PROJECT DESCRIPTION The EBRD is considering providing resources to establish a framework of up to EUR20 million to co-finance with international donors priority water and wastewater rehabilitation sub-projects across the Kyrgyz Republic. When established the framework will envisage sovereign loans for on-lending to the water companies involved as appropriate and would address urgently needed water and wastewater infrastructure rehabilitation needs. TRANSITION IMPACT Transition Impact of the sub-project would be: THE CLIENT Government of the Kyrgyz Republic. EBRD FINANCE If agreed by the EBRD's Board of Directors, the Bank will disburse a loan of EUR3 million to the Kyrgyz Republic which will be on-lent to the Jalalabad Water Company. PROJECT COST The total sub-project cost is EUR8.85 million including technical cooperation (TC) funds. The sub-project will be co-financed by SECO. ENVIRONMENTAL IMPACT The Jalalabad Water and Wastewater Rehabilitation sub-project has been categorised B under the 2008 Environmental and Social Policy. An Environmental and Social Audit/Review of the Jalalabad Water Company's current environment, health, safety and social (EHSS) management practices, operations and facilities, as well as an Environmental and Social Analysis of the proposed Priority Investment Programme (PIP) were carried out as part of the feasibility study by independent consultants.The due diligence showed that the overall EHSS management capability of the Company is weak and the EHSS management systems are underdeveloped. The present occupational health and safety, as well as stakeholder engagement practices require further improvement to meet EBRD's Performance Requirements (PRs).The Company's facilities are currently in very poor operating condition resulting in unreliable and low quality water supply, high water losses and excessive energy consumption. Wastewater collection networks are incomplete and wastewater treatment is inefficient and in need of urgent rehabilitation.The implementation of the PIP will lead to significant socio-environmental improvements. In particular, it is expected that implementation of essential improvements to the existing sewerage system and renovation of the WWTP will lead to significant improvements in treated wastewater quality, and minimize the risk of groundwater contamination.The replacement of 50 km of obsolete pipe works in the water supply system will decrease the risk of waterborne diseases in the long-term, in addition, reducing operational costs. Impact during the construction period is limited in duration and extent, and can easily be mitigated by means of adequate measures undertaken with planning and accurate supervision.The affordability analysis did not identify any concerns for the affordability of water and wastewater services. The two post-signing technical cooperation projects to be developed for Corporate Development and Stakeholder Participation Programme would help ensure that the low income levels and social conditions are taken into account when reforming water and wastewater tariffs. They would further address issues such as increased communication with customers about the quality of services, upkeep and repairs, payment of tariffs, the importance of paying in a timely fashion and public health issues.As a result of comprehensive analysis of the needs for improvement of the water supply and sewerage water collection and wastewater treatment, the PIP proposed to use available funds to address most urgent and effective actions to improve the quality and safety of provided services. Although the project will have significant positive impacts on public health and environment, it will not be able to bring the Company into full EU compliance in the short term, mainly due to the fact that there will still be untreated wastewater. To minimise the associated health risks to the local communities, awareness raising programmes will be developed as part of mitigation plans and implemented to prevent risks of water borne diseases.Additional long-term investments required for Jalalabad to achieve full compliance with EU water and wastewater requirements are substantial and beyond the Company's current borrowing capacity. Therefore, due to affordability constraints and limited financial resources, the sub-project requires derogation from the EBRD's Environmental and Social Policy.An Environmental and Social Action Plan (ESAP) has been developed for the Jalalabad Water Company to bring it into compliance with national regulations and EBRD PRs, where financially feasible. The ESAP includes the necessary improvements in the Company's EHSS management systems and capacity, improvements in water monitoring practices, cleaning procedures, formalising and developing better labour and OHS practices, fire safety and emergency response procedures, improving solid waste management practices, as well as managing potential construction EHS impacts. The associated TCs will also assist the Company in building its EHSS management capacity and implementing the ESAP.The EBRD will monitor Jalalabad Water Company's environmental and social performance and its implementation of the Project and the ESAP through annual E&S reports and site visits when deemed necessary. The project completion review will also assess whether the EHSS objectives are met. TECHNICAL COOPERATION Pre-signingJoint Feasibility Study for Osh and Jalalabad Water sub-projects: Preparation of a financial, technical, environmental feasibility study for the sub-projects, including an economic rate of return analysis of the proposed investment, operational review and recommendations for improvements, a brief municipal credit update, and an Environmental and Social Action Plan. (EUR600,000, funding provided by the EBRD Shareholders' Special Fund).Post Loan SigningSub-Project Implementation Support. International consultants to assist the sub-project implementation unit with engineering design, procurement, preparation and evaluation of tenders, contract award and administration, financial control, sub-project management and reporting. (EUR750,000 to be financed by SECO).Corporate Development and Stakeholder Participation Programme to

ACCOUNTABILITY MECHANISM OF EBRD The Project Complaint Mechanism (PCM) is the independent complaint mechanism and fact-finding body for people who have been or are likely to be adversely affected by an European Bank for Reconstruction and Development (EBRD)-financed project. If you submit a complaint to the PCM, it may assess compliance with EBRD's own policies and procedures to prevent harm to the environment or communities or it may assist you in resolving the problem that led to the complaint through a dialogue with those implementing the project. Additionally, the PCM has the authority to recommend a project be suspended in the event that harm is imminent. You can contact the PCM at pcm@ebrd.com or you can submit a complaint online using an online form, http://www.ebrd.com/eform/pcm/complaint_form?language=en. You can learn more about the PCM and how to file a complaint at http://www.ebrd.com/work-with-us/project-finance/project-complaint-mechanism.html.