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47305-002: Horticulture Value Chain Development Project

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47305-002: Horticulture Value Chain Development Project Environmental Monitoring Report Annual Report December 2017 Uzbekistan: Horticulture Value Chain Development Project Prepared by the Rural Restructuring Agency, Republic of Uzbekistan for the Asian Development Bank. This environmental monitoring report is a document of the borrower. The views expressed herein do not necessarily represent those of ADB's Board of Directors, Management, or staff, and may be preliminary in nature. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. ANNUAL SAFEGUARD MONITORING REPORT Project Number: 3471-UZB (SF) Reporting period: April - December 201 7 Republic of Uzbekistan: Horticulture Value Chain Development Project (Financed by the ADB's ordinary capital resources) Prepared by: Sayfullo Gaibullaev Rural Restructuring Agency (RRA) Tashkent, Uzbekistan For: ADB Endorsed by: Bakhtiyor Kamalov (Deputy Director General of RRA) February 2018 ABBREVIATIONS ADB – Asian Development Bank CAR – Capital adequacy ratio CBU – Central Bank of Uzbekistan ESMS – Environmental and social management system HVCDP – Horticulture Value Chain Development Project MAWR – Ministry of Agriculture and Water Resources MOF – Ministry of Finance PFI – Participating financial institution PIU – Project implementation unit PMO – Project management office RRA – Rural Restructuring Agency RRP – Report and Recommendations to the President of ADB SEE – State Environmental Expertise SLA – Subsidiary Loan Agreement EIS – Environmental Impact Statement Table of Contents Part I Introduction .................................................................................................................................. 4 1.1. Short description of the program ........................................................................................... 4 1.2. Summary of activities and project progress during the previous 12 months. ........... 4 1.3. Project organization and environmental management team, including organizational relationships with PFIs, sub-borrowers etc. ........................................................ 5 Part II Environmental issues ............................................................................................................ 6 2.1. Environmental issues in the previous 12 months.............................................................. 6 2.2. Explanations of instances in which environmental standards or guidelines were exceeded or environmental incidents happened ........................................................................... 6 2.3. Required recommendations..................................................................................................... 6 Part III: Compliance with ADB’s Social Protection Requirements and ADB’s Prohibited Investment Activities List ......................................................................................................................... 7 3.1. Provide assessment on these two sets of requirements. ................................................ 7 3.2. A brief description of the taken measures. .......................................................................... 8 Part IV: ESMS operations (for PFIs which are financing B-category subprojects) ................... 8 4.1. A brief description of the effectiveness of the ESMS within 12 months. ..................... 8 4.2. Specific data on the following activities is recommended .............................................. 9 Part V: Conclusion and action plan ....................................................................................................... 9 5.1. Conclusions. ................................................................................................................................ 9 5.2. Action plan for the next reporting period. .......................................................................... 10 Annexes ....................................................................................................................................................... 11 Part I: Introduction 1.1. Short description of the program 1. The project supports the government strategy in horticulture value chain development through increasing outreach of participating financial institutions (PFI) to horticulture farmers and entrepreneurs in all in twelve regions nationwide and the Republic of Karakalpakistan. It improved access to market-based bank finance for farmers, agro-processing enterprises, owners and operators of cold storage facilities, trading and logistics service suppliers involved in the horticulture value chain. The project helped increase farm productivity, processing and storage capacity, and reduced post-harvest losses through upgrading and setting up intensive orchards, modern and efficient greenhouses, processing, storage and refrigeration facilities. In this turn, it promoted long-term economic and environmental sustainability, and enhanced profitability for farmers and agribusiness enterprises. 1.2. Summary of activities and project progress during the previous 12 months. 2. In the course of project implementation, 124 subprojects were financed within 12 months. All subprojects underwent preliminary environmental screening by the PFIs strictly following the Environmental and social management system (ESMS) procedures of which 121 are classified as "B" and the remaining 3 subprojects are classified as "C" according to the legislation of the Republic of Uzbekistan in the field of environmental protection and ADB's requirement. Summary table of activities and project progress during the reporting period is given in the Table 1. 3. For each sub-project, a State Environmental Expertise (SEE) was carried out (State Environmental Expertise) on the basis of a draft EIS (Environmental Impact Statement) and obtained approve Environmental Conclusions of the State Committee for Ecology and Environmental Protection. Control over observance of the requirements of environmental legislation at the enterprises of each sub-project is assigned to the regional department for ecology and environmental protection (depending on which region and district the particular subproject belongs to). During the monitoring, the PFIs check that each sub borrower meets the requirements of the ESMS in accordance with the national regulations and requirements of ADB. 4. Monitoring and reporting of the implementation of safeguards requirements and procedures within the established ESMS will be prepared by PFIs. The PFIs’ quarterly progress reports will include status of compliance with safeguards covenants. The PFIs will submit to RRA (the EA) annual ES performance reports (Appendix 8 of the ESMS in Report and Recommendations to the President of ADB (RRP) linked document 12) by the end of January every year. Based on the PFIs’ annual reports, Rural Restructuring Agency (RRA) will submit to ADB annual Safeguard Monitoring reports (Appendix 9 of the ESMS) by mid-February of the following calendar year. 5. The first 3 subprojects from each PFIs were checked by RRA and agreed with ADB. The remaining subprojects will be checked by the RRA during the liquidation of advances. Table 1: Summary of activities and project progress during 12 months ESMS Number of sub-loans by № PFIs Sub-loan amount approval environmental categories (million USD $) date B C Total 1 JSICB «Ipak Yuli» 24.05.2017 8 - 8 9,800 2 PJSCB «DAVR BANK» 15.05.2017 2 - 2 1,718 3 JSCB «Turonbank» 25.05.2017 6 1 7 10,000 4 JSCB «Hamkorbank» 29.05.2017 8 - 8 2,615 5 JSCB «Asaka bank» 30.05.2017 37 - 37 46,733 6 JSCMB «Ipoteka bank» 25.05.2017 19 - 19 10,831 7 National Bank of Uzbekistan for Foreign 26.05.2017 30 2 32 40,894 Economic Activities 8 JSCB «Uzpromstroybank» 30.05.2017 11 - 11 7,604 Total 120 3 124 130.194 1.3. Project organization and environmental management team, including organizational relationships with PFIs, sub-borrowers etc. 6. The Rural Restructuring Agency (RRA) is the executing agency. A project management office (PMO) created under the existing organization of RRA. The PMO is responsible for monitoring the project implementation, including training, capacity development, and providing technical support to PFIs. To enhance capacity of the RRA, in PMO included in-house staff of RRA, including Environmental specialist, and contracted experts to save the cost. In each PFI established a project implementation unit (PIU) under its existing structure to oversee the implementation of the credit line activities at the respective PFI. The project organization chart is in Figure 1. Figure 1: Project Organization Chart Loan Agreement between ADB ADB and MOF MOF and RRA CWER under PMO under CWRD RRA Project Agreement between ADB and RRA for project management and RRA’s obligations to monitor implementation of PFI relending During implementation PFIs submit to ADB through RRA: (1) quarterly progress report; Subsidiary Loan Project (2) annual audited financial statements and audited Annual Agreements Agreements Statement of Utilization of Funds; (3) annual reports on safeguards compliance PIU Asaka Bank, Davr Bank, Hamkorbank Ipak Yuli Bank, Ipoteka Bank, National Bank of Uzbekistan, Turon Bank, Uzpromtroibank, plus other financial institutions (subject to further accreditation and availability of funds at time of accreditation) ADB = Asian Development Bank; CWER = Environment,
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