Pskov Water Project

complete

The EBRD is considering financing of construction, rehabilitation, upgrade of water supply and wastewater infrastructure in the City of Pskov (the “City”) within the Pskov Oblast. The priority investments to be financed by EBRD will be defined by consultants in a feasibility study. Transition impact is expected to be achieved through: Development and implementation of an Environmental and Social Action Plan (ESAP) which will improve the Operating Company’s environmental and social responsibility. MUE “Gorvodokanal” of the City of Pskov (the “Company”), a company providing water services to both residential and industrial customers in the City and wholly owned by the City. Senior corporate loan to the Company of up to RUB 450 million (equivalent of around EUR 10 million), guaranteed by the City. Phasing will be considered based on the study of the Company’s debt capacity. The loan is proposed to be co-financed by a capital grant from the Northern Dimension Environmental Partnership (“NDEP”). Up to RUB 815 million. Categorised B in accordance with EBRD's 2008 Environmental and Social Policy. An Environmental and Social Audit of the Company's current EHSS management practices, operations and facilities, and an Environmental and Social Analysis of the proposed investment project were carried out by independent consultants. The due diligence confirmed that the Project will significantly improve drinking water quality, reliability and efficiency of water services, improve water treatment and sewage collection and treatment in Pskov, and reduce untreated wastewater discharges into the Velikaya River, thus reducing the pollution load to Chudskoye-Peipsi Lake and the Baltic Sea. Any adverse future environmental and social impacts associated with the Project are site-specific and readily addressed through adequate mitigation measures. The investigations showed that the Company’s corporate EHSS management is satisfactory and does not require significant improvements. However, Company's facilities are currently in poor operating condition resulting in unreliable and lower quality water supply, high water losses (38%) and contamination, and discharge of insufficiently treated effluent with high nutrient loads into the Velikaya River, Chudskoye-Peipsi Lake and the Baltic Sea basin. The pollution load due to excessive nutrient discharge exceeds the fishery standards in the river, and the Pskov city is the main polluter of the whole watercourse. The river and the major lakes downstream are important for fishing and there are several nature conservation sites (Ramsar sites) with unique habitats and biodiversity values. The current sludge management at WWTP also presents a major environmental problem due to unsatisfactory practice of storage of de-watered sludge at the existing sludge lagoon in the area of WWTP. The implementation of the PIP is anticipated to significantly improve quality and availability of drinking water to the population of Pskov, reduce water losses by estimated 2–2.7 million m3/a and improve water supply reliability, improve wastewater collection and treatment, reduce risks of soil, surface and groundwater contamination and result in substantial overall energy savings of 300 MWh/a. The total estimated BOD5 load reduction in effluent from WWTP would be 138 t/a, nutrient discharges would decrease for total phosphorus by 37 t/a and for total nitrogen by 276 t/a. Improvement of the quality of water in the recipient water courses will benefit people, including all riparian inhabitants downstream of Pskov including approximately 2500 fishermen as well as several wetlands belonging to the Ramsar nature protection sites. The quality of drinking water supplied by the Company does currently not meet the national standards and the standards set in the EU Directive on the quality of water intended for human consumption (Council Directive 98/83/EC). Implementation of PIP will provide access to groundwater sources and will bring the drinking water quality into compliance with Russian and EU standards. The anticipated reconstruction of the existing WWTP will bring the quality of effluent closer towards Russian norms and in compliance with EU requirements for urban wastewater treatment (Council Directive 91/271/EEC) and HELCOM recommendations on phosphorus by introducing additional biological treatment and chemical phosphorus removal. Additional to PIP measures to achieve compliance with the Russian standards include final UV disinfection and possible additional biological phase by post-filtration will be included into ESAP. The PIP will allow for environmentally sound management of sludge as the material will be stored in impermeable sludge fields, and after the planned treatment process can be used as fertilizer in agriculture in accordance with EU recommendations. The PIP will address the main concerns associated with the existing old sludge lagoon including dam safety, leak control and continuous treatment of the excess water of the pond in the WWTP. As a long-term solution, sludge digesters and thermal drying with associated biogas generation is proposed, and these measures have been included into the ESAP to ensure compliance with EBRD’s PRs. The implementation of PIP involves construction works that will result in limited, localised and short-term adverse environmental impacts, which can be mitigated or prevented by adhering to good construction practice. The planned tariff increases are expected to affect the lower income households, however, the associated grant components and subsidies will mitigate and address affordability constraints. An Environmental and Social Action Plan (ESAP) has been developed to provide measures for mitigating the expected impacts at both the project preparation and implementation stages and to bring the Project in compliance with the Bank's requirements. The ESAP includes measures for the Company to further develop, improve and implement such areas as water UV disinfection and post-filtration, planning of the sludge management and disposal, renovation of the dam at the existing sludge lagoon, overall improvement of waste management practices, compliance with the sanitary protection zone requirements, conducting the necessary environmental impact assessment procedures and obtaining the necessary permits for the rehabilitation and major renovation works in line with national requirements, contractors' EHSS management and performance monitoring practices, emergency preparedness and response; a grievance mechanism for workers and stakeholders; meaningful consultation with and assistance to people adversely affected by the project, including implementation of a Stakeholder Engagement Plan (SEP) prior to the start of construction works. ESAP and SEP have been developed for the Client and will be implemented during the Project. The Client will provide the Bank with annual environmental and social reports, including updates on the implementation of the ESAP. The Bank will commission a completion audit and may also conduct monitoring visits, as req Grant funds will be sought for: