The EBRD is considering a project to cover emergency investments in the Yerevan Metro, covering immediate rehabilitation needs including safety upgrades. The investment is part of the plan to improve and reform public transport services in the capital of Armenia. The operation would primarily benefit lower-income groups, who rely on the poorly maintained metro system.
The proposed project will have the following transition impact:
The project will support the City and the Company in developing of a Public Service Contract (PSC). The introduction of a PSC will:
(a) establish standards and a transparent structure for the provision of public transport services, and
(b) ensure a transparent public service payment methodology including a mechanism to compensate for free riders. In addition, based on the technical, environmental, financial and social due diligence, commercial targets and reform benchmarks will be set. The Corporate Development TC will help the Company to develop a Business Plan, which will focus on:
(a) maintaining a satisfactory fare box ratio by increasing revenues and reducing operational costs
(b) developing a sustainable investment programme
(c) improving reporting, including adoption of IFRS, and
(d) improving management skills and corporate governance.
Framework for Markets
Introducing the principles of a PSC, for the first time in the Armenian urban transport sector, will further establish a clear basis for commercial public transport operations and increase transparency and accountability in the relationship between the City and public transport company.
The PSC will improve corporate governance since it clearly defines and allocates responsibilities for service delivery, finances, safety, tariff setting, passenger control, traffic control, marketing, ticketing, fare evasion and handling customer complaints.
The EBRD loan will be provided to Yerevan Metropolitan Karen Demirchyan CJSC (Yerevan Metro Company), under a sovereign guarantee. The Company is managed by the Yerevan Municipality and by the Board of Directors. The Company’s ultimate shareholder is the Government of the Republic of Armenia, represented by the Yerevan Municipality.
The proposal is for a loan of up to EUR 5.0 million from the EBRD.
The total project cost is estimated to be up to EUR 16.63 million. On top of the Bank’s loan, the European Investment Bank is also considering a loan of EUR 5 million and the EU’s Neighbourhood Investment Facility has approved a grant in the amount of EUR 5 million.
Screened B (2008). Any issues associated with the proposed Project could be identified and mitigated through an environmental and social analysis. An environmental, health and safety audit of existing facilities is required to identify any risks and issues of concern.
A Technical Review report, identifying various options for the rehabilitation of the Yerevan metro, has been reviewed by the Bank to date.
An independent due diligence will assess environmental and social impacts associated with a chosen rehabilitation option when confirmed.
PR1: Environmental and Social Appraisal and Management. The environmental and social due diligence (ESDD) will review the Company’s Environmental, Health, Safety and Human Resources policy, procedures and management systems.
PR2: Labour and Working Conditions: occupational health and safety hazards might include a work in confined space and hazardous conditions as well as a presence of asbestos. Other issues might include enforcement of general safety measures by contractors. The due diligence will address these issues, and also, review the availability of a grievance mechanism.
PR3: Pollution Prevention and Abatement. The construction phase of the Project might entail increased levels of air emissions, noise and dust, and generation and disposal of waste. Contamination and disposal of groundwater will also be addressed by the ESDD.
- PR4: Community Health, Safety and Security. Potential hazards include the poor integrity of wires and cables and, a poor state of repair of tunnels.
The availability of an adequate risk assessment and emergency plans will be addressed by the due diligence.
PR5: Land Acquisition, Involuntary Resettlement and Economic Displacement: the Project should not result in any physical resettlement or economic displacement; however, the ESDD will need to confirm this.
PR6: Biodiversity Conservation and Sustainable Management of Living Natural Resources. The Project should not entail any impacts on biodiversity
PR8: Cultural Heritage. The Yerevan underground system is running through an area that has monuments and places for public gathering and events. The Project should be structured in such a way as to avoid any impacts on cultural heritage.
- PR10: Information Disclosure and Stakeholder Engagement. stakeholders include commuters; owners/tenants of the properties located above tunnels; employees of the Company and of subcontractors; NGOs and regulatory authorities. A Stakeholder Engagement Plan will need to be developed.
An Environmental and Social Plan will be developed based on the findings of the ESDD, and agreed prior to Final Review of the Project.
- Audit of the Yerevan Metro Company, EUR 50,000, funded by the MEI team budget.
- Tunnel due diligence, EUR 50,000 funded by the Shareholder’s Special Fund.
- Technical, environmental, financial and social due diligence, EUR 180,000 to be funded by the Shareholders’ Special Fund.
- Corporate Development and City Support Programme EUR 200,000 to be funded by an international donor. The objective of this TC is to commercialize the operations of the Company. The TC further foresees development of a Public Service Contract to promote transparency and efficiency.
- Project Implementation Unit Support, EUR 650,000 to be funded by an international donor.
For business opportunities or procurement, contact the client company.
EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
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Text of the PIP