EuropeAid Water Investment Support Facility WISF-01: Environmental / Social Preparation Study for ADB Djizzak & Surhandarya Water Supply & Sanitation Project WISF-03: Environmental / Social Preparation Study for World Bank Ferghana Valley Water Resources Management Project Press Conference Tashkent 20 July 2007 WISF Team Leader: George McDonnell

Encouraging Environmental Investment International Financial Institutions like ADB and the World Bank have a long history of financing water related projects: –IFIs use toughest project evaluation methods available –IFIs can therefore provide good examples of large scale effective water projects –Project preparation is the key to IFI investment decisions

The IFI Decision Process 1 Initial analysis of all suggestions: Analyse need Analyse potential impact Analyse capacities Initial financial projection Project B Project A Project C Project D …….. Project E Project F Project Z Demand for projects IFIs (ADB, World Bank) List of potential projects For example projects that help implement a Country Assistance Strategy (CAS) IFI officia l

The IFI Decision Process 2 IFI Project Decision Document (e.g. PAD) IFI officia l Which potential projects deserve support ? Project Preparation Studies IFI Board Decision- making body approves or rejects loan Problem: who pays?

IFI Project Preparation Study An IFI loan requires a very detailed project preparation study covering financial, technical, environmental, social and other aspects Therefore professional preparation studies are needed to explore the issues affecting the potential impact of a project These studies are expensive, but essential

The Problem Project preparation studies cost a lot –IFIs can’t always finance them –They cannot normally be financed through loans A Solution EuropeAid can fund some of these studies Project Preparation Studies… Who pays?

Why EuropeAid Project Preparation Studies? EuropeAid resources are too small to finance large environmental investments in the CIS, but EuropeAid can support project preparation studies EuropeAid has done this before – lots of experience with EBRD and European Investment Bank

Water Investment Support Facility Summary WISF is helping IFIs such as ADB and World Bank prepare seven EU Water Initiative related water projects in Uzbekistan and the Caucasus WISF is helping prepare IFI water projects with a total budget of approx. EUR 340m

WISF Project Management In June 2005 EuropeAid signed the WISF contract with Euroconsult Mott MacDonald (NL) in cooperation with: –BCEOM (FR) –Mazars and Guerard (FR)

WISF Background WISF was developed by EuropeAid in collaboration with IFIs WISF is the most recent EuropeAid project preparation facility (others: Joint Environment Programme, Black Sea Investment Facility etc)

WISF Background contd. Banks want to develop Water Supply and Sanitation and Integrated Water Resource Management However, the banks need project preparation support WISF = one source of project preparation support WISF is carrying out eight project preparation studies for seven IFI projects in Uzbekistan and the Caucasus

WISF Facts & Figures The eight studies are for Asian Development Bank, EBRD and World Bank projects –Armenia (1) (EBRD) (completed) –Azerbaijan (2) (World Bank) (one completed) –Georgia (3) (EBRD) (completed) –Uzbekistan (2) (ADB & World Bank) (ongoing) WISF Budget: EUR 2.7m WISF Duration: July 2005 – December 2007

The WISF process Project pipeline Steering Committe e WISF Team Leader EuropeAid Project Manager ADB / World Bank Manager Will the project help the EU Water Initiative? Is the project in the country strategy? Is it realistic? Can WISF afford it? Project B Project A Project C Project D …….. Project E Project F Project Z Demand for projects

WISF in Uzbekistan WISF is carrying out two project preparation studies in Uzbekistan WISF-01: Environmental and Social Study for Djizzak & Surhandarya Water Supply & Sanitation Sector Project (ADB) (ongoing) WISF-03: Environmental and Social Assessment for Ferghana Valley Water Resources Management Project (Phase I) (World Bank) (ongoing)

ADB Project Project: Djizzak & Surhandarya Water Supply & Sanitation Project Results: –Improved water supply and sanitation in Djizzak and Surhandarya rayon centres and nearby rural settlements Total Project Cost: USD 31m

ADB Project Preparation Process Three project preparation components: 1.Overall Project Preparation – David King 2.Project Feasibility Study – IKS Consulting (UZ) 3.Environmental and Social Components of the project will be carried out under the WISF-01 study

WISF-01 Data WISF-01 runs from March to July 2007 WISF-01 components: –Task 1: Environmental Assessment –Task 2: Poverty and Social Assessment –Task 3: Social Safeguards WISF-01 Study Manager: Wandert Benthem

WISF-01 RESULTS (1) Environmental Impacts of ADB Project –Little or no environmental impacts –Increased demand from ground water resources –Increased waste water volumes

WISF-01 RESULTS (2) Social Impacts of ADB Project –Project will not result in resettlement –Minor social impacts in two sub-projects –No social impacts in the remaining 10 sub- projects –Improved health –Expected increase of economic activities and standard of living

World Bank Project Project: Ferghana Valley Water Resources Management Project Phase 1 Project Results: improved water productivity and water resources management in three Ferghana Oblast tumans (Rishtan, Baghdad and Altyrayk) Total Project Cost: approximately USD 50m

World Bank Project Preparation Process Two project preparation components: –Technical feasibility study - Mott MacDonald & Temelsu (Study Manager – Bob Davey) –Environmental and Social Assessment – this will be carried out under the WISF-03 study

WISF-03 WISF-03 runs from May to November 2007 WISF-03 components: –Task 1: Environmental Assessment –Task 2: Social Assessment WISF-03 Study Manager: Wandert Benthem

WISF-03 – PRELIMINARY RESULTS Project intervention options currently being formulated Environmental survey has started Social survey has started

Conclusions WISF is a EuropeAid tool to help banks prepare water projects in the Caucasus and Uzbekistan WISF is a “good gamble” by EuropeAid whereby a relatively small facility is helping to mobilise two water projects in Uzbekistan (ADB and World Bank) with a combined total budget of USD 81m WISF will run until December 2007