R2CF Iasi Sub-Project

complete

The EBRD is considering to provide up to €200 million co-financing for projects in Romania’s water and wastewater sector alongside EU Cohesion Funds. The projects will improve the quality of drinking water in Romania and expand wastewater collection and treatment in line with relevant EU water and wastewater legislation. The Framework, the Constanta and Iasi Sub-Projects 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. SC Raja SA Constanta and RAJAC Iasi have been EBRD clients since 1997 and provide water and wastewater services in most towns of Constanta County and in the City of Iasi respectively. The Companies are now expanding into neighbouring localities in Ialomita County (SC Raja SA Constanta) and around the City of Iasi (RAJAC IAsi). Categorised B. The potential environmental and social (E&S) impacts of construction/rehabilitation of wastewater treatment plants and extension and rehabilitation of water distribution and sewerage networks are site-specific and readily addressed through adequate mitigation measures. The due diligence has confirmed that all sub-projects have been screened by the environmental authorities and Environmental Impact Assessments (EIA) were not required for any of the sub-projects. Although one of the WWTPs (Iasi WWTP) has a capacity over 150,000 p.e., there will be no change to its capacity, the project will reduce its effluent discharges and any adverse impacts are addressed through mitigation measures. The other WWTPs have capacities below 150,000 p.e. Therefore all sub-projects have been categorised as B. For all sub-projects, limited impact analysis had been performed for the EU Cohesion. Fund application in the form of Technical Memorandums including information on potential impact sources and a description of the necessary mitigation measures was integrated in the design of the facilities. EBRD 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 prepared for the EU Cohesion Fund application to assess the project's compliance with the EBRD PRs. The due diligence showed that the project will result in increase connection rates by around 2 per cent for water services and 17 per cent for wastewater and will enable the Company to provide water and wastewater services in compliance with EU standards at affordable tariffs and continue improving the efficiency of its operations. The rehabilitation of the drinking water supply and sewage collection networks will enable sustainable water and wastewater services delivery. Declarations by the authority responsible for Natura 2000 sites are available for the subprojects. According to these declarations the sub-projects are not likely to have significant impacts on Natura 2000 sites as their locations are not inside or adjacent to protected areas. Wastewater from the 4 agglomerations is discharged in watercourses tributary to the Prut River, a Habitats Directive SCI (ROSCI0231). Project implementation will result in improvement of water quality parameters in the natural courses with positive impacts on the Prut River. The Company has an integrated quality, environmental, health and safety management system in place for both water supply and wastewater systems. Clearly defined procedures and responsibilities for each department, adequately qualified and trained personnel, ensure that ongoing operations are appropriately managed. The affordability analysis shows that water and wastewater services are expected to remain affordable for the average as well as the lower decile households in Iasi. Any potential adverse environmental impacts associated to the project activities are addressed through the adoption of good international construction practices and a number of mitigation measures for managing environmental, health and safety issues. In addition, a project Environmental and Social Action Plan (ESAP) has been prepared for achieving compliance with the EBRD PRs and agreed with the Company. The main action items in the ESAP are related to improvement of the institutional capacity and strengthening of the organisational structures; detailed assessment of potential E&S impacts of all sub-projects and applicable mitigation measures and including these as requirements in tendering, contracting documents and management plans; improvement of contractor management; monitoring of E&S impacts of the project; improvement of grievance mechanisms; and development and implementation of a Stakeholders Engagement Plan. The EBRD will monitor the project E&S performance through annual reports and site visits, as needed. €1.3 million for the Framework including: €700,000 for performance benchmarking, operational improvements and efficiency programmes; €380,000 for institutional strengthening in the sector; €120,000 for environmental assessments and €100,000 for financial and legal due diligence.