Ulaanbaatar Wastewater Expansion

Location:

Mongolia

Project number:

46383

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

IESE

Status:

Cancelled

PSD disclosed:

17 Nov 2015

Translated version of this PSD: Mongolian

Project Description

The EBRD is considering providing a loan of up to EUR 12 million to the City of Ulaanbaatar (the City) on-lent to Ulaanbaatar Water and Wastewater Authority (the Company), a municipally-owned water utility, to finance the expansion of wastewater treatment services in the City.

It is expected that an international financial organisation would also provide co-financing with a loan of up to EUR 10 million. Additionally, the EBRD will seek an investment grant from an international donor of EUR 2 million to complete the financing package for the project.

The proceeds of the loans and the grant will financethe construction of wastewater treatment plants and network systems in a new industrial development area of Ulaanbaatar City.

Project Objectives

The proposed investments will enable the City to expand the wastewater treatment services and is designed to comply with the wastewater treatment quality in accordance with the EU standards. In order to measure the success of this project, the Bank will monitor the following indicators before and after project implementation:

  • Annual m3 of wastewater treated
  • Total population benefitting from access to wastewater services

Transition Impact

The Project will target the following Transition Impact objectives:

  • Tariff reform: Tariff increases for water and wastewater services are covenanted. The Company will calibrate the tariff methodology and its implementation.
     
  • Commercialisation: The Project will have a positive demonstration effect in Mongolia through commercialisation by providing TC for the Corporate Development and Stakeholder Participation Programme.
     
  • New and replicable product: The Project will have a positive demonstration effect in Mongolia, as this would be the first investment project in Mongolia on sub-sovereign basis.
     
  • Increased environmental standard: The Project will reduce health risks for the City population and prevent environmental pollution in accordance with the EU standard.
     
  • Increased transparency: The Project is expected to bring improved standards of transparency and governance.

Client Information

CITY OF ULAANBAATAR

EBRD Finance Summary

EUR 12,000,000.00

Total Project Cost

EUR 26,000,000.00

Environmental and Social Summary

Categorised B in line with 2008 Environmental and Social Policy, following the Initial Environmental and Social Examination which included site visits by the Bank's environmental and social specialists and a review of the scope of the Priority Investment Programme. Construction of the two new modern wastewater treatment plants and associated network systems as part of the planned Emeelt Industrial Park is expected to result in environmental and social (E&S) benefits for the City of Ulaanbaatar by relocating some of the City's most polluting industries away from the densely populated centre and ensuring adequate treatment of associated industrial waste water, thereby reducing health risks for residents near the existing industrial zone and significantly decreasing the pollution of ground and surface water from poorly treated wastewater discharges.

The environmental and social due diligence (ESDD) is currently ongoing as an integral part of the Feasibility Study and includes E&S audit/review of the Company's management systems, existing facilities and operations, and an E&S analysis of impacts and benefits of the proposed priority investment programme to ensure the project's compliance with EBRD Performance Requirements
(PRs). Key issues that are being investigated include land acquisition and potentially associated displacement and livelihood impacts, public and worker health and safety during construction and operation phase, efficiency of WWTP operations and ability to meet Mongolian and EU standards for effluent quality, discharges into the recipient surface waters, sludge management/disposal solution, tariff affordability and gender-sensitive stakeholder engagement.

A project-specific Environmental and Social Action Plan (ESAP) will be developed to address any environmental and social issues identified during the due diligence to achieve and maintain compliance with the Bank's PRs within a reasonable time-frame. The Company will also develop a Stakeholder Engagement Plan (SEP), including a grievance mechanism.

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

Technical Cooperation

Pre Loan Signing

  • TC 1: Feasibility Study including financial, economic, technical, and environmental and social due diligence. The initial cost of the assignment was EUR 279,958, financed by the Government of Japan
     
  • later extended by an amount of EUR 25,495, financed by the Bank's own resources.
     
  • TC 2: Creditworthiness analysis of the City. The cost of the assignment was EUR 31,977, financed by the Bank's own resources.

Post Loan Signing

  • TC 3: Project Implementation Support. The estimated cost of the assignment is EUR 1,000,000, proposed to be financed by an international donor, the EBRD Early Transition Countries (ETC) Fund or the Shareholder Special Fund (SSF).
     
  • TC 4: Corporate Development and Stakeholder Participation Programme to support institutional development of the Company, implement a Stakeholder Participation Programme (SPP), and support the restatement and audit of the Company's accounts in accordance with International Financial Reporting Standard (IFRS). The estimated cost of the assignment is EUR 500,000, proposed to be financed by an international donor, the ETC Fund or the SSF.

Company Contact Information

Mr. Bayarbaatar Sandagdorj
bayarbaatar@ulaanbaatar.mn
+976 11 325060
Great Chinggis Khaan's Square 11, Ulaanbaatar 46, MONGOLIA

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