D4R7 Slovakia PPP

Complaint

On 31 August 2018, the EIB-CM received a complaint from Slovak non-governmental organisations primarily concerning the construction of a new bridge crossing of the Danube River located within a Natura 2000 site.

The Complainants allege:

1       The bridge at issue does not comply with international agreements defining the navigable height of 10m above the highest navigable water level

2       There has been widespread degradation of habitat in Natura 2000 protected bird areas

3       The Project does not comply with European Union/national law on environmental impact assessment on the following four grounds: (1) salami-slicing, (2) absence of meaningful public consultation, (3) failure to assess significant environmental impacts, including increased public safety risk for kayaking or other recreational water sports resulting from the modification of the bridge design and (4) failure to provide access to justice

4       The Project does not comply with national law, particularly that (1) illegally extracted materials have been used for the Project's construction works and (2) the Project lacks valid building permits given the deviations from approved plans and given the fact that the environmental impact assessment screening process, which is a condition for the issuing of building permits, is still in progress

Findings

The EIB-CM's analysis relative to the allegations has concluded that:

1         The Danube Commission Recommendations were adequately considered in design preparation; horizontal and vertical clearances are as per current international standards; and the design and construction works are monitored by both the Lenders' Technical Advisor and Independent Engineer.

2         The EIB disbursed funds on the basis of a preliminary notification of compensatory measures to the European Commission. The final notification of compensatory measures to the European Commission took place approximately (a) two years after the start of construction on said measures and (b) three years after the start of Project construction. Furthermore, the EIB failed to ensure the adequacy of delayed measures intended to compensate for adverse environmental impacts of the Project on protected habitats/species, prior to its disbursement of funds. Despite recent progress, Project impacts on the Natura 2000 sites remain at issue, are unlikely to be completed by the end of 2020 as required at time of inquiry and lack present and planned effectivity monitoring.

3         Regarding alleged salami-slicing judicial and administrative decisions at national level suggest that the splitting up of changes to the Project into five separate screening procedures is not in line with the requirements of the European Union and national law. On the basis of the information processed as part of the appraisal and monitoring of the contested Project, the EIB had reasons to heighten the monitoring of this operation.

Monitoring activities carried out by the EIB considered the judicial proceedings at national level to be a continuing risk to the Project; however, there is no evidentiary documentation concerning the EIB monitoring of the developments following the Ministry of Environment's decisions to revoke its screening decisions for Notification of Changes 3 and 4.

Regarding alleged absence of meaningful consultation while technical changes to the bridge design resulting from economic optimisation have not been assessed through a full environmental impact assessment process, they were the subject of a screening procedure, which was in turn subject to public information/consultation, as required by the applicable regulatory framework.

Regarding alleged failure to assess significant environmental impacts ¾ while judicial and administrative decisions at national level indicate shortcomings with regard to the compliance of the contested Project with the applicable regulatory framework, a judgement on the assessment of significant environmental impacts, including the safety of the new bridge design, cannot be drawn until the pending judicial and administrative proceedings are completed. With regard to the safety of activities such as kayaking and swimming, given the seriousness of the allegations submitted as part of a formal complaint to the Bank, the EIB-CM considers that the EIB should have actively collected and reviewed relevant documentation upon notification of the Complaint, rather than performing these actions during the consultation of the EIB-CM Conclusions Report. The EIB-CM notes that the collection of documentation remains incomplete.

Regarding alleged failure to provide access to justice the inquiry shows that the Complainant had access to judicial proceedings concerning the validity of screening decisions.

4       Regarding the alleged illegal extraction of materials EIB operational services have followed-up on developments related to ongoing criminal proceedings concerning the alleged illegal extraction of materials and related contamination; while not in a position to form a reasoned opinion at this stage, the EIB-CM highlights the importance of continued monitoring of developments related to the above-mentioned proceedings.

Regarding the alleged lack of valid BPs the inquiry did not lead to conclude that the judicial and administrative decisions concerning the validity of the screening decisions directly affect the building permits’ validity.

EIB recommendations and suggestions for improvement

The Conclusions Report contains a number of recommendations in order to address underlying weaknesses, as follows:

·        The EIB should receive from the Promoter and/or the Borrower: 

o   satisfactory explanations on the feasibility of the timetable for the implementation of compensatory measures within the timeframe established by the finance contract as well as on the coordination of implementation works on compensatory measures with construction activities for the Project;

o   satisfactory evidence that compensatory measures whose implementation is required and feasible in the short/medium term are effectively fast-tracked; and

o   satisfactory evidence of adequate additional compensatory measures (including approval and necessary permits) due to the delay in the implementation of the compensatory measures notified to the European Commission, in the event that implementation exceeds the deadline established by the Finance Contract.

·        The EIB should use appropriate measures to ensure the above actions are satisfactorily implemented, including reassurance that compensatory measures will be implemented within the deadline established by the Finance Contract or that the Borrower commits to put in place additional compensatory measures due to the delay in its implementation. The appropriate measures may include, but are not limited to, withholding disbursements.  

·        For future operations, where disbursements are conditioned to notification of compensatory measures by a member state to the European Commission, and without prejudice to the Bank's legally binding obligations, where areas of attention are identified as in the present case (e.g. first notification to the European Commission, conditional notification, incomplete notification), it would be considered good practice to establish contact with the European Commission prior to disbursing funds in order to gather information in view of supporting the Bank's decision that the condition attached to the EIB's financial assistance has been satisfied.

·        In light of information duties of the Borrower under the Finance Contract, the EIB will continue to closely follow-up on ongoing judicial and administrative proceedings.  

·        The EIB should ensure, when notified of a decision granted by the competent authorities being legally challenged in court by third parties or annulled by a competent authority, that the implications of the legal proceedings are followed up by the EIB’s relevant services with relevant expertise as required (e.g. environmental experts). Internal awareness should be raised by the EIB competent services on the importance to trigger the involvement of these resources in similar situations.

·        The EIB services' assessment of the Complainant's public health and safety concerns should be complemented by a review of the missing floaters tracking test documentation in order to provide assurance of substantial compliance with Standard 9 so far as the Danube Bridge is concerned.

The EIB-CM has made further suggestions for improvement related to ongoing legal proceedings/criminal investigations and public consultation on notification of changes.