Environmental Monitoring Report # Annual Safeguard Monitoring Report February 2019 UZB: Affordable Rural Housing Program Prepared by Rustam Saparov (Management and Monitoring Unit) for the Ministry of Economy and Industry (MOEI) and the Asian Development Bank. This Environment 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 ___________________________________________________________________________ For FI operations Project Number: 3535 January-December 2018 Uzbekistan: Affordable Rural Housing Program (Financed by Asian Development Bank) For: Ministry of Economy and Industry Endorsed by: Management and Monitoring Unit February, 2019 ABBREVIATIONS ADB - Asian Development Bank ARHP - Affordable Rural Housing Program CCRA - Climate change risk assessment DLI - Disbursement Linked Indicator EA - Executing Agency EA - Executive Agency EIA - Environmental impact assessment EMP - Environmental Management Plan ESMS - Environmental and Social Management System HQ - Head Quarter IA - Implementation Agency IB - Ipoteka Bank IEE - Initial Environmental Examination MMU - Management and Monitoring Unit MOEI - Ministry of Economy and Industry NBU - National Bank of Uzbekistan PCB - Participating Commercial Bank PFI - Participating Financial Institute PIAL - Prohibited Investment Activities List PIU - Project Implementation Unit PPE - Personal Protective Equipment QQB - Qishloq Qurilish Bank QQI - Qishloq Qurilish Invest QQL - Qishloq Qurilish Loyiha (design entity) RBL - Result Based Lending RETA - Regional Technical Assistance SARHP - State Affordable Rural Housing Program SCAC - State Committee for Architecture and Construction SPS - Safeguard Policy Statement TA - Technical Assistance ZVOS - National Environmental Impact Assessment 2 Table of Contents I. INTRODUCTION ...................................................................................................................... 2 1.1. Short description of the program ................................................................................................... 2 1.2. Summary of activities and project progress during the previous 12 months ............................. 3 1.3. Summary of ESMS implementation in each PCBs and consolidation of PCBs’ annual Environmental and Social Performance reports .................................................................................. 3 1.4. Project organization and environmental management team ....................................................... 3 II. ENVIRONMENTAL ISSUES .................................................................................................. 5 III. COMPLIANCE WITH ADB’s SOCAIL PROTECTION REQUIREMENTS AND ADB’s PROHIBITED INVESTMENT ACTIVITIES LIST ................................................................... 7 IV. ESMS OPERATIONS ............................................................................................................. 8 4.1 Policies and Procedure ..................................................................................................................... 8 4.2 Capacity Building .............................................................................................................................. 9 4.3 Monitoring and Reporting ............................................................................................................. 10 4.4 Consultations and Complaints ....................................................................................................... 11 V. CONCLUSION AND ACTION PLAN ................................................................................... 11 VI. ANNEXES .............................................................................................................................. 15 ANNEX 1. Annual report of QQI ........................................................................................................ 15 ANNEX 2. Annual report of QQB ....................................................................................................... 42 ANNEX 3. Annual report of NBU ....................................................................................................... 55 ANNEX 4. Annual report of Ipoteka Bank ........................................................................................ 70 ANNEX 5. Example of climate change report .................................................................................... 83 ANNEX 6. Picture from trainings ....................................................................................................... 93 ANNEX 7. Photos from construction sites .......................................................................................... 94 ANNEX 8. Template of checklist ......................................................................................................... 95 ANNEX 9. Sample filled checklist ....................................................................................................... 97 I. INTRODUCTION 1.1. Short description of the program 1. The Government of Uzbekistan has started a State Affordable Rural Housing Program (SARHP) which aims to improve the quality of life in rural areas of Uzbekistan through rural housing construction, employment generation, and private sector development. The SARHP is guided by the national goal of rural development and improved quality of life in rural areas. The SARHP is a proven government strategy for generating rural employment through housing construction and public-private partnership for social and market infrastructure development. The government provides incentives for small and medium-sized enterprises and promotes local manufacturing hubs for construction materials. 2. The Affordable Rural Housing Program (ARHP) will support a portion of the SARHP and will focus on rural housing financing and on leveraging institutional improvements in the associated sectors. Under the ARHP, three state-owned banks: Ipoteka Bank (IB), National Bank of Uzbekistan (NBU), and Qishloq Qurilish Bank (QQB) will provide loans to construct at least 29,000 dwelling units in nine regions of the country, including: Karakalpakstan, Khorezm, Bukhara, Samarkand, Surkhandarya, Kashkadarya, Fergana, Namangan and Tashkent. The construction will be undertaken by private contractors and supervised by a state-owned engineering company QQI, the State Design Institute QQL, and the Ministry of Construction of the Republic of Uzbekistan. 3. The government has requested a loan of $500 million from ADB’s ordinary capital resources to finance a portion of the SARHP during 2017–2021. In this regard, the ARHP, a 5-year RBL was approved by the Board of Directors on 1 June 2017. 4. On 6 July 2017 Loan agreement on the basis of ARHP - RBL №3535-UZB between the Republic of Uzbekistan and ADB was signed in the amount of $500 million in pursuance of the Resolution of the President of the Republic of Uzbekistan No.PP-2812 dated March 2, 2017. 5. The ARHP is designed as a results-based program and as such it finances a part of the SARHP. The outcome of the ARHP will be an increased number of rural families meeting the social equity criteria benefit from affordable housing constructed in accordance with national quality standards. The program outputs are followings: Output 1. Beneficiary selection, site selection, and housing construction are in accordance with social equity criteria and national quality standards; Output 2. Improved policies and systems for the rural housing sector, which support institutional strengthening, enhanced sustainability, and improved governance; Output 3. Strengthened program management and performance monitoring. 6. The Executive Agency (EA) of the Program is the Ministry of Economy and Industry of the Republic of Uzbekistan (MOEI), which through Management and Monitoring Unit (MMU) manages and monitors the Program. As the Implementing Agencies (IA) the following three Participating Commercial Banks (PCBs) were chosen: Qishloq Qurilish Bank (QQB), National Bank of Uzbekistan (NBU) and Ipoteka Bank (IB), and also Government Engineering Company- Qishloq Qurilish Invest (QQI). 2 3 7. The present Annual Environmental Safeguards Monitoring Report is consolidated and prepared for the Affordable Rural Housing Program (ARHP) financed by Asian Development Bank (ADB) based on an Annual Environmental Safeguards Monitoring Reports submitted by QQI and three PCBs in accordance with their respective ESMSs. 1.2. Summary of activities and project progress during the previous 12 months 8. A specific feature of the Program’s financing is the selected financing mechanism - results-based lending, which provides for funding from ADB based on the results of the corresponding disbursement linked indicators (DLI). 9. In 2018, 7,250 mortgage contracts were concluded, which were distributed as follows among the three participating commercial banks: - JSCB “Qishloq Qurilish Bank” - 2,090 preferential mortgage loans; - JSCB “Ipoteka Bank” - 2,437 preferential mortgage loans; - National Bank of Uzbekistan - 2,723 preferential mortgage loans.