Municipal Environmental Investment Programme

complete

An investment programme to expand and improve the waste-water and water supply treatment network and services in Split, Solin, Kastela, Trogir, Pula and Rijeka, all of which are located on the Adriatic coast of Croatia. Principal objective is to address critical water sector investment needs of selected municipalities, and the secondary objective is to create the basis for a viable system of municipal infrastructure financing in Croatia. The investments will improve the appeal of tourist destinations which have proven foreign exchange earning potential. The state-owned Croatian Bank for Reconstruction and Development (HBOR) was established in 1992 to help restructure the Croatian economy and channel international financial institution loans and assistance. HBOR will act as borrower of the EBRD and World Bank credits and make back-to-back subsidiary loans to the Split Water and Sewerage Corporation and the Pula Communal Services Corporation. EBRD loan: € 30 million State/local contribution: € 50 million World Bank loan: € 60 million € 140 million. The project was screened A/0, requiring an environmental impact assessment. A key aim of the project is environmental restoration and protection, with the following four specific objectives: Each sub-project funded under the loan of the EBRD to the Croatian Bank for Reconstruction and Development (HBOR) is subject to environmental due diligence carried out on the basis of Terms of Reference jointly developed between the World Bank and the EBRD. The two largest and environmentally most important sub-projects are sewage treatment plants near Split and on Ciovo Island, which will collect all municipal and industrial effluents currently discharged into Kastela Bay. This waste water will receive primary treatment and will then be discharged offshore into the Split and Brac Channels, using subsea discharge pipes outside the actual coastal area. At present, only primary treatment is planned. A key issue is the impact of the discharges from the two treatment plants on water quality. The Croatian authorities and the municipalities believe that dispersion is sufficient to ensure compliance with Croatian environmental standards and all relevant European Union environmental standards. This has been confirmed by the Environmental Impact Assessment, which has been completed for this sub-project. The project includes a monitoring component aimed at continuously monitoring sea water quality in the area receiving the discharges, at controlling water quality and determining whether additional secondary and tertiary treatment may be required. Environmental studies for other sub-projects have not yet been completed. It is a condition for disbursement for these sub-projects that such studies are carried out and that they are satisfactory to the Bank. A public consultation programme is under way, in accordance with Croatian requirements. Technical cooperation is being sought to assist HBOR in assuming the administration and implementation responsibilities of the programme and to develop as a municipal credit institution. A separate technical cooperation programme assists the subsidiary borrower utilities to implement their investments and improve operational performance.