Krakow Public Transport Project - Phase II

complete

The EBRD is considering a second phase of the successfully implemented “Integrated Public Transport in the Kraków Agglomeration” project, co-financed with EU Cohesion Fund grants and the EBRD existing loan (DTM 34554). The new project includes investments in (i) Construction of a new tram line from Rondo Grzegorzeckie to Most Kotlarski and Lipska street; (ii) Tram track renewal between Dluga and Kamienna streets in the city centre; (iii) Purchase of 24 new low-floor trams. The project is to be co-financed with EU Cohesion Fund grants and EIB finance. Implementation of Phase II of the existing project is crucial to the infrastructure development of the city and neighbouring municipalities. It aims to reduce congestion and pollution in the Kraków agglomeration through an increased share of public transport in the overall transportation means. Moreover, the project will enhance regional development through sustainable improvement of the living standards for inhabitants of Kraków and increase the potential for economic growth. The transition impact of the project comes from Miejskie Przedsiębiorstwo Komunikacyjne S.A. (“Kraków Public Transport Company”, “MPK”), a joint stock company wholly owned by the City of Kraków (“the City”) through Krakówski Holding Komunalny (“Kraków Municipal Holding Company”, “KHK”). Senior EBRD corporate loan of up to EUR 23 million (in PLN equivalent) to MPK. The project is to be co-financed with EU Cohesion Fund Grant and EIB finance. EUR 92 million (in PLN equivalent). Categorised B under EBRD’s 2008 Environmental and Social Policy. The environmental and social due diligence (ESDD) included an initial site visit by the Bank’s environmental specialist, and an environmental and social assessment against EBRD Performance Requirements (PRs) by the external independent consultants. Due diligence confirmed that there are no significant adverse environmental or social impacts or risks associated with the Company or with the project. MPK is very well organised and managed. It has environmental and quality management systems and practices in place which are certified according to ISO 14001 and ISO 9001 standards. The project is in the advanced stage of development and has been developed in compliance with Polish and EU requirements. The construction of a new tram line and tram tracks refurbishment were subject to an EIA according to the Polish law. The permits required for the construction activities have already been obtained by the Client, and the environmental documentation, including an EIA and associated public consultation and disclosure, has been verified and accepted by authorities issuing the permits for compliance with Polish and EU requirements. The project will contribute positively to the quality of the public transportation in the City of Krakow and will lower the negative impact of transport on the health and environment. The project presents opportunities for carbon reduction due to improvements of the tram infrastructure and purchasing of modern trams with good energy efficiency rating. Some potential adverse environmental and social impacts would be present during construction activities and will include such issues as dust generation, noise, vibration, visual impacts, waste management and disposal, and emergency preparedness and response. During operation phase of the project the key impacts will be related to noise. Noise modelling has been undertaken by the Client to identify key areas of concern, and MPK will implement special noise reduction measures for the tram track (especially in Dluga street), install noise prevention screens and purchase new trams with low noise level specifications. The potential adverse environmental and/or social impacts of the construction of the new tram line and tram track refurbishment will be mitigated by good construction practices and an Environmental and Social Action Plan (ESAP), a Stakeholder Engagement Plan (SEP) and an E&S monitoring plan. The ESAP includes a detailed list of actions to minimise any environmental, health and safety and social impacts during the project implementation. ESAP covers (i) project planning activities including the development of the specific EHS procedures for construction stage and staff (internal and subcontractors) training on implementation of those; (ii) corporate environmental and social issues, including finalisation and implementation of SEP and grievance mechanism for internal and external stakeholders; (iii) construction phase activities, including appropriate EHS procedures for contractors and EHS supervision of the works, procedures for chance finds, prevention of vibration and visual impacts, and implementing specific actions to ensure community health and safety issues; (iv) operation phase issues, including environmental and noise monitoring activities. The Stakeholder Engagement Plan (SEP), including a grievance mechanism, has been prepared for the project and will be implemented by the Client in accordance with EBRD's requirements. SEP will be disclosed on the Company's website http://www.mpk.krakow.pl/. The Bank will monitor project implementation issues through annual environmental and social reporting, including updates on ESAP and SEP implementation. The Bank's environmental and social staff or consultants will conduct monitoring visits where necessary and adequate. EUR 30,000 for environmental & social due diligence of the Project.