Notice

Category A project supported: Morava Corridor Motorway, Serbia

Published 30 November 2021

1. Project description

UK Export Finance (UKEF) has agreed to provide support to the Ministy of Finance, Serbia and the Ministry of Construction, Transport and Infrastructure, Serbia and ‘Corridors of Serbia’ for the development of the Morava Corridor Motorway in Serbia. The construction consortium (referred to as ‘BEJV’) is formed of a joint venture between Bechtel Corporation (Bechtel) and Enka İnşaat ve Sanayi A.Ş. (Enka) on a design and build basis. Bechtel is the Exporter. Corridors of Serbia are overseeing the construction phase and ‘Roads of Serbia’ will be responsible for the operation and maintenance of the motorway.

The Morava Corridor Motorway will be a 112km dual-carriageway toll motorway with a 30m width, located approximately 200km south of Belgrade in a low-level flood plain along the West Morava river. The Government of Serbia considers the development of the motorway as essential to building the economic corridor to the industrial city of Kruševac, connecting it with the important regional commercial centres of Sarajevo, Bosnia and Herzegovina and the port city of Bar, Montenegro.

The motorway has a design speed of 130km per hour. It will have parking lots and rest areas and toll platforms for toll collection and access control. It will also have above ground structures such as interchanges, bridges, culverts, overpasses and under passes. A telecommunications corridor will also be constructed along the route; this will help to manage traffic through various traffic control and tolling systems. The motorway will be equipped with lighting, line marking, traffic signs, appropriate fencing and safety barriers. Temporary facilities will be utilised for construction and comprise quarries and borrow pits, worker camp sites, storage areas, crushers, concrete batching plants and asphalt plants, and access roads.

The Project region is subject to flooding and therefore the Project will include river regulation works along the Morava river to help protect the motorway, surrounding settlements and existing assets (e.g. roads and bridges) from flooding. The works will also stabilise the river route and control fluvial erosion. River regulation works are scattered along a 138km stretch of the West Morava river and will include bank protection, meander ‘cut-offs’ (straightened, channelised sections of the river) and reconstruction of existing flood embankments.

The Project does not include any Associated Facilities^{[footnote 1]}.

2. Project sector

The Project is in the civil construction sector.

3. Project sponsors

The Project is being developed by Corridors of Serbia, who lead the design, planning, commissioning, and supervision of the construction of all Serbian traffic infrastructure projects. BEJV is the construction contractor, who will undertake detailed design and construction of the motorway. The Jaroslav Cerni Institute for the Development of Water Resources (JCWI) and the Serbian Public Water Management Company (PWMC Srbijavode) are responsible for the design of the river regulation works, after which BEJV is responsible for their construction. Roads of Serbia will be responsible for the operation and maintenance of the motorway. PWMC Srbijavode will be responsible for the maintenance of the river regulation works.

4. UK exporters

Bechtel Corporation

5. Export credit agent bank

JP Morgan

6. Amount of UK Export Finance support

The principal value of UKEF support is approximately GBP 363 million.

7. OECD Common Approaches and Equator Principles

UKEF categorised the Project as a Category A i.e. having potentially significant environmental, social and human rights (ESHR) impacts in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”) and the Equator Principles (2020).

As required by the OECD Common Approaches, UKEF disclosed its potential involvement in the Project prior to committing our support. A notification was posted on the UKEF website on 9 December 2020, which provided a description of the Project, a contact point to signpost interested parties to environmental and social information, and links to the environmental impact assessment. No enquiries were received by UKEF or the contact point as a result of this notification.

8. Environmental, Social and Human Rights Standards

Project-related ESHR documentation was reviewed for alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines. The applicable IFC PS and World Bank Group EHS Guidelines were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts
• PS2: Labour and Working Conditions
• PS3: Resource Efficiency and Pollution Prevention
• PS4: Community Health, Safety and Security
• PS5: Land Acquisition and Involuntary Resettlement
• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources
• PS8: Cultural Heritage
• World Bank Group General EHS Guidelines (2007)
• World Bank Group EHS Guidelines for Toll Roads (2007)
• World Bank Group EHS Guidelines for Construction Materials Extraction (2007)

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• air emissions and climate change
• noise and vibration
• soil quality
• waste, including hazardous waste
• wastewater
• biodiversity
• land acquisition and livelihood impacts
• management of third-party contractors and suppliers
• grievance mechanisms
• occupational and community health and safety
• emergency planning and response
• cumulative impacts
• worker welfare
• cultural heritage
• visual impacts
• community engagement

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the OECD Common Approaches and Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

The review included:

• Desk-based review of project-related documentation by an Independent Environmental and Social Consultant (IESC): environmental and social impact assessment, environmental and social management plans
• Follow-up meetings and interviews with relevant Project representatives

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

11. Climate change considerations

UKEF considered the Project’s potential direct (Scope 1 and 2) and indirect (Scope 3) greenhouse gas (GHG) emissions and effects of climate change factors on the Project. The Project’s total Scope 1 and 2 operational emissions are expected to be approximately 30,935 tonnes CO2e per year, which exceed relevant thresholds for quantification and reporting set by international standards. Operational Scope 3 emissions will largely be from vehicles using the motorway. Most traffic is expected to be diverted from existing roads, however the motorway will also accommodate new traffic too. These additional emissions are considered in line with Serbia’s economic development. The motorway is being constructed in a flood prone area and therefore the Project includes river regulation works to minimise flooding effects on the road.

12. Decision

Various actions have been agreed between the Project developers, operators, and parties involved in the financing, which are necessary to ensure the Project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the Project cycle. UKEF has therefore decided to provide its support in respect of the supply of capital goods and services by UK exporters to the Project.

A condition of support is that the Project will be subject to ESHR monitoring by an IESC, in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

UK Export Finance

November 2021

1. The OECD Common Approaches defines “Associated Facilities” as: those facilities that are not a component of the project, but that would not be constructed or expanded if the project did not exist and on whose existence the viability of the project depends; such facilities may be funded, owned, managed, constructed and operated by the buyer and/or project sponsor or separately from the project. ↩