ViO Zagreb

Location:

Croatia

Project number:

46846

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

B

Status:

Cancelled

PSD disclosed:

21 May 2015

Translated version of this PSD: Croatian

Project Description

The EBRD is considering refinancing of the existing loan with Zagreb Holding by transferring the operation to the newly formed water and waste water operator Vodoopskrba i odvodnja (“ViO Zagreb” or the “Company”). The original Bank's loan for water and wastewater infrastructure upgrades was signed with Zagreb Holding in December 2007. Following the new National Water Act of 2014 which resulted in the creation of the new subsidiary for the water and wastewater operations – ViO Zagreb, the Bank's loan will be transferred to ViO Zagreb.
 

Transition Impact

The transition impact of the proposed transaction will be achieved through:
  • Demonstration of successful restructuring and improved operational and financial efficiency of ViO Zagreb by implementation of Financial and Operational Improvement Programme (“FOPIP”).
  • Performance benchmarking through which the Company will be involved in a sector-wide activity of monitoring and benchmarking of water sector companies, aimed at the promotion of economic efficiencies, setting standards for reporting, transparency and monitoring throughout the sector and hence improve accountability and knowledge sharing within the sector.
  • Frameworks for Markets with transition impact deriving from the introduction of a new Public Service Agreement (“PSA”) between the Company, Zagreb Holding and the City of Zagreb, which is expected to secure a transparent formula for providing services that will take into account the full cost recovery mechanism for all user groups.
  • The expected transition impact rating is ‘good’.

The Client

ViO Zagreb is the largest water and wastewater operator in Croatia that services up to 850,000 inhabitants of Zagreb and several surrounding cities and municipalities.

The Company is 100 per cent owned by the Zagreb Holding, a City of Zagreb owned holding municipal services company that is in charge of running the City’s communal activities.

EBRD Finance

Senior loan in the amount of up to EUR 30 million to Vodoopskrba i odvodnja d.o.o., for re-financing of the existing EBRD Loan to Zagreb Holding.
 

Project Cost

Total Project costs of up to EUR 30 million.
 

Environmental and social categorisation, impact, and mitigation

Categorised B in line with 2008 Environmental and Social Policy. The project will not involve any new investments but rather a refinancing of the existing project approved back in 2007 under 2003 Environmental Policy. The original investment is currently under implementation and aims to improve the efficiency, reliability and quality of the water supply and wastewater collection in the City of Zagreb, thus contributing to the provision of uninterrupted access to safe drinking water, prevention of soil and groundwater pollution and improvement of public health.
 
The wastewater treatment is not a responsibility of ViO, but is provided by a private operator under a long-term concession contract with the City. The Bank has previously provided two loans to the concessionaire for the construction of a new wastewater treatment plant under ZAGREB WASTE WATER TREATMENT PLANT BOT, which has been designed to meet Croatian and EU effluent quality standards.
 
ESDD will build on previous due diligence reports and review ViO Zagreb’s operations, corporate management systems, EHS and labour management practices and overall E&S performance under the existing project including progress of ESAP implementation. Particular attention will be paid to OHS management practices during construction and operation, especially excavation safety and confined space working, and gender sensitive stakeholder engagement. The need for an updated Environmental and Social Action Plan (ESAP) will be assessed to ensure compliance with EBRD PRs.
 
This PSD will be updated upon completion of E&S due diligence.
 

Technical Cooperation (“TC”)

Technical Assistance will be provided as described below:
 
Post-signing
 
  1. Financial and Operational Performance Improvement Programme (EUR 275,000) to provide assistance to the Company in the re-organisation of their financial and operational activities to ensure they are more efficient, including business planning, PSA preparation, advice on tariff reform and collection improvements. The TC will also look at outsourcing non-core activities of the Company in order to secure additional efficiency gains. The assignment is proposed to be financed by an international donor or the EBRD Shareholder Special Fund (“SSF”).
  2. Performance Benchmarking (EUR 50,000) to provide assistance to the Company in participating in a country-wide exercise of benchmarking of key operational and managerial indicators. The assignment is proposed to be financed by an international donor or the SSF.
     

Company Contact

Štefica Mihalic, director
Vodoopskrba i odvodnja  d.o.o., Zagreb,
Folnegovićeva 1,
10 000 Zagreb, Croatia
Telephone +385 1 6163 000
 

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.