ONEE Water Supply

repaying

Translated version of this PSD: French The EBRD is considering a sovereign-guaranteed loan of up to EUR 65 million to Office National de l’Électricité et de l’Eau potable (“ONEE” or the “Company”) to finance drinking water supply to 3 medium sized cities and 260 rural communities in the regions of Ouarzazate, Azilal and Benguerir. These investments will address critical water supply needs and will benefit over 480,000 inhabitants. The loan will also finance the third phase of a nationwide Performance Improvement Programme, launched by the government in 1995. ONEE has implemented successfully the initial two phases of the Programme, providing 90 per cent of the rural population with access to drinking water. The success of the project will be measured by the following benchmarks: The Project will support further access to drinking water in rural areas, which will result in improvement of access to drinking water to less-developed regions of the country. The Company will participate in a Financial and Operating Performance Improvement Programme (“FOPIP”). ONEE is state-owned. It was recently created as a joint water and electricity company. Its water division produces 972 million m3 of drinking water per year, operates 70 water treatment plants and supplies 1.6 million clients. It also collects and treats wastewater in 87 communes covering 3.3 million inhabitants. A sovereign-guaranteed loan of up to EUR 65 million to ONEE. EUR 81 million, including VAT. The project has been categorised B in accordance with EBRD’s 2008 Environmental and Social Policy. The Bank has undertaken an environmental and social due diligence of the Company and the project with the help of an independent consultant, consisting of an E&S audit of the Company's management systems and practices, the existing facilities and operations, and an E&S analysis of the impacts and benefits of the proposed investment programme. The due diligence included visits to the Company’s facilities and a review of the E&S impacts of the performance improvement programme to determine project compliance with the relevant EBRD's Performance Requirements (“PRs”). The reliability of the water supply services will be significantly improved and the drinking water quality is expected to meet national and EU standards as a result of the Bank's Project. However, for the few parameters where the Moroccan legislation is less stringent than that of the EU, the Company will be asked to monitor drinking water compliance in accordance with EU requirements to confirm compliance in the Project. The implementation of the Project will also improve sanitation and hygienic conditions, and have a significant positive impact on public health and safety. Moreover, the Stakeholder Participation Programme (“SPP”), aimed at enhancing public ownership by encouraging water conservation, increasing public participation in the provision of water services (service quality, rehabilitation activities, tariffs integrating poverty and social issues) and raising public awareness on issues related to the project implementation and water use will be developed and implemented. The Bank’s environmental and social due diligence concluded that any adverse future environmental and social impacts resulting from project implementation will be temporary, and limited to the Company’s operational and project construction sites. Potential adverse impacts will include noise, dust and air pollution from construction machinery, local disruption of drainage, light pollution and generation of construction wastes. An Environmental and Social Action Plan (“ESAP”) and Stakeholder Engagement Plan (“SEP”) have been developed requiring the project to be designed, constructed and operated in accordance with relevant national and EU standards and EBRD’s PRs and to mitigate any negative impacts from the project implementation. Implementation of the ESAP and SEP will be covenanted in the Loan Agreement. The Company will be required to provide the Bank with annual environmental and social reports, including updates on the implementation of project and the ESAP in compliance with EBRD PRs. The Bank will be monitoring the project through reviewing these reports and may also undertake site visits or independent E&S audits, as required. The project will benefit from the following TC of up to EUR 4.2 million: