparation and publication of IFRS and a business plan, training on procurement, etc.); and
  • Introduction of a formal consultation process with water users in form of a community based stakeholder participation programme.

The Client

Government of the Kyrgyz Republic, Tokmok City and the Tokmok Water Company.

EBRD Finance

Sovereign loan of up to €2.0 million to the Kyrgyz Republic, transferred to Tokmok City for the benefit of the Tokmok Water Company.

Project Cost

The total sub-project cost is €6.5 million including technical cooperation. The sub-project will be co-financed by an investment grant from an international donor.

Environmental Impact

The sub-project has been categorised B under the EBRD Environmental and Social Policy.  An Environmental and Social Review of the Water Company’s current environmental and social (E&S) management practices, operations and facilities, and an Environmental and Social Analysis of the proposed Priority Investment Programme (PIP) has been carried out as part of the Feasibility Study by independent consultants. Based on the findings of the Feasibility Study, the implementation of the proposed PIP is expected to significantly improve efficiency and reliability of water supply and wastewater collection in Tokmok, thus contributing to the provision of access to safe drinking water, prevention of ground and watercourses pollution and improvement of public health. PIP components will mostly involve rehabilitation of water and wastewater systems. The implementation of the PIP involves construction works that will result in limited, localised and short-term adverse environmental impacts, which will be mitigated or prevented by adhering to good construction practice.

The results of due diligence investigations has shown that the capacity of the Water Company  to manage E&S issues is low and their E&S management systems, occupational health and safety and stakeholder engagement practices require further upgrading and improvement to meet EBRD's Performance Requirements (PRs).

Currently, 25 per cent of the population use water from own sources (wells). Groundwater from wells is either acceptable quality or residents disinfect their own water supply. Still, backyard wells pose significant health risks. Water supply facilities operated by the Company are currently in poor operating condition resulting in unreliable water supply, excessive water losses (60 per cent) and energy consumption. The existing water quality is generally good with the existing analysis results showing only few violations for microbiological parameters. Through the implementation of the PIP, the reliability of the water supply services will be significantly improved and water losses will be considerably reduced (from current 60 per cent to 30-35 percent). Improved and extended water supply system will lead to increased connection rates (80 per cent) and generally improve the public health. Improvements to the laboratory will enable better control of the water quality. Still, additional further long-term investments into water networks would be required to bring the water supply system in full compliance with the EU standards.
Currently, only a limited part of the city (50 per cent) is served by a piped sewerage network and large scale extensions will be necessary to reach the long term objective. Due to extensive dilution of the wastewater resulting from groundwater intrusion into the sewerage system, the biological treatment in the existing WWTP cannot be operated. The effluent from the WWTP complies with the national and EU standards but only as result of the dilution rather than treatment.  The PIP will include limited sewer network expansion.

Further expansion and improvements to the water supply system and expansion and renovation of wastewater infrastructure needs to be included in the long term investment programme due to affordability reasons. At this time the financing for the long-term investment programme from the Company’s own revenues cannot be confirmed and no potential sources of external funding has been identified. Therefore, on account of constraints arising from affordability and limited financial resources, derogation will be sought from the EBRD’s Environmental and Social Policy.

The human health implications of the shortfalls from EU standards are assessed to be minor compared to the benefits of the PIP implementation resulting in more reliable water supply to the local population. Although, inadequate treatment of wastewater discharges will remain in the short term, this does not pose any significant public health and environmental risks due to extensive dilution of the wastewater by infiltrating groundwater to levels that satisfy EU discharge standards.

The Environmental and Social Action Plan (ESAP) commits the Company amongst others to developing an environmental, health and safety (EHS) management system, E&S trainings, acquiring necessary permits, upgrading of laboratory facilities for improvement of water and wastewater monitoring, monitoring of affordability for low-income groups, management and monitoring of contractors, asbestos handling and disposal, archaeological chance find procedures, and improving human resources practices. A Stakeholder Engagement Plan is also under development for the Water Company.

Technical Cooperation

The following technical co-operation (TC) assignments are included as part of this sub-project:

Pre-signing

  • Feasibility study including the preparation of a financial, technical, environmental and social feasibility study. EUR 290,320, financed by the EU’s Investment Facility for Central Asia;
  • Audit and restatement of Tokmok Water Company’s accounts. EUR 20,740, financed by the Bank’s own resources.

Post-signing

  • Implementation Support to the Company to assist with engineering design, procurement, preparation and evaluation of tenders, contract award and administration, financial control, project management and reporting. EUR 690,000, to be  financed by an international donor;
  • Corporate Development and Stakeholder Participation Programme: (i) to support institutional development in the form of operational improvements and financial improvements to secure sustainability of the water company; and (ii) to implement a Stakeholder Participation Programme. EUR 400,000, to be financed by the EBRD Shareholder Special Fund.
 

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

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