R2CF Brasov sub-project

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Translated version of this PSD: Romanian The EBRD is considering providing up to €27.5 million loan to Compania APA Brasov S.A. The project includes two components. The first entails co-financing to Cohesion Fund of up to €19 million for key investments in the County of Brasov to meet EU water and wastewater directives. The Bank’s loan would co-finance a regional investment programme of up to of €190 million, which will include significant grant funding from the European Union, the Government of Romania and the local governments under Romania’s Cohesion Fund Programme. The project is expected to improve the quality of drinking water in Brasov County and expand wastewater collection and treatment in line with relevant EU water and wastewater legislation. The second component of €8.5 million includes a restructuring of the existing EBRD Municipal Environmental Loan Facility signed on 18 May 2002 to take into account the company's transformation into a commercial company and regional operator and the change in security. The Project will support environmental improvements, efficiency gains from continued regionalisation of water and wastewater services and transfer of commercial and managerial skills in water and wastewater operations to less-developed localities. The project is also expected to promote the on-going sector-wide performance benchmarking initative, which is designed to improve comparability between water utilities, exchange of experience, and incentives for improved efficiency in the sector. Compania APA Brasov S.A. Senior loan up to €27.5 million. Up to €190 million. 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 the identified 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 and the sub-projects to be implemented in Brasov, Rupea, Prejmer, Codlea and Moeciu were required to undergo EIA procedure according to applicable Romanian legislation. Although one of these WWTPs (Brasov WWTP) has a capacity over 150,000 p.e., there will be no change to its capacity but only upgrading of existing treatment to accommodate N and P removal. The other WWTPs have capacities under 150,000 p.e. The potential impacts of all sub-projects can be addressed through the identified mitigation measures. Therefore all sub-projects have been categorised as B. 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 project will bring the Company’s operations into compliance with the relevant EU Directives and did not identify any significant adverse impacts or non-compliances with the EBRD PRs and identified further management, mitigation and improvement measures. 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. Presently, Apa Brasov is exempted from meeting wastewater discharge quality parameters for several indicators. The implementation of the sub-projects for water supply and wastewater discharge and treatment will ensure compliance with national and EU requirements within the transitions 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 ESDD showed that the project will result in significant environmental benefits and improve the quality of the local environment and mitigate public health risks in the County of Brasov by extending the drinking water supply and wastewater collection networks, improving drinking water treatment and quality, improve sewage collection, and improve existing and introduce new biological waste water treatment systems. As a result of the project, more than 50,000 inhabitants in the project area will have access to safe water supply and more than 90,000 inhabitants will have improved sanitation and sewerage services. The ESDD established that the Company’s existing EHSS management systems are well developed and it has ISO 14001, ISO 9001, and OHSAS 18001 management system certifications and is in the process of implementing ISO 22000 (Food Safety) standards. However, further improvements to the Company’s institutional capacity, organisational structures and contractor management practices are needed to meet the Bank’s PRs. 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 Client's operations into compliance with the EBRD's PRs. ESAP commits the Company amongst others to improving grievance mechanism for employees and contracted workers; incorporating in the tender documents and contractor agreements the specific conditions and protection measures for construction activities and monitoring of contractor's compliance; developing and implementing a training programme, developing and implementing a cultural heritage chance find procedure and management plan; and adopting and implementing Stakeholders Engagement Plan compliant with EBRD PR 10 as well as undertaking systematic monitoring of the internal and external social and environmental impacts of 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 required. The Brasov sub-project will benefit from overall TC under the Framework, including an analysis of the environmental and social impacts, issues and risks and a gap analysis (€ 125,100 - financed by Spain), institutional and financial due diligence (€ 74,800 - financed from the EBRD’s own resources) as well as a benchmarking and FOPIP programme (€ 750,000 - financed by the EBRD’s Shareholder Special Fund).