Resettlement Policy Framework RP511

REPUBLIC OF MONTENEGRO SUSTAINABLE TOURISM DEVELOPMENT PROJECT April 4, 2007 Final

Public Disclosure Authorized Project

The proposed Montenegro Sustainable Tourism Development Project (MSTDP) will assist the Republic of Montenegro to better design and implement an integrated coastal zone management approach aimed at reducing coastal degradation and at the same time fostering environmentally sound tourism development through (i) enhancing spatial development, use of natural resources, regulatory policy, institutional capacity and governance of the coastal zone, and (ii) initiating priority investments to improve environmental conditions and foster development of high quality tourism.

The components of the MSTDP are as follows:

Public Disclosure Authorized a) The integrated management policy for the Montenegrin Coast and institutional capacity building: • Improving land use planning so as to protect the land from uncontrolled development; • Developing spatial and ecological plans for the management of -Buna Delta as an area with the protected area status; • Spatial plans, updating the cadastral register, integrated municipal management plans and detailed spatial plans of the municipalities in which the Project will be implemented; • Improving the capacities of public utility companies; and, • Institutional strengthening of the Bojana River Delta management;

b) Construction of the infrastructure necessary for the sustainable and quality management of the

Public Disclosure Authorized water supply systems and eco-tourism infrastructure of the Bojana Delta: • Constructions of the Regional water supply system (RWSS) from water intake in the Skadar Lake aquifer - the continental part, and the southern branch of the system for the water supply to Bar, • The construction of a Nature Information Center and Office Building for the Bojana Buna Management Unit.

c) Project management and monitoring: • Project management, coordination, monitoring and evaluation.

Project Investments and Social Impacts

Project investments will be made in the:

Public Disclosure Authorized • Podgorica – Skadar Lake, where the water intake (Bolje Sestre) will be constructed together with the continental part of the RWSS for Montenegrin Coast; and

• Coastal area –where the construction of the southern branch of the RWSS up to the Municipality of Bar is envisaged. 1 Considering the various components of MSTDP, several legal entities will act as final beneficiaries of the project. Public Enterprise for water supply, wastewater drainage and treatment and solid waste disposal “Regional Waterworks - Montenegrin Coast” (hereinafter: PEW) will be the Project Implementation Unit (PIU), and accordingly in charge of implementation, monitoring and evaluation of the overall MSTDP, in compliance with the items 6 and 7 of the Letter Development Policy (LDP) in the chapter on sustainable tourism development in the Montenegrin Coast, yet to be issued by the Government of Montenegro. The entity in charge of eco-tourism projects and the protected area of Bojana-Buna Delta will be determined afterwards, on the basis of the findings of the background study on the protected area of Bojana-Buna Delta, which is being prepared. All the above-mentioned entities will work under supervision of the Inter- Ministerial Committee, which will act as the Project Coordination Unit (PCU) liable to the Ministry of Tourism and Environmental Protection. This RPF has been prepared by the PCU with the aim of outlining how PCU itself, PIU and other entities implementing the projects will manage potential impacts of the activities. In general, it appears that the project objective of initiating priority investments to improve environmental conditions and foster development of high quality tourism might involve potential land acquisition for specific infrastructure investments, as well as removal of a few seasonal business capacities.

Rationale for Preparation of the Resettlement Policy Framework

WB policy requires ‘screening ‘ of all projects proposed for WB financing to help ensure that they are environmentally and socially sound and sustainable. In the process of project preparation, WB screening ascertained that under Operational Policy (OP) 4.12 the MSTDP project might involve land acquisition. As the exact location, land type and size have not yet been determined, a Resettlement Policy Framework (RPF) is prepared for this project, as a condition of appraisal. Should land acquisition occur under the activities supported under the Project, it will then be carried out following well-established procedures specified in Montenegro’s laws and procedures relating to land purchase and expropriation and World Bank Operational Policy (OP)4.12 and Bank Procedures (BP) 4.12 on Involuntary Resettlement, as spelled out in the RPF.

Objectives of the Resettlement Policy Framework

The purpose of the RPF is to set out the policies, principles, institutional arrangements, schedules and funding mechanisms for any land acquisition that may occur as the result of the project. The operational objective of the framework is to provide guidelines to stakeholders participating in the mitigation of adverse social impacts of the project, in order to ensure that the social and economic well being of project affected persons (PAPs) will not be worsened as a result of the project.

MSTDP components and their possible impacts are described in the following sections:

Regional Water Supply System

This MSTDP component involves the implementation of the RWSS project with the sustainable water source at Skadar Lake by means of, in the first phase (2007-2010), the construction of water production facilities and transmission pipeline to the coast, along with the connection to the South to cover water needs in Bar and . In order to be financially viable, the remaining part of the southern branch to Ulcinj will be prepared under the IBRD financed MSTDP 2, and the northern branch to Budva, Tivat, Kotor and Herceg-Novi should follow suit (to be financed under a separate EBRD financed project). 2 The final design for most of the RWSS is already completed, and only the part for the water intake still needs to be carried out. On the basis of the prepared studies, and depending on the results of the remaining studies, certain issues regarding the land acquisition will arise. In this respect, it must be considered that the studies prepared for the project - Engineering Consultancy Services Report, Environmental Impact Assessment and Environmental Safeguards Framework - foresee the majority of investments to be realized on land owned by the Government/municipalities. However, some works regarding RWSS will have to be carried out on the private land, and thus might call for a resettlement plan. It has been estimated that the total size of the private land to be acquired will be 1, 5 ha, divided as follows:

• Water intake “Bolje sestre” at Skadar Lake/Podgorica Municipality – 1 ha; • Access road to the water intake and reservoir “” in Ulcinj – 0, 5 ha ( will come later under MSTDP 2); and • All other compensations are related to the so-called temporary expropriations (former licenses that were granted have been expired), or the right to install pipeline that will cover app. 2 ha on the pipeline route from WTP “Bolje Sestre” to the reservoir “Djurmani” and, maybe later under MSTDP 2, from the reservoir “Bratica” to Ada Bojana Island in Ulcinj, where certain temporary expropriations through olivewoods is expected.

The exact extent of the works on the private land will be known upon completion of the final designs. At this stage, no demolitions are foreseen.

The sanitary protection zone of the water intake for RWSS, located in Skadar Lake/Bolje sestre, is not populated, while the private land that will be acquired has no agricultural value whatsoever, and has never been exploited in any way. Land to be acquired for the construction of the access road to the water intake and “Bratica” reservoir has the same characteristics. Private land, which will be temporary, expropriated (the so-called right of way) for pipeline construction from the water intake to “Djurmani” reservoir, is occasionally flooded due to seasonal fluctuation of the Skadar Lake water level, and has no significant importance for the livelihoods of the owners.

Eco-infrastructure for the protected area of Bojana-Buna Delta

Only the construction of a combined Nature Information Center and Office Building is foreseen under this project. The site has not yet been identified, but it is expected that public unused land will be used as the construction site. All other eco-infrastructure investments would be carried out under MSTDP 2.

Illegal settlements in the Municipality of Ulcinj

As of now, the Municipality of Ulcinj has no legal basis for issuing construction permits for areas which lack a detailed urban plan. The project will finance detailed urban plans for some areas which will enable the municipality of Ulcinj to issue construction permits on a legal basis. The preparation of detailed urban plans will not cause any demolition of buildings or resettlements of legal and illegal inhabitants. On the contrary, it will enable the municipality of Ulcinj to legalize previously illegally constructed buildings which had no construction permits because of lack of an urban plan. Legalization of constructed buildings will be carried out in accordance with the Vienna Declaration on Informal Settlements, adopted by the Government of Montenegro. However, for any construction in the area of the Municipality of Ulcinj commencing after

3 December 14th, 2006 (this cut off date is the day the round table discussion was held in Ulcinj, at which the public has been informed on the action plan for the protection of Bojana/Buna Delta), the compensation will not be provided in case the construction will not be legalized. This is in order to ensure that new illegal settlers are not encouraged to encroach on the land.

Legal framework in Montenegro Regarding the Potentially Affected Sites

The Coastal Zone Management Agency, Morsko Dobro, previously issued temporary licences for persons to construct cottage-like buildings on the coastal strip area. These temporary licenses have now been expired. According to the Law on morsko dobro (“The Official Gazette of the Republic of Montenegro”, No. 14/92, 27/94) Morsko dobro can compensate affected persons by issuing new license on other location with lower land - lease fees.

According to the Law on Waters (“The Official Gazette of the Republic of Montenegro,” No. 16/95, 22/9) Article 3, Paragraph 1, water management business is in the public interest. Water management business, among other, includes the protection of water from pollution and provision of potable water. Consequently, the water management facilities include facilities for the protection of water from pollution (main collectors for wastewater drainage into treatment plants, wastewater treatment plants, and treated wastewater drainage facility) and water supply systems (regional water supply systems, public water utility for potable water supply, rural water utility). The construction and reconstruction of water supply systems, central municipal wastewater treatment plants and wastewater discharge collectors entail water management requirements issued by the Ministry in charge of the water management. Building permissions for the construction and reconstruction of the facilities and plants, as well as for the construction works on these facilities may be issued after the water management approval has been obtained. The authority, which defines the water management requirements, issues water management approval as well.

The public interest in the expropriation of an estate can be determined through a separate law or by a decision adopted by the Government. In this case, public interest in the construction of RWSS has been declared in Article 1 of the Law on water supply, wastewater drainage and solid waste disposal in the municipalities of Herceg Novi, Kotor, Tivat, Budva, Bar, Ulcinj and Cetinje (The Official Gazette of the Republic of Montenegro, No. 46/91), which has been adopted as, so- called, “lex specialis”. Regarding the eco-infrastructure for Bojana-Buna Delta, public interest will be declared in the foundation act of the protected zone. The Real Estate Agency (REA) of the Republic of Montenegro is in charge of conducting the expropriation procedure for estates for which the public interest has been declared, which means that REA will conduct expropriation procedure upon the request of PEW. REA has the obligation to consult the owner of the estate concerning the facts related to expropriation, prior to issuing a decision on expropriation. The head of the REA rules a complaint against the first-degree decision issued by the REA.

The national legislation treats this issue under the Expropriation Law (Official Gazette of the Republic of Montenegro No. 55/00 and 12/02). According to this Law, the final beneficiary for whom the expropriation will be carried out is responsible for paying the compensation to the owner. Additional legislative sources are the Spatial Planning and Development Law (Official Gazette of the Republic of Montenegro No. 28/05), Nature Protection Law (Official Gazette of the Republic of Montenegro No. 36/77, 39/77, 2/89, 39/89, 48/91, 17/92, 27/94) and other secondary legislation.

4 The Expropriation Law defines that the compensation for the expropriated estate equals the commercial value of the estate

The user of the expropriated estate sends an official note regarding the proposed amount of the compensation to the REA. At the same time, REA obtains the information from other institutions and organizations about the facts that could be important for mutual agreement regarding the compensation. REA is responsible to organize, without delay, a discussion between the owner and the future user of the expropriated estate, in order to obtain a mutual agreement regarding the compensation. This compensation can be financial, or achieved by land replacement, relocation of the existing facilities, construction of an access road, or other legally approved actions.

The PEW has been established in 1991, upon the Decision of the Parliament of the Republic of Montenegro from 1991 (The Official Gazette of the Republic of Montenegro” No. 50/91). According to LDP, PEW will be in charge of the overall MSTDP implementation and will act as PIU, or implementation agency.

According to the World Bank’s Operational Policy on Involuntary Resettlement (OP/BP 4.12), the implementation agencies are required to compensate all affected persons. According to the national legislation on this issue, under the Expropriation Law, the final beneficiary for whom the expropriation will be carried out is responsible for paying the compensation to the owner. Since during the implementation of this Project, the implementation agency, in principle, is not going to be the final beneficiary of all the project components, this issue will be settled by the Sub-credit and Project Implementation Agreements, which should be signed between the implementation agency and the final beneficiaries (such as: ViK Bar, and Bojana-Buna Delta Management unit), with the Bank’s prior no-objection. Sub-credit and Project Implementation Agreements shall identify the responsibilities of the final beneficiaries in respect to the compensation to the affected persons.

Principles to be applied

Under supervision of Ministry of Tourism and Environmental Protection and PCU, PEW will adhere to the following principles during completion of final designs and investments plans, in order to mitigate any anticipated negative impacts:

• Minimize disruption • Engage affected persons actively in the development of mitigation plans • Substitute land to enable people to continue their economic practices, if feasible and desired • Compensate people for lost assets (structures and plants) at full replacement cost • If incomes are adversely affected as a result of taking assets, assist affected people to restore income such losses.

The above mentioned World Bank’s Operational Policy on Involuntary Resettlement (OP/BP 4.12) requires implementation agencies to compensate all affected persons, for lost assets and to provide assistance to relocate (homesteads and farmsteads) and restore incomes, regardless of their legal status. Thus, the impact of the removal of orchards and commercial structures will be mitigated whether or not the users have the legal right of use.

5 Removing orchards and commercial structures may affect the incomes of affected households and employees. Mitigation plans will therefore include provisions to restore incomes by compensating lost income flows or, if possible, assisting affected persons to find alternative sites.

Preliminary Matrix of Entitlements

Based on available information, three groups of persons that may be affected by investments in the area of Skadar Lake and municipalities Bar and Ulcinj are anticipated. The actual number of groups, and the way they will be affected, will be determined once final designs are complete. Additional groups may also be identified during the preparation of mitigation plans, such as owners of other types of structures that must be removed. The following matrix describes the anticipated affected persons and their respective entitlements.

6 Investment Project Impacts Category of project Entitlement Other measures affected persons Regional water Land Acquisition and Land owners Compensation for land (equivalent to None Supply system right of way for water market price or to purchase use right in from Skadar lake intake and continental alternate site) and waste water and coastal part of Compensation for right of way (WWTP and pipelines and waste collectors) in Bar water facilities and Ulcinj

Removal of Orchards Orchard (olive-wood) Production value of current crop Delivery of new owners AND saplings Production value of trees through normal productive period and until new saplings produce first olive harvest and replacement value of new saplings

7 Project Requirements

If the orchards are removed, the PEW will prepare an abbreviated resettlement action plan (RAP) as described in OP/BP 4.12, Involuntary Resettlement that covers the mitigation measures for displacement due to the removal of garden units or orchards, and land acquisition and/or removal of residences and commercial structures due to the construction of the new pipeline. Prior to tender announcement for the construction contract for the respective works, the plan will be submitted to the World Bank for review, comment and approval.

The mitigation plan will contain the following sections, at least:

• Number and category of affected persons • Nature and magnitude of impact on affected persons • Laws, regulations and special provisions, if any, prescribing obligations, entitlements, procedures • Specific mitigation measures to be taken • Matrix of entitlements of affected groups • Implementation responsibility • Implementation schedule • Estimated budget • Monitoring and impact assessment plans

Procedure

Consultants preparing the final designs of the project investments will notify the implementation agency on whether the design of the structure or work requires the removal of orchards or structures, or acquisition of private land. The PCU, in cooperation with the implementation agency and users of the expropriated property, will prepare a Resettlement Action Plan (RAP) for any expropriation required, and execute it prior to commencing physical works on the expropriated property. The RAP will include details about steps already taken, such as notification or consultation with the owners, and the description of the land acquisition process. It should also include the following: an estimate of the amount of land that will be acquired, baseline census and socio-economic survey information for the affected persons; the specific compensation rates and standards; entitlements that are to be provided relating to the impacts identified through the census or survey; description(s) of the land to be provided and/or the resettlement sites; the implementation schedule for the compensation/resettlement activities; and a detailed cost estimate.

In consultation with the PCU, the PEW will commission the preparation of the RAP either through the existing design contract or by an additional contract. Preparation of the RAP will entail an appropriate legal analysis, census of affected persons, consultation

8 with affected persons on mitigation measures, and development of a mitigation plan and budget.

The PEW will submit the RAP to the World Bank for review and comment and revision, as appropriate, and issue a no-objection when the plan is approved.

The PEW will incorporate the RAP in the construction contract for the work.

The PCU and PEW will monitor implementation of the RAP continually, and the Bank will review status and monitor field implementation during scheduled supervision missions.

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