Location: Bosnia and Herzegovina
Project number: 49840
Business sector: Municipal and environmental infrastructure
Notice type: Public
Environmental category: B
Approval date: 29 Jan 2020
Status: Passed Final Review, Pending Board Approval
PSD disclosed: 14 Oct 2019
Project Description
Provision of a sovereign loan to the state of Bosnia and Herzegovina ("BiH"), which will be on-lent through a legislated cascade of sub-loans from BiH via the Federation of Bosnia and Herzegovina (the "FBiH") to Sarajevo Canton (the "Canton") for the construction of a twin pipe tunnel in Kobilja Glava and connection road to the tunnel (on the 1st Transversal road); and a dual carriage way at the end of the Sarajevo bypass road (on the 9th Transversal road) (the "Project").
Project Objectives
Assisting the Canton to implement its plan to upgrade and modernise its strategic road network by improving urban transport within the city of Sarajevo and connecting it to other parts of the Canton.
Transition Impact
The expected transition impact includes: (i) introduction of procurement certification among the employees and the improvement of corporate governance of the Sarajevo Canton Roads Directorate (the "Directorate") and (ii) improvement of infrastructure for more effective connectivity within the Canton.
Client Information
Bosnia and Herzegovina Soverign
The borrower is BiH. The loan will be on-lent to the FBiH and further to Canton. The Directorate will act as the implementing agency for this Project.
EBRD Finance Summary
EUR 30,000,000.00
A sovereign loan of up to EUR 30 million, to be on-lent to the Canton. The loan will be provided in two tranches of EUR 10.0 million for Tranche 1 and EUR 20 million for Tranche 2.
Total Project Cost
EUR 46,435,000.00
Co-financing will be provided by the Canton and the FBiH.
Environmental and Social Summary
Categorised B (2014 ESP). Overall, the Project is expected to result in benefits for residents in Sarajevo; principally through faster journey times and better connectivity within the city. Environmental and social due diligence ("ESDD") was carried out by an independent consultant and focused on the Directorate, which operates as part of the Ministry for Traffic of Sarajevo Canton, their operations and capacity to implement the Project in line with EBRD PRs.
An Environmental and Social Action Plan ("ESAP") has been developed to address any environmental and social ("E&S") shortcomings and bring the Project in line with EBRD Performance Requirements ("PRs") and will be agreed with the Client prior to Board approval. A disclosure package that includes an overarching Non-Technical Summary ("NTS"), Land Acquisition Framework ("LAF") and Stakeholder Engagement Plan ("SEP") will be disclosed.
The ESDD showed that the Directorate has very limited capacity to manage EHSS issues and lacks E&S and H&S management systems, policies and plans and does not have dedicated E&S or OHS personnel within the organisation. The Directorate has been struggling with implementation of PRs and reporting to the Bank on the previous Project with EBRD. Even though a PIU has been set up for this Project, no person with EHHS capacity has been appointed yet. Human resources are managed at the ministry level, which operates in line with national Labour Law and is aligned with EBRD PR 2. However, there is no employee grievance mechanism in place. EBRD's requirements on labour and working conditions during construction will be included in Construction Tender Documents for the Project.
The national requirements for environmental assessment have been partially met through the conducting of an Environmental Impact Assessment ("EIA") for the 1st Transversal road and an Environmental Permit ("EP") was issued by the Federal Ministry of Environment and Tourism in October 2018, which is valid for five years. No EIA for the 9th Transversal road has been prepared to date.
The Project will implement pollution prevention and control measures in line with national and EU standards. Environmental Management Plans for construction and operation will include defined requirements for monitoring, in-water and near-water works, waste management, spoil disposal, borrow sites, spill response, groundwater protection and revegetation of disturbed areas. The Project is in a highly urbanised area, with no significant, protected or potentially endangered plant and animal species, or critical habitats. At a minimum, the Project will however be required to develop a revegetation plan for any disturbed areas.
Land acquisition, predominantly of privately-owned parcels, will be needed on the 1st Transversal road (17 land parcels, including five residential structures), and 13 temporary commercial structures on municipal land on the 9th Transversal road will be affected, which will therefore give rise to some physical and economic displacement. A Land Acquisition and Resettlement Framework ("LARF") has been developed and will be disclosed in line with EBRD PR 5 requirements prior to Board. The Project's land acquisition process is not progressed enough to develop a Land Acquisition and Resettlement Plan, which needs to be prepared ahead of klix implementation of the resettlement and construction activities for the Project.
There has been public consultation carried out during the development of the Project and a SEP has been prepared for the Project. This includes requirements for public engagement during the pre-construction and construction period, including awareness raising activities with the local communities on community health and safety and the grievance mechanism for the Project. A formal Road Safety Audit has not been conducted to-date although is proposed in the ESAP. Other ESAP measures include the introduction of EHHS management systems and policies by the Directorate and appointment of suitably skilled E&S personnel, introduction of employee grievance mechanism, development of construction and operational ESMPs, preparation of Traffic Management Plan and a Chance Finds Procedure and development of Land Acquisition Plans as well as implementation of the SEP.
The Bank will evaluate the Project's environmental and social performance in accordance with the Bank's PRs through review of reports and monitoring visits.
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