Autocesta Rijeka-Zagreb Project Extension

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The operation will enable ARZ to complete the construction upgrading to full motorway profile between Kikovica and Stara Susica which, together with other investments, will complete the motorway between Rijeka and Zagreb. The proposed project will include a Technical Assistance Programme to assist the Company in preparation of the medium term Corporate Strategy. The main transition impact will come from loan conditionalities related to the commercialisation of ARZ in the post-construction phase. ARZ – the Client - is a Public Limited Company fully owned by Croatia. The Client holds a 28 year renewable concession (of which 20 years are left) to design, build, finance, operate and maintain all sections of the motorway linking Rijeka with Zagreb. The EBRD finance would be in the form of a Sovereign Guaranteed loan of EUR 50 million to ARZ. EUR 290 million. The project has been screened C/0. The project is an extension to an existing Bank project, which underwent an Environmental Impact Assessment and public consultation in accordance with the Bank’s Environmental Procedures for A-category projects in 2000-2001. The Bank’s Environmental Specialist undertook a site visit along the entire length of the motorway, held meetings with the Ministry of Environment and discussed with the consultants who undertook the update of the Environmental Impact Assessment (EIA). The investigations confirmed that the upgrading to full profile motorway, by adding a second road carriageway, will not result in any deviation from the existing corridor and will not raise any significant new environmental issues to the original project. The review of the EIA's and public consultation already undertaken showed that they were carried out in full compliance with national requirements and in accordance with EU EIA Directives. The EIA has identified all necessary environmental protection and mitigation measures and provides a detailed Environmental Management Plan (EMP) for the project. Discussions are under way to finalise the EMP, the implementation of which will be covenanted in the loan agreement. Furthermore the Sponsor has recently established a new environmental protection department within ARZ and aim to achieve full ISO 14001 accreditation in 2006. This should help to ensure that the Environmental Mitigation, Management and Monitoring Plans, which form a condition of the construction and operation permits, will be implemented in full and to a very high level. EUR 250,000 to be mobilised to prepare privatisation strategy of the motorway company in the medium term.