Sibenik Wastewater Investment Programme

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The EBRD is considering providing a €10 million loan to Vodovod i odvodnja d.o.o. Sibenik (the “Company”), municipal water and wastewater company providing services in the area of the City of Sibenik, to finance the rehabilitation and upgrade of the wastewater infrastructure in the Sibenik area. The project would increase the coverage of the sewage network in Sibenik area and enable the company achieve compliance with the EU directives. The Project is expected to provide significant transition impact through implementation of the following measures: 1. The signing of a Public Service Contract (PSC), between the Company and the City. 2. A review of the existing tariff setting procedures and improvements to the existing structure, which might include the elimination of tariff differentials between the various customer groups. 3. Operational and cost efficiencies, through the implementation of a Financial and Operational Performance Improvement Programme. Vodovod i odvodnja d.o.o. Sibenik (the “Company”), the municipal water and wastewater company providing services in the area of the City of Sibenik. The Company is majority owned by the City of Sibenik (63 per cent) and surrounding municipalities (37 per cent). A senior loan of up to €10.0 million. Up to €16.5 million. The project has been categorised B in accordance with EBRD's 2008 Environmental and Social Policy. Environmental and social due diligence (“ESDD”) for the project was carried out by independent consultants and consisted of an Environmental and Social audit/review of the Company's existing corporate management systems, facilities and operations; review of the Company's compliance status; analysis of the Environmental and Social impacts and benefits of the priority investment programme, as well as preparation of an Environmental and Social Action Plan (“ESAP”) and Stakeholder Engagement Plan (“SEP”) to structure the project to meet EBRD Performance Requirements. The due diligence concluded that the project will provide substantial environmental and health benefits compared to the existing situation, by significantly increasing the coverage of the sewage network in the Sibenik area; creating more favourable conditions for tourism by improving the quality of the environment, shallow groundwater and coastal waters – including bathing areas; and removal of localised nuisances associated with septic tank systems. The implementation of the investment programme involves construction works that will result in limited, localised and short-term adverse environmental impacts, which can be mitigated or prevented by adhering to good construction practice and relevant Environmental Health & Social Standards (“EHSS”) mitigation measures will be included in the tender documentation for construction. The tariff increases associated with the project are not expected to raise affordability issues or constraints. The ESAP has been developed to mitigate the identified Environmental and Social issues and impacts during preparation, construction and operation of the Project, and to bring the Company’s operations into compliance with the EBRD's Performance requirements. The main requirements in the ESAP include the development and implementation of EHSS management systems, specific water and wastewater management improvements as well as the implementation of the SEP and grievance mechanism prior to the start of construction works. The ESAP also includes the necessary medium-long term investments to bring the Company’s wastewater treatment and sludge management into compliance with the respective EU Directives. The Company's Environmental and Social performance and implementation of the ESAP will be monitored through Annual Environmental and Social Reports and monitoring visits. Technical and Environmental and Social Due Diligence – financed by the EBRD Shareholder Special Fund (€74,500). Financial and Operational Performance Improvement Programme (FOPIP) to the Company - including the corporate assistance, improved cost efficiency, long-term planning, and implementation of a cost recovery tariff model and preparation of the PSC. To be financed by an international donor (€245,000). Project Implementation Support – to be financed by the Government of Austria (€287,000).