Table of Contents 1. INTRODUCTION ............................................................................................................................... 6 1.1 General description ....................................................................................................................... 7 1.1.1 Current condition ..................................................................................................................................................... 7 1.1.2. Future condition ................................................................................................................................................... 11 1.1.3. Strategic goals ..................................................................................................................................................... 13 1.1.4 Knowledge and experience of municipality Sveti Nikole ....................................................................................... 14 1.2 Conclusion ................................................................................................................................... 16 2. PROJECT DESCRIPTION .................................................................................................................. 17 2.1. General information on the municipality Sveti Nikole ......................................................... 17 2.2. Population and demographic structure ................................................................................ 17 2.3. Demographic profile ............................................................................................................. 17 2.4. Natural resources .................................................................................................................. 19 2.5. Climatic characteristics ......................................................................................................... 19 2.6. Hydrological characteristics .................................................................................................. 20 2.7. Local economic development ............................................................................................... 21 2.8. Agriculture – Development and resources ........................................................................... 21 3. SOCIAL IMPACT OF PROJECT ......................................................................................................... 22 3.1. Methodology ......................................................................................................................... 22 3.2. Social diversity and gender ................................................................................................... 23 3.3. Institutions, rules and behavior ............................................................................................ 24 3.4. Stakeholders ......................................................................................................................... 24 3.5. Citizen’s engagements/ participation ................................................................................... 25 3.6. Social risks ............................................................................................................................. 26 3.7. Other considerations ............................................................................................................ 26 3.8. Resettlement issues .............................................................................................................. 26 3.9. Concluding remarks .............................................................................................................. 26 4. ENVIRONMENTAL IMPACT OF THE PROJECT ................................................................................ 27 4.1. Main project activities that have an impact on the environment ........................................ 28 4.2. Major impacts on the environment and sensitive receptors ............................................... 28 4.3. Main environmental impacts in the operational phase ....................................................... 32 4.4 ENVIRONMENTAL MITIGATION PLAN ......................................................................................... 33 5. Technical solution ......................................................................................................................... 38 5.1. Description ............................................................................................................................ 38 5.1.1. Construction and reconstruction of local streets and street sections ................................................................... 39 5.1.2. Pavement structure and sidewalks ...................................................................................................................... 43 5.1.3. Stormwater drainage system ............................................................................................................................... 44 5.1.4. Pavement structure and sidewalks ...................................................................................................................... 48 5.2. Alternative solutions ............................................................................................................. 51 5.3. Conclusion and recommendations ....................................................................................... 52 6. FINANCIAL ANALYSIS ..................................................................................................................... 53 6.1. Project costs ............................................................................................................................... 53 6.2. Loan repayment ......................................................................................................................... 53 6.3. Credit capacity ........................................................................................................................... 54 6.4. Financial Analysis of Municipal Capacity to Service Debt .......................................................... 55 6.5. Analysis of the financial feasibility of the project ...................................................................... 57 6.5.1 Time Horizon ....................................................................................................................................................... 57 6.5.2 Limitations of the analysis ................................................................................................................................. 57 6.5.3 Initial Investments ............................................................................................................................................... 57 6.5.4 Inflation ................................................................................................................................................................ 57 6.5.5 Discount rate ....................................................................................................................................................... 57 6.5.6 Projection of operating cash flows ................................................................................................................... 57 6.5.7 Results from financial analysis ......................................................................................................................... 59 6.6. Sensitivity analyses .................................................................................................................... 60 6.7. Concluding Remarks ................................................................................................................... 61 7. Cost Benefit analysis ..................................................................................................................... 62 7.1 General Information ................................................................................................................... 62 7.1.1 Framework of the analysis .................................................................................................................................... 62 7.1.2 Limitations and constraints of the study ................................................................................................................ 62 7.1.3 Scope .................................................................................................................................................................... 63 7.2 Identification of the relevant costs and benefits ........................................................................ 63 7.2.1 Project investment costs ....................................................................................................................................... 63 7.2.2 Project costs and benefits ..................................................................................................................................... 63 7.2.3 Other assumptions ................................................................................................................................................ 67 7.3 Valuation of the Cost and Benefit analysis ................................................................................. 67 7.4 Results of the Cost and Benefit analysis ..................................................................................... 67 7.5 Sensitivity analysis .....................................................................................................................