R2CF Dambovita -Targoviste 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 56 million (equivalent €13 million loan) alongside up to RON 463 million (equivalent €107.7 million) from EU Cohesion Funds, as well as the funding from the local and state budget to finance a RON 717 million (equivalent € 166.7 million) regional water investment programme of the Compania de Apa Targoviste-Dambovita. The investment programme will help the company to extend and rehabilitate the water and wastewater infrastructure in 33 municipalities representing nearly one third of the population in Dambovita County. As a result of the project, more than 170,000 inhabitants in the project area will have improved access to safe water supply and sanitation services. The proposed sub-project is part of the €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 Dambovita County, which will result in efficiency gains as well as the transfer of commercial and managerial skills to less-developed localities in the county. Compania de Apa Targoviste-Dambovita has been a Bank client since 1997 under the Municipal Utilities Development Programme II (“MUDP”) and has already undergone significant reforms since then. The Company reorganised in January 2009 into a regional water company, and will now expand its services to one third of the Dambovita county, serving 6 towns (Targoviste, Moreni, Gaesti, Pucioasa, Titu, Fieni) and 27 rural communities. RON 56 million (equivalent €13 million loan) for Dambovita Sub-Project. RON 717 million (equivalent € 166.7 million) for Dambovita Sub-Project. Project Categorisation The Project has been categorised B in accordance with the EBRD Environmental and Social Policy. 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 due diligence has confirmed that all sub-projects have been subject to EIA screening process by the environmental authorities. The sub-project to be implemented in Dambovita was subject to a full EIA screening procedure whereas for the other sub-projects to be implemented in Moreni, Gaesti, Fieni, Pucioasa and Titu 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 all sub-projects fall under category B. Due Diligence Carried Out and Results The due diligence for the project included an environmental and social review of the Company management systems, an audit of selected facilities; and a gap analysis of the project appraisal documents for the project prepared for the EU Cohesion Fund application to assess compliance with the EBRD PRs. The investigations showed that the project will result in the following significant improvements in public health and benefits for the public: The Project will also enable the Company to provide water and wastewater services in line with EU standards at affordable tariffs as well as to continue to improve the efficiency of its operations. In case of the agglomerations, some of the project components in Gaesti and Fieni will be implemented within NATURA 2000 sites. At Gaesti the last section of the collecting pipe, the waste water treatment plant and in the some sections the evacuation pipe are located within ROSCI 0106 “Lunca Mijlocie a Argesului”. At Fieni, the water catchment front and part of the trunk line are located within ROSCI 0013 ”Bucegi”. Potential impacts on these sites have been assessed as part of the Technical Memorandums. Declarations by the authority responsible for Natura 2000 sites have been issued for the Sub-projects, stating that the proposed developments are not likely to have significant impacts on Natura 2000 sites. Mitigation Measures All potential environmental impacts associated to the project activities are addressed through the adoption of good international construction practices in line with EU requirements, and a number of mitigation measures to address environmental, health and safety issues. In addition, the Company has committed to a project specific Environmental and Social Action Plan to meet EBRD Environmental & Social Policy requirements, covering the following: Monitoring and Review The Company will establish and implement a monitoring programme to measure compliance with environmental and social requirements, as well as implementation of the ESAP and the Contractor monitoring provisions. EBRD will monitor the project through reviewing the Company’s annual environmental and social reports and monitoring visits, as appropriate. €970,000 TC funding was approved for the overall Framework, from which this sub-project will benefit, including: