BRIEF

World Bank Floods Emergency Recovery Loan for Serbia

March 11, 2015



Background Information on the Tamnava West Field Mine Dewatering Component

The Floods Emergency Recovery Project for Serbia, approved by the World Bank’s Board of Executive Directors on October 3, 2014, came in response to the devastating flooding that hit Serbia in mid-May, and supports the country in meeting critical needs in the power and agriculture sectors, repairing damaged flood control infrastructure, and helping the country better respond to natural disasters.

The project focuses on priority sectors identified in a Recovery Needs Assessment (RNA) conducted by the Government in June and July 2014, and supported jointly by the European Commission, United Nations Development Programme (UNDP), and the World Bank.

The project is helping to close the financing gap for energy purchases to ensure power delivery this winter. The project will also restore and strengthen critical power sector infrastructure.  In the agriculture sector, the project is helping to ensure direct support to farmers in affected areas, providing these farmers with the income security needed to re-invest in their farms. The project is also helping improve resilience to disasters by financing repairs to critical flood prevention infrastructure.

Tamnava West Field Mine Dewatering component

Among other activities, the project is supporting the first critical step towards putting the Tamnava West Field Mine in the Kolubara mining basin back into operation and helping to avoid significant health hazards associated with the flooded mine, including the potential pollution of ground water, an increase in waterborne diseases, as well as threats to surrounding flora and fauna that would emerge as a result of stagnant water in the mine pit.

The mine is a critical link, providing 43 percent of the fuel supply for the Kolubara, Nikola Tesla and Morava Thermal Power Plants, which in turn keeps houses warm, lights on and industries operating in surrounding communities through the cold Serbian winter. 

Given the urgent need to begin this activity--with its health, safety and economic consequences--the procurement of the dewatering service contract was carried out in accordance with the Public Procurement Law of Serbia, prior to World Bank approval of the project. The dewatering contract was signed on August 19, 2014, and was considered eligible for retroactive financing by the World Bank based on an ex-post facto review.

The World Bank would like to clear up public confusion regarding the procurement process for the Tamanava West Field Mine Dewatering component.  The World Bank agreed to accept the local procurement process on an exceptional basis in line with the World Bank’s procurement policy for Projects in Situations of Urgent Need of Assistance or Capacity Constraints (paragraph 20 of OP 11.0).

Final tender documents as issued, bid evaluation report, and the signed contract were inspected during the project appraisal phase, and were found acceptable to the World Bank. The Bank ensured that the main principles of transparency, fairness, economy, and efficiency were met during the procurement process carried out by the Electric Power Industry of Serbia (EPS). 

Contract extensions

Mine dewatering on this scale has rarely—if ever—been attempted, and faces considerable risks and uncertainties. Despite the technical complexity and uncertainties involved, the pumping of water has been carried out as planned and is nearing completion. According to information provided by EPS, a first milestone was achieved when the quantity of water that was pumped reached 80 million m3 within the deadline and conditions specified in the contractual agreements, without significant impacts on the structural integrity of the mine, and with due consideration for environmental issues.

In view of the fact that the specific amount of water is unknown due to precipitation and underground water infiltration, among others, contract extensions were requested by EPS and agreed to by the Bank in order to allow the finalization of the activity. Under these extensions, no price change is foreseen.

All publicly available information on the Emergency Recovery Loan is available on the project document website: http://www.worldbank.org/projects/P152018?lang=en

Communications contacts:

Belgrade: Vesna Kostic, +381-11-3023-723, vkostic@worldbank.org

Washington: Kristyn Schrader-King, +1-202-458-2736, kschrader@worldbank.org