R2CF Bistrita Sub-Project

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Translated version of this PSD: Romanian The EBRD is considering providing a local currency loan of up to RON 33 million (EUR 7.8 million equivalent) to SC Aquabis SA, to co-finance the company’s RON 357 million (EUR 83.2 million equivalent) regional investment programme, co-financed by up to 90 per cent grant funding from the European Union (EU) under Romania’s Cohesion Fund Programme as well as funding from the local and state budget. The proposed transaction will assist the company to extend its operations into 17 municipalities and to rehabilitate the water and wastewater infrastructure in the County of Bistrita Nasaud. As a result of the project, 134,000 inhabitants, in the project area will have access to safe water supply and sanitation services. The proposed sub-project is part of the EUR 200 million Framework approved by the Bank to co-finance projects in Romania’s water and wastewater sector alongside EU Cohesion Funds. The sub-project will support environmental improvements as well as the continued regionalisation of water and waste water services in Bistrita Nasaud County, which will result in efficiency gains as well as the transfer of commercial and managerial skills to less-developed localities in the county. SC Aquabis SA has been a Bank client since 1997 under the Municipal Utilities Development Programme II and has already undergone significant reforms since then. SC Aquabis SA reorganised in July 2008 into a regional water company, and will now expand its services to about half of the county, serving 4 towns (Bistrita, Nasaud, Beclean and Sangeorz-Bai) and 14 rural communities. RON 33 million (EUR 7.8 million equivalent) for Bistrita Sub-Project. RON 357 million (EUR 83.2 million equivalent) for Bistrita Sub-Project. Categorised B. The potential E&S impacts of construction/rehabilitation of wastewater treatment plants and extension and rehabilitation of water distribution and sewerage networks are likely to be site-specific and can be readily identified and addressed through adequate mitigation measures. The competent environmental authorities undertook EIA screening procedure for individual project components in accordance with applicable Romanian EIA legislation that is harmonised with the EU EIA Directive. The sub-project to be implemented in Bistrita, Beclean, Nasaud and Feldru were required to undergo EIA procedure according to applicable Romanian legislation. For other sub-projects to be implemented in Sangeorz-Bai and Telciu agglomerations only Technical Memorandums were required. None of the sub-projects involves increasing of the current WWTP capacity by more than 150,000 p.e.. Therefore none of the sub-projects fall under category A in accordance with the Bank's Environmental and Social Policy. Environmental and social due diligence (ESDD) has been carried out by independent consultants. The ESDD included a site visit, review of the Company's existing E&S management systems, available technical and environmental documentation prepared in accordance with Romanian permitting requirements and the project appraisal documents prepared for the EU Cohesion Fund application as well as assessment of the project against EU environmental requirements and the EBRD PRs. The ESDD concluded that the implementation of the sub-projects for water supply and wastewater discharge and treatment will ensure compliance with national and EU requirements within the transition period agreed for meeting requirements of Directive No. 98/83/EC on drinking water quality (by 2015) and Directive 91/271/EC on urban wastewater (from 2013 to 2018 depending on the agglomeration size). The project is not expected to require significant land acquisition or cause any significant displacement or resettlement impacts. However, some temporary disturbance may occur during the construction phase. The ESAP includes the requirement for relevant procedures and a compensation action plan/policy to be established by the Company so as to meet the requirements of PR5, in the event of any such impacts. No other significant adverse impacts or non-compliances with the EBRD PRs have been identified. The construction works will have limited, localised and short-term adverse impacts, which can be mitigated or prevented by adhering to good construction practice. The planned tariff increases are not expected to generate affordability challenges for the average and lower income households. The ESDD showed that the project will result in significant environmental benefits and improve the quality of the local environment and mitigate public health risks by extending the drinking water supply and wastewater collection networks, improving drinking water treatment and quality, improve sewage collection and wastewater treatment systems.. The project will result in around a 20 per cent increase in the Company's customer base by 2015. As a result of the proposed investments, the Company’s coverage will extend from 84 per cent to 98 percent by 2013 for drinking water and from 60 per cent to 91 percent for wastewater by 2013, enabling the Company to provide services in accordance with EU directives to nearly half of the population in the County. There have been negotiations between the EU and the Ministry of Environment with regard to the level of connections to the centralised water systems to be considered as compliant with the EU Directives. It was agreed that above 90 per cent level of connection is considered compliant. This is because there are some areas with low population where connection to the centralised networks is not cost-efficient. Some sections of the project components in agglomeration Feldru will be implemented near a NATURA 2000 site. Potential impacts on this site have been assessed as part of the EIA for that sub-project and concluded that the proposed developments are not likely to have significant impacts on Nature 2000 sites. The ESDD established that the Company’s existing EHSS management systems are well developed and it has an integrated ISO 14001, ISO 9001, and OHSAS 18001 management system in place. An Environmental and Social Action Plan (ESAP) has been developed for mitigation of identified E&S issues and impacts during preparation, construction and operation of the project, and to bring the Company's operations into compliance with the EBRD's PRs. The ESAP commits the Company amongst others developing site specific E&S Management Plans for each sub-project; enhancement of EHS training programmes; establishment of procedures for performance monitoring, land acquisition, cultural heritage chance find, handling and disposal of materials containing asbestos; development of an action plan for reduction of power consumption; and adopting and implementing Stakeholders Engagement Plan compliant with EBRD PR 10. The Company 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 required. EUR 970,000 TC funding was approved for the overall Framework, from which this sub-project will benefit, including: