Khanti Mansi Regional MSDP. Surgutski Rayon

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The proposed project would involve loan to Surgutsky Rayon, a municipality in the Khanty-Mansi Autonomous Okrug (the Okrug). The project would focus on priority investments to improve municipal district heating, water and wastewater infrastructure facilities and services in small settlements of Surgutsky Rayon. The project would also finance institutional strengthening of integrated municipal services company established in the due course of project implementation. The proposed project follows the successful project in the City of Surgut currently under implementation. The project is likely to have significant demonstration effect as it will be the first project in municipal services sector, which will be co-financed by the local commercial bank. The transition potential of the operation relates to establishment of an integrated operating company providing services to settlements of the Surgutsky Rayon on a basis of an incentive based Service Contract. The project will also contribute towards strengthening of corporate governance standards in operating company through introduction of IFRS for financial reporting. The municipality of Surgutsky Rayon will be the Borrower. The Khanty-Mansi Autonomous Okrug will provide a guarantee to support the project. The loan up to RUB 810 million (equivalent to ~ EUR 23 million) to Surgutsky Rayon. RUB 1,400 million (equivalent to ~ EUR 40.5 million) The project has been screened B/1 requiring environmental analyses of the proposed multi-sector municipal services development programme. The environmental analysis indicates that the project would have a positive overall benefit on public health and the environment. The operation will enable the Surgutsky Rayon to (i) reduce pollution of the drinking water by upgrading its water treatment facilities and distribution network; (ii) reduce pollution of the local rivers by rehabilitation of wastewater treatment facilities and collection network; (iv) reduce greenhouse gas emissions from the heating plants by increasing efficiency heating systems and upgrading boiler houses. The project will meet Russian environmental, health and safety standards and will contribute towards achieving compliance with relevant EU environmental standards. Temporary environmental impacts may be generated during construction and land-take, such as increased level of noise, dust and traffic (in the settlements). Such temporary impacts, however, will be minimised through the incorporation of good management practice including forewarning and signing of works, restriction of working hours, development of traffic management schemes offering alternative routes to traffic and pedestrians, etc. Locally financed TC: Design, Procurement and other implementation support (up to EUR 3.0 million). Grant financing will be sought for: Corporate Development Programme for the integrated operating company aimed to enhancing its commercial viability and institutional capacity (EUR 450,000). Previous Technical Cooperation included: The Feasibility Study for the Project was prepared by Ramboll financed by the EU