R2CF Covasna sub-project

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Translated version of this PSD: Romanian The EBRD is considering providing a loan of to €7.6 million to S.C. Gospodarie Comunala S.A for water and wastewater infrastructure improvements. The financing is a sub-project of the €200 million Framework for Romania EU Cohesion Fund Co-Financing for regionalised water companies (the “Framework”). The project will be cofinanced by a regional investment programme of up to of €78.9 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 investments are expected to significantly reduce water losses, optimise operating costs and expand the water supply and wastewater collection and treatment services in Covasna County, in line with relevant EU directives. The sub-project will support environmental improvements as well as the continued regionalisation of water and wastewater services in Covasna County, which will result in efficiency gains as well as the transfer of commercial and managerial skills to less-developed localities in the county. The Company will participate in a benchmarking programme alongside other borrowers under the Framework, which was approved by the Bank to co-finance projects in Romania’s water and wastewater sector alongside EU Cohesion Funds. The project will also inlcude tariff adjustments to achieve financial and operational sustainability. In addition, the transition impact potential for this Project will be further enhanced based on the fact that the Company is expanding to smaller and less developed communities, resulting in a greater scope for institutional capacity building. S.C. Gospodarie Comunala S.A. (Apa Canal Covasna). Senior loan of up to €7.6 million. Up to €86.5 million. The Project has been categorised B in accordance with the EBRD Environmental and Social Policy. The potential E&S impacts associated with the project components can be readily identified and addressed through adequate mitigation measures. The project is expected to result in significant community health benefits. One of the eligibility criteria for sub-projects under this Framework is approval of the Companies' investment programmes by the EU Cohesion Fund programme. The due diligence for each sub-project will include: Based on the recommendations of the due diligence an Environmental and Social Action Plan (ESAP) will be prepared for each sub-project. The ESAPs will be structured to bring the existing facilities and operations, including water, wastewater and sludge management/disposal into full compliance with national and EU environmental standards. The participating companies will also develop a Stakeholder Engagement Plan in accordance with PR10. The ESAPs will be part of the legal agreements between the participating companies and the EBRD. This PSD will be revised once the due diligence and ESAPs are finalised. The 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).