Page 1 1 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE I. Basic Information Date prepared/updated: 05/22/2006 Report No.: AC2078 1. Basic Project Data Country: Romania Project ID: P088252 Project Name: MUNICIPAL SERVICES PROJECT Task Team Leader: Sudipto Sarkar Estimated Appraisal Date: May 1, 2006 Estimated Board Date: June 13, 2006 Managing Unit: ECSIE Lending Instrument: Specific Investment Loan Sector: General water, sanitation and flood protection sector (100%) Theme: Other urban development (P) IBRD Amount (US$m.): 131.70 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: BORROWER 38.9 38.9 Environmental Category: B - Partial Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) Yes [ ] No [X] 2. Project Objectives The objective of the project is to assist Romania to meet EU environmental directives in the water and wastewater sector. This objective will be met through: a) the support of infrastructure development in the municipalities of Bucharest and Arad to provide better water and wastewater service and improve stormwater management; and b) preparation of priority water and wastewater projects in 11 counties. Projects are being prepared in anticipation of potential financing by EU Structural and Cohesion grants along with other co-financing. The indicators to determine project progress are summarized below. • Improved access to water supply meeting EU standards; • Improved access to sanitation meeting EU standards; • Proportion of the project area protected from flooding; • Improved road surfacing (in areas where water, sewerage, and stormwater networks will be laid); and • Projects accepted for EU funding or funded from other sources. Page 2 2 3. Project Description The project will have three components, on which information is presented below. Component 1: Urban services in Bucharest Municipality (Cost: 73. 9 million; Bank loan: 48.0 million) . Eligible expenditures under this component would be for (i) Works and goods for the provision of new urban services – water, sewerage, drainage and road surfacing – in priority neighborhoods; and (ii) Technical Assistance to prepare bidding documents, for construction supervision, and support to the municipality to implement the project. About 20% of the population of Bucharest does not have access to water supply and wastewater services that meet EU standards. The municipality has embarked on a 5-year program, consisting of four phases, to improve the urban infrastructure in the city to EU standards. The program comes out of the General Urban Plan, the Water Supply Master Plan and the Wastewater Master Plan which prioritize areas of greatest need and future growth within the city. This project covers Phase I of this program and foresees the extension of water supply, sewerage and stormwater services in two out of the six sectors in the city. Within these two sectors, the municipality has identified 7 priority locations – a combination of partly built-up area and new residential areas – based on the approved urban development plan. The project will include the following: • Water supply: Households in built-up areas now relying on well water will be connected and water will be supplied to new development areas. In the new development areas, the project will extend the water and wastewater investments made under the EU PHARE project to provide services to priority new developments. The pipelines will improve the hydraulics of the city-wide water supply network and improve the reliability of water supply and pressure in the network which in turn will improve the functioning of the system. The existing water treatment plant and transmission lines have sufficient capacity for the proposed extension areas; • Sewerage: Households will be connected to the sewer system, which will feed a wastewater treatment plant that has sufficient design capacity for the increased sewerage load. This treatment plant is currently being upgraded with assistance from the EU; • Stormwater drainage: Stormwater drains will be laid to reduce flooding, especially in the low lying areas of the city. Lagoons will be used to retain stormwater to reduce the hydraulic load to the receiving water body; and • Road paving: The water and wastewater services in Bucharest municipality are provided by Apa Nova, a private operator, through a concession contract with the Municipality of Bucharest. As per the concession contract, the concessionaire can take on the responsibility of providing water and wastewater services only once the streets are paved. By paving the roads the municipality will be in a position to Page 3 3 include the project areas in the concession contract. Paving has additional benefits for traffic and for reducing siltation in stormwater drains. Component 2: Urban services in Arad Municipality (Cost: 50.3 million; Bank loan: 47.2 million). Eligible expenditures under this component would be for: (i) Works and goods for the provision of new urban services – sewerage, drainage and road surfacing – in priority neighborhoods; and (ii) Technical Assistance to prepare bidding documents, for construction supervision, and support to the municipality to implement the project. Arad has a population of 190,000 and is experiencing rapid industrial growth stimulated by the industrial zones created within the city and the border trade with Hungary and other EU Member States. Meeting EU standards through improved urban services is a high priority for the municipality, including the construction of a sewerage and stormwater network to meet the industrial growth needs. The project will cover three districts in Arad municipality. About 90% of the population living in the project areas does not have access to public sewerage and uses septic tanks that leak to the groundwater, which is high in the Arad area. The project areas also need proper drainage facilities as they are prone to flooding. The project investments are: • Sewerage: Households will be connected to the sewer system, which will feed anew wastewater treatment plant being built with EU financing. This plant will treat the collected wastewater to EU standards; • Stormwater drainage: Stormwater drainage will be installed, especially in the low lying project areas; and • Road paving: Roads in which sewerage pipes and stormwater drains are installed will be restored to at least their original quality. However, road paving has benefits for the traffic and the impact on vehicle maintenance and reduces silatation of the stormwater drains. The municipality will determine, prior to construction, whether or not roads in each district should be paved. This determination will be based on a satisfactory economic rate of return for the Bank to provide no objection to road paving. Component 3: Project Preparation for the EU (Cost: 1 3.1 million; Bank loan 11.0 million). Eligible expenditures under this component will be for consulting services to prepare projects in 11 counties. This component will be implemented by the Ministry of Environment and Waters Management (MoEWM). The MoEWM has already started project preparation in 30 counties, and together with the 11 countries in this project, all counties will have prepared projects. The MoEWM will ensure the following: a) Romania complies with its commitments made to the EU on making improvements in the environmental sector; b) EU grant funds, Page 4 4 as available, are effectively used; and c) the local capacity is developed to prepare and implement projects. The MoEWM has chosen 11 counties, covering about 5 million people, where priority water and wastewater projects will be prepared. These counties are: Arad, Sibiu, Galati, Dolj, Ilfov, Mehedinti, Vrancea, Bistrita – Nasaud, Braila, Constanta, and Ialomita. Within the MoEWM, the General Directorate for Management of Structural Instruments will manage this component. As this directorate is responsible for the programming of EU Structural and Cohesion Funds for the environmental sector, it is fully aware of the EU procedures that will be followed under this project. There will be two consulting contracts that will be used for the Technical Assistance. The Terms of Reference will be similar to the ones used for the other counties that have also started the process of preparing projects securing EU grant funds. The consultancy services will be for: (a) data collection and assessment of the current situation related to water and wastewater infrastructure in each country; (b) development of a Master Plan at the country level to identify priorities; (c) completion of detailed feasibility studies; (d) completion of Application Forms to seek EU Cohesion and Structural Funds; (e) Institutional Strengthening at the central, regional, and local levels for efficient management of environmental investments; and (f) preparation of complete tender dossiers to implement works and services contracts as outlined in the feasibility studies. 4. Project Location and salient physical characteristics relevant to the safeguard analysis The Project is located in the municipalities of Bucharest and Arad. The two municipalities were chosen as they have heavy pollution loads and thus high investment needs. The Project is one of the first projects to pilot the use of country systems to meet the World Bank’s safeguard requirements, and has been prepared in accord with the requirements of the World Bank operational policy (OP/BP 4.00) “Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank- Supported Projects” issued in March 2005. Under this policy, all investments to be financed by this project will apply Romanian environmental and social laws, regulations and Environmental Impact Assessment (EIA) and Cultural Property guidelines and legislation for selected safeguard policies on a pilot basis as appropriate. 5. Environmental and Social Safeguards Specialists Mr Norval Stanley Peabody (ECSSD) Ms Ruxandra Maria Floroiu (ECSSD) Page 5 5 6. Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) X Natural Habitats (OP/BP 4.04) X Forests (OP/BP 4.36) X Pest Management (OP 4.09) X Cultural Property (OPN 11.03) X Indigenous Peoples (OP/BP 4.10) X Involuntary Resettlement (OP/BP 4.12) X Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank- Supported Projects (OP/BP 4.00) X II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: For the project, the following safeguards will be triggered: (a) Projects on International Waterways; and (b) Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank Supported Projects. Under the latter policy, the Bank is recommending the use of Romanian systems to address the Bank policies on Environmental Assessment and Cultural Property. Equivalence and Acceptability Assessments : This project was selected for piloting the use of country systems under the Bank’s OP/BP 4.00. Thus, a safeguards diagnostic study was undertaken to assess: (a) the equivalence of Romanian systems and World Bank requirements; and (b) the acceptability of implementation practices, track record and capacity of the agencies involved. 1 The equivalence and acceptability assessment was carried out by an interdisciplinary team of Bank staff in collaboration with relevant Government staff. The Bank review included meetings and site visits in cooperation with environmental officials at the central, regional and local levels. The methodology included desk review of current legislation and supporting mandatory guidelines. The results of the diagnostic review indicate that the operational principles of Environmental Assessment as stated in Table A1 of OP 4.00 and the Romanian Environmental Impact Assessment (EIA) system have many common features and that there are no gaps in equivalency. With respect to the acceptability, it was also found that Romania’s current approach to EIA conforms to OP 4.00. As per Bank’s policy on Environmental Assessment, the project is categorized as an environmental category B 1 Safeguards Diagnostic Review for Piloting the Use of Romanian Systems to Address Environmental and Social Safeguard Issues in the Proposed World Bank-Assisted Romania Municipal Services Project and Transport Sector Support Project . Equivalence and Acceptability Assessment Report. World Bank, Final Draft April, 2006. Page 6 6 since the investments will be related to small civil works without significant impact to the environment. Regarding cultural property, the Romanian systems are equivalent to that of the Bank and appropriate for application, if needed. If the project requires construction or rehabilitation near historic buildings or other physical cultural resources, or if “chance finds” are encountered, Romanian systems are at least as effective as those outlined in OP/BP 4.00 on such points. Inventories of buildings and sites of cultural significance are available, and stakeholders are consulted to assess whether proposed investment projects might cause impact. Local experts on archeology, architecture and other relevant fields are brought in for assessments before construction decisions are made, and if “chance finds” are encountered during construction. Bank supervision on safeguard-related matters will continue, on a semi-annual basis, throughout the implementation of the proposed project to ensure compliance with equivalent and acceptable Romanian procedures and track results. The equivalency analysis did not cover the Bank’s policy on International Waterways where the Bank’s policy will apply for components 1 and 2 of the project as: in Bucharest stormwater will be discharged to the Dambovita River that discharges to the Arges River that flows into the Danube River – an international waterway. In Arad the stormwater discharge will flow into the Mures river that flows into the Tisza river in Hungary which meets the Danube in Hungary before it flows through Romania to the Black Sea. Further, in both cities, additional wastewater will be collected due to sewerage connections. This wastewater will be fully treated before it is discharged to the Mures and Dambovita rivers. Although the impact of the project is negligible compared to the flow of the Danube River, in accordance with Bank policies, the MoEWM informed the International Commission for Protection of the Danube River (ICPDR) on December 28, 2005 about this project. On February 22, 2006, the ICPDR replied to the MoEWM acknowledging receipt of the letter from the Government and did not raise any objections to the project. The ICPDR also mentioned that it had informed the riparians and welcomed the initiative taken by Romania to improve the Danube water quality. For the component 3 of the Project, under OP7.50, riparians are also required to be notified about any projects under preparation that may impact the international waterways. On May 15, 2006, the MoEWM sent a supplemental notification informing the ICPDR about the technical assistance component which will include the preparation of tender dossiers (encompassing detailed design and engineering studies) for Romania to seek EU grant funds. The ICPDR has been given until May 31, 2006 to respond to the supplemental notification. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: The investments supported are all intended to improve local services and the population’s health and social welfare and will be designed to minimize adverse effects. No significant indirect or long-term impacts are expected. Page 7 7 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. N/A 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. As per Bank’s Operational Policy 4.00, the use of the country systems for the environmental and social safeguards is being piloted. As stated above, Romania has agreed to implement the measures identified in the safeguards diagnostic review report prepared by the Bank to sustain equivalence and acceptability of piloted safeguard- related policy areas. The requirements of the policy on International Waterways (OP 7.50) have been met. As noted above, Romania has completed notification. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Staff from the Ministry of Environment and Water Management (MoEWM) and the World Bank jointly organized a public consultation workshop to discuss the draft version of the Equivalence and Acceptability Report in Bucharest in December 2005. The MoEWM had circulated copies of the Executive Summary of the draft report to a large number individuals and relevant agencies inviting them to participate in the public consultation and comment on the report. Over thirty-five people, representing non- Government officials, consultants, academia, and various Government departments, attended this workshop. Participants expressed their support to the proposal to pilot Romanian environmental and social system in the context of the project and agreed with the findings and gap filling actions proposed to achieve and sustain equivalence and acceptability. The full report, including the executive summary, was disclosed in Romania and in Washington on January 25, 2006. A final version of the document will be disclosed in Romania and Washington DC by the Board date. B. Disclosure Requirements Date Safeguards Diagnotics Review Report: Date of "in-country" disclosure 01/25/2006 Date of submission to InfoShop 01/25/2006 C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP 4.01 - Environment Assessment Does the project require a stand-alone EA (including EMP) report? N/A Page 8 8 If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? N/A Are the cost and the accountabilities for the EMP incorporated in the credit/loan? N/A OP/BP 4.12 - Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been prepared? For components 1 and 2, works will be carried out on public lands owned by the municipalities of Bucharest and Arad and as a result t he Bank’s policy on Involuntary Resettlement that includes land acquisition will not be triggered. Under the Project Agreements, the two municipalities have also confirmed that the implementation of the project will not cause the Bank's policy on Involuntary Resettlement to be triggered. N/A If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? N/A OP 7.50 - Projects on International Waterways Have the other riparians been notified of the project? Yes If the project falls under one of the exceptions to the notification requirement, has this been cleared with the Legal Department, and the memo to the RVP prepared and sent? N/A What are the reasons for the exception? Please explain: The Bank loan will prepare feasibility study for water and wastewater investments, exceptions in line with para 7b Has the RVP approved such an exception? N/A The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank's Infoshop? Yes Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? Yes All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Yes Have costs related to safeguard policy measures been included in the project cost? N/A Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Yes Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? Yes Page 9 9 D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Sudipto Sarkar 05/22/2006 Environmental Specialist: Ms Ruxandra Maria Floroiu 04/25/2006 Social Development Specialist Mr Norval Stanley Peabody 04/26/2006 Additional Environmental and/or Social Development Specialist(s): Approved by: Regional Safeguards Coordinator: Mr Ronald N. Hoffer 05/24/2006 Comments: Sector Manager: Mr Sumter Lee Travers 05/22/2006