BELARUS WATER SECTOR FRAMEWORK

REGIONALISATION APPROACH FOR WATER SECTOR IN BELARUS

TERMS OF REFERENCE

1.INTRODUCTION

The European Bankfor Reconstruction andDevelopment (the “EBRD” or the “Bank”) has approved a EUR 40 million Belarus Water Sector Framework (the “Framework”) that consists of sovereign-guaranteed loans to water and wastewater companies in Belarus and capex grants from international donors. The Framework isfacilitating critical improvements in selected water supply and wastewater treatment services in Polotsk, Orsha, Lida and other cities across Belarus with a primary focus on reducing pollution of the Baltic Sea basin and the Black Sea basin.

The Framework builds upon the experience gained by the Bank within the Belarus Environmental Infrastructure Facility, whereby the Bank signed a loan agreement with the Republic of Belarus in 2012 to finance wastewater infrastructure rehabilitation in Vitebsk, Slonim and Baranovichi, with the objective to reduce pollution of rivers flowing into the Baltic Sea. These projects are currently being implemented.

As a result of a long period of under-investment in the water sector, water assets are highly obsolete across the country. There are high levels of water losses and frequent network failures. Wastewater treatment infrastructure is in a particularly precarious state and posesa serious risk to the environment. In addition, it appears that there is a good potential for operating and financing performance improvements and cost optimization.

At the moment, there are a large number of small municipal water utility companies in most cases owned by the Regions (Rayispolkoms/Oblispolkoms). The capacity of these companies to properly manage the water supply and wastewater systems at a proper quality level, and undertake the much needed large reconstruction projects, is relatively weak. Their organisational structure and management practices are often suboptimal.The Ministry of Housing and Communal Services (the “Ministry”) - who is the main regulatory body in the sector – would like to assess the possibilities of regionalising the water operations via merging the individual utility companies on an Oblast level or in another similar way. The Ministry has selected Vitebsk Region as a pilot region for the purposes of this study. Vitebsk Region Executive Committee (“Vitebsk Region”, the “Client”) will engage a consultant (the “Consultant”) to help assess regionalisation opportunities in Vitebsk Region andshare the findings with the Ministry. The results of the study in Vitebsk region will allow the Ministry to assess the possibilities of regionalising at the state level. The Consultant would need to study similar regionalisation experiences in other countries (e.g., Romania, Moldova, etc,) and advise if and how the regionalisation could be implemented in Belarus. Alternatively, the Consultant would need to provide clear justification that regionalisation is premature and outline possible alternatives.

  1. OBJECTIVES

The overall objective of this assignment is to support aregionalisation approach in the water sector in Belarus. This implies assisting the Vitebsk Region, as the pilot region,in assessing the economic viability of this approach at the regional level, establishing a regionalwater company in a pilot region, and assessing how the regionalisation process in Vitebsk Region could subsequently be replicated at the country level.

3.SCOPE OF WORK

The assignment is to be carried out in two parts. Part I will aim at assessing the viability of the regionalisation option. Part II is contingent on the conclusions drawn in Part I and will require the Consultant to assist the Vitebsk Region, the Ministry and other stakeholders in carrying out the proposed regionalisation.

The Consultant is expected to carry out the following main tasks:

Part I:

  • Estimate the potential economic benefits of regionalising water utilities in comparison to the “status-quo” based on the analysis of the existing legislation, existing operations and systems, financial and technical aspects of the water utility operations in the Vitebsk Region. Inter alia, the Consultant would produce a report including a table comparing the “status-quo” and regionalisation scenarios on various dimensions to be agreed with the Vitebsk Region, the Ministry and the Bank;
  • If the approach is not deemed economically viable, the Consultant is requested to provide a thorough and clear justification of this conclusion, including scenarios testing for various regionalisation models within Vitebsk region, international comparisons and provide tangible estimates that the approach is not economically viable performed under a clear and internationally accepted methodology.
  • If the approach is deemed viable, the Consultant would be required to undertake Part II of the assignment.

Part II:

  • Define “regions” in the Vitebsk oblast in a most efficient way considering geographical/administrative characteristics for the purposes of potential regionalisation of water and wastewater utility companies.
  • Explore the potential benefits for the Vitebsk Region in terms of costs savings, operational and financial improvements and assess opportunities for replication in other oblasts with associated potential challenges and costs.
  • For the Vitebsk Regionpropose and seek approval of division ofoperations, equipment, human resources (and engineers) and responsibilities into (i) regional water company and (ii) local branches / existing water utilities. The key output expected here is a general concept and a model, which will serve as a “template” to be adopted country-wide in different regions.
  • Present a suitable set up of a regional water company. The set-up for the regional water company should include: (i) consideration of an adequate corporate capacity on the environmental, health and safety and labour/social matters, and (ii) introduction of adequate internal corporate management systems on EHSS matters in line with good international practice, such as international standards ISO 14001 and OHSAS 18001.
  • Develop a strategy, staffing plan, and first business plan for the regional water company for the next 5 years, including a financial model as part of the business plan with clearly identifiedphysical and monetary savings and other cost/benefits that would be achieved by the regional company as compared to the “status-quo”. The regional water company should further comprise technical equipment to be available for use by small water utilities in the vicinity.
  • Organise a meeting of the regional board and present the above proposals for their endorsement.
  • Seek and obtain the Vitebsk Region’s and other relevant stakeholders’ approval of the proposed regionalisation plan in the selected pilot region.
  • Summarise activities and outcomes in a final report and share the experience of the pilot initiative in the Vitebsk Region during a final the workshop bringing together stakeholders from other regions where regionalisation could be replicated–.
  1. IMPLEMENTATION ARRANGEMENTS AND DELIVERABLES

The duration of the assignment will be 12months from the mobilisation date.

In relation to Part I, the Consultant will finalise and submit to the Vitebsk Region, the Ministry and the Bank a draft report within 2 months of mobilisation, followed by the final report taking into consideration all comments received within 3 months of mobilisation. The final report should be acceptable to the Vitebsk Region,the Ministry and the Bank.

In relation to Part II (if applicable), the Consultant will finalise its deliverables including a report on the relevant tasks in the Part II assignment, business plan and financial model (format to be strictly agreed with the Bank), meeting with the stakeholders, obtaining the approval of the proposed restructuring plan by the Vitebsk Region and the relevant stakeholders and conducting the training to the management/staff of the regional company within 12 months from mobilisation.

The Consultant shall report to Mr. Aleksei Hvalko, Director of Vitebskoblvodokanal,within the Vitebsk Regional Administration, whilst liaising both with the Ministry and the Bank’s Operation Leader, Ms. Natallia Dzivakova, based in Minsk.

The Consultant will ensure that all stakeholders are informed at all stages of the progress of the assignment, particularly where difficulties are encountered.

All deliverables will be provided in the electronic form in Russian and English to the Vitebsk Region,Ministry and the Bank for approval. Hard copies may be requested by the Vitebsk Region, Ministry or the Bank, for a maximum of 4 hard copies in each language for each report.

Donor visibility

Given the assignment is funded through the EBRD’s donor funded technical cooperation programme, the Consultant will be required to support the Client to ensure visibility of these resources. Support on these visibility aspects can be obtained from the Bank’s Communications Department. Measures could include but not be limited to:

  • All documents produced by the Consultant should mention donor support and bear the logo of the donor, when appropriate.
  • Donor support to the project should be acknowledged in any public communication (press releases, launch of facilities).
  • Local representatives of donors should be invited to any public event organised to promote the project (press conferences, inaugurations, possibly stakeholder participation programmes).
  • Any public awareness campaign in relation to the project will acknowledge donor support.
  1. CONSULTANT’S PROFILE

The Consultant should ensure that the appropriately qualified experts are available, as required, for each of the different tasks outlined above. It is expected that the assignment will be led by an appropriately qualified project manager, accompanied by both key and supporting experts.

The Consultant must set out clear communication lines with the beneficiaries, so that they are able to draw on the support of the Consultant as required. It is envisaged that this will be best supplied through a combination of long- and short-term expertise.

The Consultant is required to provide the beneficiaries with independent, impartial technical, cost, strategic, management and financial advice, and as such will not be permitted to have a commercial interest in any other contracts or agreements related to the Framework.

The Consultant Team would be expected to include the following key experts:

  • Team Leader/Project Manager;
  • Legal Experts;
  • Water and Wastewater Sector Experts;
  • Financial Experts;
  • Local experts (legal, sector, etc.).
  • Key Expert 1: Team Leader(s)/Project Manager(s), preferably with 10 years of relevant professional experience, including 5 years in managing water and wastewater projects in similar environments. The experts should have previous project management experience in Eastern European countries, and preferably Belarus. Knowledge of Russian or Belarusian is considered an advantage.
  • Key Experts 2:Legal Experts preferably with 8 years of relevant professional experience. The experts should have a good knowledge of the requirements of Belarusian legislation. Knowledge of Belarusian is essential.
  • Key Experts 3:Water and Wastewater Sector Experts, preferably with 8 years of relevant professional experience in the water and wastewater sector. The experts should have good knowledge of the key factors affecting the sector in Belarus or other countries in Eastern Europe. Knowledge of Russian or Belarusian is considered an advantage.
  • Key Experts 4: Financial Experts, preferably with 8 years of relevant professional experience in dealing with financial and contractual issues, preferably in the context water and wastewater projects. Knowledge of Russian or Belarusian is considered an advantage.
  • Key Experts 5: Local experts - preferably with 8 years of relevant professional experience. The experts should have a good knowledge of the requirements of Belarusian legislation and/or the water sector. Knowledge of Belarusian is essential.

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