Sakha (Yakutia) Republican MSDP GUP ZhKH

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The proposed project would involve loans to the City of Yakutsk (the City), State Unitary Enterprise “Yakutsk Vodokanal” (the Vodokanal) and State Unitary Enterprise of Communal and Housing Services (GUP ZHKH) of the Republic of Sakha (Yakutia). The project would focus on priority investments that reduce operating costs and finance general rehabilitation and upgrading of the heating and water systems in the City and smaller municipalities of the Republic of Sakha (Yakutia) (the Republic). The project would also finance institutional strengthening of service companies and the Republican Government and the municipal authorities in the City. The project is likely to have significant demonstration effects, as it will be the first long-term municipal infrastructure loan on a regional scale in the Russian Far East. The transition potential of the operation relates to optimisation of budget expenditures related to provision of communal services in the remote northern settlements with harsh climate conditions; commercialisation of water and heating services in the city of Yakutsk and northern settlements through tariff reform, optimisation of subsidies to low income residential consumers and through development and reorganisation of operating companies providing services to municipalities in the Republic on a basis of an incentive based Service Contracts. The project will also contribute towards strengthening of corporate governance standards in operating companies through introduction of IFRS for financial reporting. The borrowers will be (i) the City; (ii) the Vodokanal; (iii) GUP ZHKH. The Republic will provide a guarantee and project support undertakings to support the project. Lending programme to include: (i) a loan up to RUB 300 million (EUR 8.5 million) to the City; (ii) a loan up to RUB 350 million (EUR 10 million) to Vodokanal; (iii) a loan up to RUB 1000 million (EUR 28.4 million) to GUP ZHKH. RUB 2,500 million (EUR 71 million) The project has been screened B/1 requiring environmental analyses of the two components of the proposed multi-sector municipal services development programme. The environmental analysis indicates that the project would have a positive overall benefit on public health and the environment. The operation will enable the Republic and the City to (i) reduce pollution of the drinking water by upgrading its water intake facilities and distribution network; (ii) reduce pollution of the local rivers by rehabilitation of wastewater collection network; (iv) reduce greenhouse gas emissions from the heating plants by increasing efficiency of boilers and heating systems as a whole. The project will meet Russian environmental, health and safety standards and will contribute towards achieving compliance with relevant EU environmental standards. Temporary environmental impacts may be generated during construction and land-take, such as increased level of noise, dust and traffic (in the City). Such temporary impacts, however, will be minimised through the incorporation of good management practice including forewarning and signing of works, restriction of working hours, development of traffic management schemes offering alternative routes to traffic and pedestrians, etc. Loan financed TC: Grant financing will be sought for: Previous Technical Cooperation included: