Mahovljani Interchange

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The EBRD is considering providing a sovereign guaranteed loan worth €25 million to the newly established public company Republika Srpska Motorways (RSM) to finance the construction of the Mahovljani interchange, which is located on the Banja Luka to Gradiska motorway. The proposed project in principle is built on an existing EBRD project, which encouraged corporatisation of the motorway agency and establish financial and institutional sustainability. The additional transition impact is likely to come from (i) institutional building of a newly established motorway company and (ii) the introduction of tolls on the motorways, which will be the first in Republika Srpska. The Client is a newly established Public Company “RS Motorways” (‘RSM’), registered in January 2009 as a limited liability company, wholly owned by the Government of Republika Srpska. The role of the company is to develop, manage and operate the motorway network on behalf of the government of RS. The company is at a very early stage of development. €25 million loan to RSM with sovereign guarantees. Grant co-financing of €5 million is currently being approved by the European Commission under the Crisis Response Package. €35 million. Environmental and social category and justification Following an Initial Environmental and Social Examination (IESE), the project has been screened B under the Bank’s Environmental and Social Policy 2008. The construction and operation of a motorway interchange can be associated with a number of environmental and social issues that can readily be assessed and addressed through mitigation measures. The project classification is based on the location of the site which is not in a sensitive environmental setting and, therefore, does not fall under Annex 1 of the Bank's Environmental Policy (2008) requirements. Environmental and social appraisal and information reviewed An EIA was prepared for the whole Banja Luka – Gradiska motorway project, based on the original (now superseded) design for the interchange, which included consultation in accordance with the EBRD Environmental Policy (2003). The EIA for Banja Luka Gradiska and other related documents are available at: http://www.putevirs.com/ and on the RS Ministry of Transport website at: http://www.vladars.net/sr-SP-Cyrl/Vlada/Ministarstva/msv/Pages/Splash.aspx The environmental and social due diligence has been undertaken by an independent consultancy, including a site visit and review of existing Environmental Impact Assessments (EIA), feasibility studies, expropriation plans, contract documentation and other supporting information. Due diligence confirmed that a Social Impact Assessment (SIA) of the project was not required under national law. However, the Independent Consultants assessed the social impacts of the MI during their due diligence, utilising publicly available information and a sample of interviews with potentially affected people. As a result of the investigations, an Environmental and Social Action Plan (ESAP) and a Resettlement Action Plan (RAP) have been prepared in line with the Bank’s Performance Requirements (PRs) to address both the construction and operational phases of the project. Key Environmental and social issues and due diligence results The MI Project which was assessed as part of the Banja Luka Gradiska EIA concludes that there will be no significant impacts resulting from the development of the whole motorway, including the MI, and the results of the ESDD largely concur with these findings. However, there are a number of issues which were identified during the ESDD which are as follows: Environmental and Social benefits This project provides an opportunity to improve regional transportation, decrease levels of accidents, reduce traffic congestion, air emissions and noise levels in the locality. Summary of Environmental and Social Action Plan An Environmental and Social Action Plan (ESAP) has been prepared and will be agreed with the Sponsor to ensure that the Project will fully comply with EBRD’s Performance Requirements. The ESAP includes requirements for: the implementation of an Environmental, Health, Safety and Social Management System by RSM and its contractors; plans and procedures for the management of hazardous materials, waste, noise, dust and emergency response; the implementation of the MI Resettlement Action Plan (RAP) and Stakeholder Engagement Plan (SEP). The Sponsor will be required to provide an annual environmental and social report to the Lenders, including updates on the bird monitoring undertaken, implementation of the agreed ESAP, and notification on any material accidents or incidents. Consultancy services for environmental, social and economic due diligence. €200,000 grant funding was provided by the Central European Initiative. Further grant funding in the amount of €300,000 will be mobilised towards institutional strengthening programme for RSM, including tolling strategy.