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MUNICIPALITY OF CHAIR

PROJECT APPRAISAL DOCUMENT

FOR RECONSTRUCTION OF WATER SUPPLY,

SEWERAGE AND STORM DRAINAGE ON STREET

DIZONSKA 15; 17; 19; 21; 23 AND 23a

Skopje

March 2021

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Table of Content

Summary ....................................................................................................................................................... 8

1 Project description .............................................................................................................................. 11

1.1 General Information on the municipality of Chair ...................................................................... 12

1.2 Demographic and economic profile ............................................................................................ 13

1.2.1 Demographic table .............................................................................................................. 13

1.2.2 Gender and age ................................................................................................................... 14

1.2.3 Minority repartition ............................................................................................................ 15

1.2.4 Economy and employment ................................................................................................. 15

1.2.5 Relevant extracts of the municipality’s documents about the project .............................. 17

1.3 General description of the Project .............................................................................................. 17

1.3.1 General description ............................................................................................................. 17

1.3.2 Area concerned by the project ........................................................................................... 18

1.3.3 Current situation ................................................................................................................. 20

1.3.4 Project goals and project beneficiaries ............................................................................... 23

1.3.5 Financial data ......................................................................... Error! Bookmark not defined.

1.3.6 Knowledge and experience of the municipality of Chair .................................................... 24

1.3.7 Conclusions ......................................................................................................................... 25

2 Social assessment ............................................................................................................................... 26

2.1 Social study ................................................................................................................................. 27

2.1.1 Social diversity and gender ................................................................................................. 27

2.1.2 Institutions, rules, and behavior ......................................................................................... 28

2.1.3 Stakeholders........................................................................................................................ 29

2.1.4 Citizens engagement ........................................................................................................... 29

2.1.5 Social risks ........................................................................................................................... 30

2.2 Other fields of consideration ...................................................................................................... 31

2.4 Conclusion on the project potential success and recommendation .......................................... 31

3 Environmental Impact ............................................................................ Error! Bookmark not defined.

3.1 Location of project site .................................................................. Error! Bookmark not defined.

3.2 Main project activities with environmental impact ....................... Error! Bookmark not defined.

3.3 Main environmental impact and sensitive receptors .................... Error! Bookmark not defined.

3.4 Environmental mitigation plan for the project: Construction of water supply, sewerage and

storm drainage on Dizhonska street no. 15, 17, 19, 21, 23 and 23a ......... Error! Bookmark not defined.

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3.5 Environmental monitoring plan for the project: Construction of water supply, sewerage and

storm drainage on Dizhonska street no. 15, 17, 19, 21, 23 and 23a ......... Error! Bookmark not defined.

4 Technical solutions .............................................................................................................................. 46

4.1 Description .................................................................................................................................. 47

4.1.1 Water supply network ........................................................................................................ 47

4.1.2 Fecal sewerage network ..................................................................................................... 51

4.1.3 Atmospheric drainage ......................................................................................................... 53

4.1.4 Earth works ......................................................................................................................... 54

4.1.5 Asphalt works ...................................................................................................................... 54

4.2 Analysis and evaluation .............................................................................................................. 55

4.3 Conclusions and recommendations ............................................................................................ 55

4.4 Alternative solutions ................................................................................................................... 55

5 Financial analysis ................................................................................................................................. 56

5.1 Project cost ................................................................................................................................. 57

5.2 Credit capacity ............................................................................................................................ 59

5.3 Loan repayment ............................................................................. Error! Bookmark not defined.

5.4 Review of the municipal account ................................................................................................ 59

5.5 Analysis of the financial feasibility of the project ....................................................................... 61

5.5.1 Time horizon ....................................................................................................................... 65

5.5.2 Limitations of the analysis .................................................................................................. 65

5.5.3 Initial investment ................................................................................................................ 65

5.5.4 Inflation ............................................................................................................................... 65

5.5.5 Discount rate ....................................................................................................................... 66

5.5.6 Projection of operating cash flows ..................................................................................... 66

5.5.7 Costs .................................................................................................................................... 66

5.5.8 Sensitivity analysis ................................................................. Error! Bookmark not defined.

5.6 Conclusions .................................................................................... Error! Bookmark not defined.

6 Cost-benefit analysis ................................................................................................................................ 72

6.1 General information............................................................................. Error! Bookmark not defined.

6.1.1 Framework of the analysis ............................................................ Error! Bookmark not defined.

6.1.2 Limitations and constraints of the study ...................................... Error! Bookmark not defined.

6.1.3 Scope ............................................................................................. Error! Bookmark not defined.

6.2 Identification of the relevant costs and benefits ................................. Error! Bookmark not defined.

6.2.1 Project costs .................................................................................. Error! Bookmark not defined.

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6.2.2 Quantifiable benefits .................................................................... Error! Bookmark not defined.

6.2.3 Unquantifiable benefits ................................................................ Error! Bookmark not defined.

6.3 Valuation of the costs and benefits ..................................................... Error! Bookmark not defined.

6.3.1 Economic valuation of the costs ................................................... Error! Bookmark not defined.

6.4 Other assumptions ............................................................................... Error! Bookmark not defined.

6.5 Valuation of the costs and benefits ..................................................... Error! Bookmark not defined.

6.6 Results from the cost - benefit analysis ............................................... Error! Bookmark not defined.

6.7 sensitivity analysis ................................................................................ Error! Bookmark not defined.

6.8 Conclusion ............................................................................................ Error! Bookmark not defined.

7 Risk analysis ........................................................................................................................................ 81

7.1 Technical risks to the municipality .............................................................................................. 82

7.2 Financial risks to the municipality ............................................................................................... 82

8 Recommendations .............................................................................................................................. 84

9 Annex .................................................................................................................................................. 86

9.1 Decision of the Municipality of Chair for loan ............................................................................ 87

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List of Tables Table 1. Basic demographic and economic data about Chair ...................................................................................... 13 Table 2. Age distribution by gender ............................................................................................................................ 14 Table 3. Population by ethnic groups in Chair ............................................................................................................. 15 Table 4. Active business legal entities for 2019 ........................................................................................................... 16 Table 5. Active business legal entities by sector 2019 ................................................................................................. 16 Table 6. Unemployment by gender (November 2020) ................................................................................................ 17 Table 7. Detailed information about the sections of the street “Dizhonska” ............................................................. 19 Table 8. Overview of investment costs ........................................................................... Error! Bookmark not defined. Table 9. Implemented investment projects................................................................................................................. 25 Table 10. Main project activities with potential environmental impact ........................ Error! Bookmark not defined. Table 11. Estimated values of the generated different waste streams during construction activities Error! Bookmark

not defined. Table 12. Administrative numbers of Decisions for approval of the EIA Elaborates ..... Error! Bookmark not defined. Table 13. Calculation of the annual capital repayment .................................................. Error! Bookmark not defined. Table 14. Calculation of the repayment of the loan ....................................................... Error! Bookmark not defined. Table 15. Revenues and expenditures of municipality Chair.......................................... Error! Bookmark not defined. Table 16. Accounts payable/receivable .......................................................................... Error! Bookmark not defined. Table 17. MSIP loan repayment capacity of municipality Chair ..................................... Error! Bookmark not defined. Table 18. Collection of Property tax & Communal fees (%) ........................................... Error! Bookmark not defined. Table 19. Summary of comparisons between the “without” and “with the project” scenarios ... Error! Bookmark not

defined. Table 20. Cost-benefit analysis (in MKD) ........................................................................ Error! Bookmark not defined. Table 21. Sensitivity analysis.......................................................................................... Error! Bookmark not defined. Table 22. Technical risks .............................................................................................................................................. 82

List of Figures

Figure 1. Municipality Chair within the city of Skopje ................................................................................................. 12 Figure 2. City of Skopje with its ten constituent municipalities .................................................................................. 12 Figure 3. Chart for population by gender .................................................................................................................... 14 Figure 4. Chart for population by age .......................................................................................................................... 15 Figure 5. Macro location of the street “Dizhosnka” .................................................................................................... 18 Figure 6. Micro location of the street “Dizhosnka” ..................................................................................................... 19 Figure 7. Photo from existing situation of section Dizhonska no. 15 .......................................................................... 20 Figure 8. Photo from existing situation of section Dizhonska no. 17 .......................................................................... 21 Figure 9. Photo from existing situation of section Dizhonska no. 19 .......................................................................... 21 Figure 10. Photo from existing situation of section Dizhonska no. 21 ........................................................................ 22 Figure 11. Photo from existing situation of section Dizhonska no. 23 ........................................................................ 22 Figure 12. Photo from existing situation of section Dizhonska no. 23 A ..................................................................... 23 Figure 13. Location of the sub-projects .......................................................................... Error! Bookmark not defined. Figure 14.Transverse section of water supply network trench ................................................................................... 49

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Figure 15.Detail of the types of underground fire hydrants ........................................................................................ 49 Figure 16.Detail of inbuilt set ...................................................................................................................................... 51 Figure 17.Transverse section of fecal sewerage network trench ................................................................................ 53 Figure 18. Detail of revision manhole .......................................................................................................................... 53 Figure 19. Detail of catchment canal with lattice ........................................................................................................ 54

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Abbreviations

CBA Cost and Benefit Analysis

DUP Detailed Urban Plan

EIA Environmental Impact Assessment

ENPV Economic Net Present Value

ERR Economic Rate of Return

ESARNM Employment service agency of Republic of North Macedonia

H&S Health and Safety

IRR Internal Rate of Return

MIRR Modified Internal Rate of Return

MKD Macedonian Denar

MKS EN Macedonian Standard

MSIP Municipal Service Improvement Project

NGO Non - Governmental Organizations

NPV Net Present Value

PAD Project Appraisal Document

RNM Republic of North Macedonia

SSO State statistical office of Republic of North Macedonia

VAT Value Added Tax

WHO World Health Organization

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Summary

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This project is about reconstruction of water supply, sewerage and storm drainageof6 (six) sections of street “Dizhonska” i.e. they are:

- Dizhonska no. 15;

- Dizhonska no. 17;

- Dizhonska no. 19;

- Dizhonska no. 21;

- Dizhonska no. 23A and

- Dizhonska no. 23.

The total amount of the project is 39,823,849.00 MKD (647,542.26 EUR) with included VAT 18 %. The

waste majority of finds (99.75%) will be provided from the Second Municipal Services Improvement

Project (MSIP 2) sub-loan according to the Decision of the municipal Council for borrowing no. 08-428/9

dated 17.02.2021 in the amount of 39,724,359.16 MKD while the rest (0.25%) will be secured by the

Municipality in accordance with the Statement of the Mayor of Municipality of Chair for co-financing, no.

09-677 dated 11.03.2021. The importance of the project comes from the need to improve the quality of

life of the citizens of municipality of Chair. With this project the citizens will have social and environmental

benefits, such as better quality of the potable water, increasing the quantity of the water for personal

hygiene and improving the standard and quality of living.

The Project is in-line with the Detailed Urban Plan (DUP) who is adopted by the Council of Chair municipality and will contribute towards achieving the vision of the municipal administration for providing full coverage of water supply and sewerage infrastructure throughout the municipal territory. The Mayor and the municipal administration strive to achieve full coverage of a water supply and sewerage infrastructure throughout the municipal territory. It can be inferred that the implementation of the Project will undoubtedly contribute towards improvement of the quality of life and well-being of the citizens of the Municipality Chair. Municipality has implemented various similar Projects in the past, some of which in collaboration with international institutions, which implies that is able to implement large construction Projects such as this one.

This project is approved from the municipal Council with the Decision no. 08-1636/3 dated 09.10.2020for municipality priority for financing projects through borrowing within the framework of the Second Municipal Services Improvement Project (MSIP 2) (IBRD – 8165 MK). The necessity from this project was in accordance with the need for satisfying the public interest in the area of capital projects. On 15.01.2021 the administration of Chair municipality organized public hearing about this project. This public hearing confirmed and concluded this project for reconstruction of water supply, sewerage and storm drainage of 6 (six) sections of street “Dizhonska” to be realized with the financial sources from the borrowing.

The implementation of the Project is expected to provide potable water for the all citizens of the street “Dizhonska” because the existing water supply system doesn’t satisfy the necessary quantities. Also with this project will be increase the quantity of the water for personal hygiene i.e. to improve the standard and quality of living. Namely, the new reconstructed sewerage will improve the quality of life of the citizens because the existing sewerage is in very bad conditions and doesn’t satisfy the need of the citizens. The storm drainage will solve the problem with the storm water from the streets i.e. the storm water from the streets will be accepted in the existing collector. Also, once the Project is implemented,

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the Municipality will spend less money for repairs and reallocate them to other municipal services. Flood control will not only reduce the municipal spending, but also private spending on repairs, thus enabling reallocation of the funds to other more beneficial, i.e. productive use. The project will have a positive effect on the economic development and the value of the properties in those settlements, because the settlements will become more attractive and covered with all the necessary water supply and sewerage infrastructure in accordance with the current standards.

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1 Project description

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1.1 GENERAL INFORMATION ON THE MUNICIPALITY OF CHAIR

Chair municipality is one of the ten constituent municipalities of the City of Skopje – the capital of the RNM (Figure 1). It is the smallest municipality within Skopje by area, however belongs to the group of those highly populated (Figure 2). The municipality was formed in 1976 based on the Law on Municipalities, but with the new Law on Territorial Division of 2005, the borders of the municipality significantly decreased. Now it covers an area of 3.52 km² and has 64,773 inhabitants, which represents 3.2% of the total population of the RNM.

Figure 1.Municipality Chair within the city of Skopje

In figure 2 presents the location of the Municipality of Chair (number 4 in the figure) in the City of Skopje.

Figure 2. City of Skopje with its ten constituent municipalities

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Municipality Chair borders with Municipality of Centar on the north-west, with Municipality of Karposh to the south - west, with Municipality of Butel to the south and with Municipality of Gazi Baba on the east. The Municipality has 64,773 inhabitants (revised Census data from 2005). The average low temperature is 6°C and the average high temperature is 18.1°C. The average precipitation days are 75 and the annual rain fall for the Municipality is estimated at 507mm, which is observed mostly from October through December. August is the driest month of the year and the relative humidity is at its lowest level during summer at 55%.

1.2 DEMOGRAPHIC AND ECONOMIC PROFILE

1.2.1 Demographic table

Considering the SSO data, the following table shows infrastructure, education and economic

indicators for the municipality of Chair, Skopje Region and the RNM. There are 190 health and social

institutions in municipality of Chair. There are11 primary schools 1 high school. Namely, in 2019/2020

there are 8094 pupils attending the primary school. Also, there are 2047 business subjects. Table 1

presents the basic demographic and economic data about municipality of Chair.

Table 1. Basic demographic and economic data about Chair

Indicators Unit Municipality

Chair Skopje Region

RNM

Demography

Area km2 3.52 1,812 25,713

Total population Number 64,773 578,144 2,022,547

Settlements Number 14 156 1,792

Population density Number 18,401 319 79

Total dwellings Number 17,127 188,394 698,143

Total households Number 17,122 163,633 564,296

Average households members Number 3.79 3.45 3.58

Education

Primary schools Number 11 159 987

High schools Number 1 35 130

Children at age 6-14 that attend school in school year 2019/2020

Number 8,094 66,103 187,240

Population literacy at age 10 and more Number 52,241 488,916 1,693,044

Infrastructure

Local roads km 150 935 9,878

Water supply, sewerage and waste management institutions

Number 4 77 260

Health and social institutions Number 86 1,084 3,246

Economy

Active business subjects Number 2,047 29,652 75,914

GDP per capita MKD N.A. 470,876 331,982

Employment

Total unemployed Number 5,438 30,578 155,575 Source: SSO – Makstat data base, Census 2002 and Employment Service Agency of RNM (ESARNM)

http://en.wikipedia.org/wiki/%C4%8Cu%C4%8Der-Sandevo_Municipality

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According the last data from the Employment Service Agency of RNM (ESARNM) the total

employment in municipality of Chair is 5438 i.e. municipality of Chair is a municipality with the highest

number of unemployed people compared to other municipalities in the Skopje region. The GDP per capita

is calculated on a regional level, since there are no available data on the municipality contribution. The

population density is very high in Chair municipality than the average population density for RNM and

Skopje region for 2002 when the last census was conducted.

1.2.2 Gender and age

According to the Census in 2002, the total number of inhabitants in the municipality of Chair is 64,773 inhabitants, living in 17,122households i.e.3.78 residents per household. The population density is 18,401 inhabitants per km2, which makes the municipality one of the most densely populated areas. Regarding the limitations of the data, in the next figure we only present (because the limitations of the data) population by gender by the census in 2002 about the municipality of Chair. The statistical data on gender structure in 2002 shows that male are represented with 49.98% and the female are represented with 50.02%. Also, in the next table we presents the age distribution by gender of total population in municipality of Chair.

Figure 3. Chart for population by gender

Source: SSO – MakStat database

Table 2. Age distribution by gender

Source: SSO - MakStat data base, Census 2002

50.02%

49.98%

50.0%

50.0%

50.0%

50.0%

50.0%

50.0%

50.0%

50.0%

Female Male

0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+

Total 4,812 5,334 5,320 5,065 5,072 5,487 5,644 5,099 4,322 3,863 3,450 3,104 2,793 5,408

Male 2,501 2,785 2,712 2,584 2,562 2,744 2,901 2,582 2,258 1,918 1,571 1,403 1,377 2,466

Female 2,311 2,549 2,608 2,484 2,510 2,743 2,743 2,517 2,064 1,945 1,869 1,701 1,416 2,942

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The following figure represents the age distribution in the total population according the census

in 2002. The analysis of data shows that municipality of Chair has share of population younger less than15

years23.80% who is bigger for 2.71 pp compare to the population on same age in RNM. Namely, the

following figure show that the number of population between 15 – 64 and persons 65 and older are less

compare to the population on same ages in the RNM.

Figure 4. Chart for population by age

Source:SSO - MakStat data base, Census 2002

1.2.3 Minority repartition

Majority of population in the municipality of Chair are Albanians with 57% from the total population. Macedonians with 24% are the second population in terms of representation in the municipality of Chair, Turks are 6.9%, Roma are 4.8%, Bosnians are 4.6%, Serbian are 1.0% and Vlachs are 0.1% from the total population in the municipality of Chair, while the others are 1.5% which are members of other national groups. The following table presents the population of municipality of Chair by ethnic groups.

Table 3. Population by ethnic groups in Chair

Total Albanians Macedonians Turks Roma Vlach Serbs Bosnians Others

Number 64773 36921 15628 4500 3083 78 621 2950 992

% 100 57 24 6.9 4.8 0.1 1.0 4.6 1.5 Source: SSO - MakStat data base, Census 2002

1.2.4 Economy and employment

In the municipality of Chair there are 2047 active business legal entities, which is 6.9% of the total

active business legal entities in Skopje region i.e. is 2.7% of the total active business legal entities in RNM.

It is obvious the domination of the micro businesses shares of 68.24% in RNM and also 75.33% in Chair.

Micro and small business legal entities in RNM, Skopje region and in Chair are 97-98% of the total active

business legal entities.

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Table 4. Active business legal entities for 2019

Total Micro Small Medium Large

RNM 75,914 51,800 22,579 936 599

Skopje region

29,652 18,387 10,379 488 398

Chair 2,047 1,542 491 13 1 Source: SSO - MakStat data base

The number of legal entities by sector in RNM, Skopje region and Chair is presented in the next

table. The companies in Chair are mostly concentrated in wholesale and retail trade (37% of total),

manufacturing (9.8% of total) and transport and storage (9.8% of total).

Table 5. Active business legal entities by sector 2019

RNM Skopje region

Chair

Total 75,914 29,652 2,047

Agriculture, forestry and fishing 2,605 317 8

Mining and quarrying 221 76 2

Manufacturing 8,362 2,707 219

Electricity, gas, steam and air conditioning supply 224 141 2

Water supply, sewerage, waste management and remediation activities

260 77 4

Construction 5,270 2152 111

Wholesale and retail trade; repair of motor vehicles and motorcycles

23,140 7941 757

Transportation and storage 5,780 2152 200

Accommodation and food service activities 4,777 1461 115

Information and communication 2,041 1383 34

Financial and insurance activities 470 269 20

Real estate activities 645 403 11

Professional, scientific and technical activities 7,636 3994 160

Administrative and support service activities 1,962 1173 57

Public administration and defense; compulsory social security

264 134 1

Education 1,289 545 33

Human health and social work activities 3,241 1116 86

Arts, entertainment and recreation 1,753 820 54

Other service activities 5,974 2791 173 Source: SSO - MakStat data base

Regarding the limitations of the data for the unemployment in municipality of Chair, in the next

table we present available data about the unemployment by gender for the RNM, Skopje region and Chair.

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Table 6. Unemployment by gender (November 2020)

Source: ESARNM

1.2.5 Relevant extracts of the municipality’s documents about the project

The project reconstruction of water supply, sewerage and storm drainage of 6(six) sections of street “Dizhonska” (section Dizhonska no. 9; section Dizhonska no. 11; section Dizhonska no. 13; section Dizhonska no. 15; section Dizhonska no. 17; section; section Dizhonska no. 19; section Dizhonska no. 21; section Dizhonska no. 23A and section Dizhonska no. 23) unite the strategic goals of the Strategy plan for local economic development of the municipality of Chair in the field of infrastructure and local economy, by setting conditions for local economic development of rural areas. This project is accordance with the Strategy plan for development of the Municipality of Chair.

Regarding the above this project under consideration of this PAD was planned to be implemented with sub-loan. On 27.01.2021 the municipality Council adopted a Decision for a prioritization of this project for long run borrowing from the World Bank’s MSIP II 02/2018 No. 09-1097/1. The necessity was justified in the Decision with the need for satisfying the public interest in the area of capital projects. The maximal amount for borrowing was decided to be 39,724,359.16 MKD with maturity of 12years inclusive of the 3-years grace period and an interest rate equal to what the RNM pays to the World Bank already.

On 15.01.2021at 10:00am the administration of Chair municipality organized public hearing about this project. Present were employees in the municipality and representatives from the interested citizens. Responsible for the project from the municipality of Chair first explained the financial technicalities of the possible borrowing and after explained the technical part of projects. Also the strategic dedication of the municipality for improvement of the communal infrastructure of Chair was explained. Citizens started the discussion by pointing the hot spots with the sections of the street “Dizhonska” needs in their interest. In total 29 persons were present to the public hearing as presented by the List of attendees. After the public hearing it was concluded and confirmed project “Reconstruction of water supply, sewerage and storm drainage of 6 (six) sections of street “Dizhonska” (section Dizhonska no. 15; section Dizhonska no. 17; section; section Dizhonska no. 19; section Dizhonska no. 21; section Dizhonska no. 23A and section Dizhonska no. 23)" to be treated with the financial sources from the borrowing.

Based on the public hearing the municipal Council of Chair adopted borrowing decision No. 08-169/7 on its plenary session held on 27.01.2021.The decision was adopted by all 23 present counselors.

1.3 GENERAL DESCRIPTION OF THE PROJECT

1.3.1 General description

In general, this project includes reconstruction of water supply, sewerage and storm drainage of 6 (six) sections of street “Dizhonska” i.e. they are:

Total Male Female

RNM 155,575 77,751 77,824

49.98% 50.02%

Skopje region 30,578 15,066 15,512

49.27% 50.73%

Chair 5,438 2,712 2,726

49.88% 50.12%

Percentages

Percentages

Percentages

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- Dizhonska no. 15;

- Dizhonska no. 17;

- Dizhonska no. 19;

- Dizhonska no. 21;

- Dizhonska no. 23A and

- Dizhonska no. 23.

1.3.2 Area concerned by the project

Street “Dizhonska” is located in the northern part of the City of Skopje. The street “Dizhonsksa” it intersects with the street “John Kennedy” in the south and with the street “Second Macedonian Brigade”. The street “Dizhonska” is located in the urbanized area of the City. Location of the street are presented in the next figures. The street is a part of the Detailed Urban Plans (DUP) for the local communities, adopted by the municipal council. The DUPs of the local communities were used as the base for preparation of the technical documentation and the detailed designs.

Figure 5.Macro location of the street “Dizhosnka”

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Figure 6.Micro location of the street “Dizhosnka”

In the next table we present detailed information for the 6 (six) section of street “Dizhonska”

covered with this project.

Table 7. Detailed information about the sections of the street “Dizhonska”

Sections of the street

“Dizhonska”

Water supply

network length

(m)

Sewerage

length (m)

Dizhonska no. 15 196.20 180.00

Dizhonska no. 17 180.00 180.00

Dizhonska no. 19 180.00 178.73

Dizhonska no. 21 210.00 205.83

Dizhonska no. 23A 70.00 69.96

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Dizhonska no. 23 165.32 170.00

Total 1,001.52 984.52

Source: Detailed designs for reconstruction of the above section of the street “Dizhonska”

1.3.3 Current situation

Street “Dizhonska” is located in the urban area of Chair municipality. On the street “Dizhonska”

live around 8000 citizens, and most of them live in the individual objects for housing while a smaller

number of them live in residential buildings. The citizens which live on the street “Dizhonska” are

supplying with water from the water supply network who is built 30 years ago.

According the detail designs the main purpose of this project is to reconstruct the water supply

network and sewerage on 6 (six) section of the street “Dizhonska(section Dizhonska no. 15; section

Dizhonska no. 17; section; section Dizhonska no. 19; section Dizhonska no. 21; section Dizhonska no. 23A

and section Dizhonska no. 23)". According the detail designs there are existing water supply and sewage

networks which didn’t satisfied the needs of the citizens. In the following figures we present the current

existing situation of the sections of the street “Dizhonska”.

Figure 7. Photo from existing situation of section Dizhonska no. 15

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22



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Figure 12. Photo from existing situation of section Dizhonska no. 23 A

1.3.4 Project goals and project beneficiaries

Regarding the current situation as well the continuous grow of the citizens and properties for

housing on street “Dizhonska”, the existing water supply network and sewerage is not enough to satisfy

the needs of the citizens and they face with different problems every day.

With this project the citizens and the municipality of Chair will have social and environmental

benefits, such as increasing access to the potable water, increasing the amount of the water for personal

hygiene and improving the standard and quality of living. Namely, according the detail design in the all 6

(six) sections of the street “Dizhonska” there are 186 individual connections on the reconstructed water

supply network, it means 186 households, or around 1000 inhabitants. The water supply network will be

built according the standards for quality recommended by the World Health Organization (WHO) in order

to reduce the level of contamination. The project will have positive effect on the economic development

of the municipality. Also implementation of this project will have positive effect on increasing the value

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of the properties which are located on this sections of the street “Dizhonska” because they will be more

attractive and covered with all necessary communal infrastructure.

This project will improve the quality of living standards of the citizens which live on the all 6 (six)

sections of the street “Dizhonska(section Dizhonska no. 15; section Dizhonska no. 17; section; section

Dizhonska no. 19; section Dizhonska no. 21; section Dizhonska no. 23A and section Dizhonska no. 23)".

Namely, all 6 (six) sections of the street “Dizhonska” has important role in the municipality of Chair.

The direct beneficiaries of this project are around 8.000 citizens which live on the street

“Dizhonska” and everyday use this street for fulfilling their needs and responsibilities and all business

located on the street “Dizhonska”. Namely, the indirect beneficiaries of this project are the citizens of the

other settlements in municipality of Chair and City of Skopje which use these streets in their daily

functioning and other citizens which have relatives and friend which live on the above sections on the

street “Dizhonska.

The objectives of the technical solution of the project are as follows:

- To improve the communal infrastructure on the street “Dizhonska”;

- To improve the social and health welfare to the citizens which live on the street “Dizhonska”;

- To provide quality supplying with potable water for the citizens;

- To enable efficient, effective and safe disposal of waste water and

- To improve the environmental protection of the citizens which live on the street “Dizhonska”.

Additionally, the implementation of the project is expected to lead towards reduction of the

municipal costs for constant repairs of existing water supply network and atmospheric and fecal sewerage.

Once the Project is implemented, the Municipality will spend less money for repairs and reallocate them

to other municipal services.

1.3.5 Knowledge and experience of the municipality of Chair

The knowledge and experience needed for successful implementation of the Project are related

to project management, technical knowledge and execution of procurement practices. The Municipality

Chair, the competent authority in this Project, has participated in a wide variety of large construction and

reconstruction or other type of Projects with different investors, whereby the Municipality allocated the

land and provided the investors with technical services, and gained in return new businesses on its

territory or improved housing facilities, schooling facilities, wastewater networks and treatment. The

Municipality has implemented several Projects for improving municipal services supported by the

International finance institutions. It can be inferred that the Municipality is able to contribute with the

necessary experience to large construction Projects such as the reconstruction of various communal

infrastructure in the urban districts of the Municipality Chair. It can be concluded that the municipality is

the required knowledge and experience required for implementation of project for reconstruction local

communal infrastructure on the sections of street “Dizhonska” in the municipality of Chair, envisaged to

be financed from the World Bank Second MSIP funds to the Government of the RNM. In the next table

we present the implemented investments projects from the municipality of Chair.

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Table 8. Implemented investment projects

Number Municipality Project name Financing source Implementation

period Budget (Euro)

1 Municipality of

Chair

Water supply and sewage system,

Dizhonska Vodovod 2019 300,000.00

2 Municipality of

Chair Water supply system

Serava Municipality of Chair 2019 200,000.00

4 Municipality of

Chair

Water supply and sewage system, Gazi

Baba Municipality of Chair 2018 300,000.00

5 Municipality of

Chair Reconstruction of

local roads Municipality of Chair 2017-2020 800,000.00

6 Municipality of

Chair

Reconstruction of local roads, SahatKulla

Municipality of Chair 2018 300,000.00

Total 1,900,000.00

Source: Municipality of Chair

1.3.6 Conclusions

The project is in line with the strategic priorities of the municipality of Chair and will contribute to

achieving the vision of the municipal administration for improvement the communal infrastructure in all

settlements and communities of Chair municipality.

The relevance of this projects results arises from the fact that population in the municipality is

affected by old communal infrastructure. The proposed technical solution for project are in accordance

with the existing standards and regulations for such kind of projects. The project is of high priority to the

municipality, the Mayor, the city Council and its citizens. The municipality has the required knowledge

and experience for successful implementation and management of the project, has technical knowledge,

as well as knowledge and experience for execution of procurement procedures. Municipality of Chair has

implemented a variety of similar projects in the past, in cooperation with international institutions, which

means that the municipality is capable to carry out this communal infrastructure project.

26

2 Social assessment

27

2.1 SOCIAL STUDY

The study is based on the World Bank – Five Entry Points One Result methodological framework,

incorporating five relevant components in the assessment: social diversity and gender, institutions, rules

and behavior, stakeholders, participation, and social risk.

The assessment involved a review of relevant data and documents of the municipality of Chair: socio-

demographic profile of the municipality, socio-economic data, key project documents, the municipal

strategic documents, results from surveys conducted with citizens of the municipality of Chair (in the

process of preparation of local development plans), as well as the World Bank guidelines for the

assessment of the social impact of the project. Due to time constraints and constraints imposed by the

COVID-19 pandemic, the evaluation relied to the largest part on secondary data obtained from the

Municipality of Chair and the State Statistical Office.

2.1.1 Social diversity and gender

The Municipality of Chair is one of the ten local self-governments units based in the City of Skopje.

According to the Census data from 2002, 64.773 citizens are living in the municipality of Chair. The gender

distribution is almost equal 32.374 inhabitants (49.9 %) male and 32,399 (50.01 %) females. The share of

the population of the Municipality in the total population of the country is 3.2%. With 64.733 inhabitants

it is one of the biggest municipalities in the City of Skopje by the number of the population. Several ethnic

groups are based in the municipality - ethnic Albanians represent a majority of the population (57%), while

ethnic Macedonians compose short than a quarter (24.13%). Ethnic Turks (6.95%), Romani (4.76%) and

Bosnians (4.55%) also form a considerable portion of the population as representatives of the “smaller”

non-majority communities. Because of its composition of population, the Municipality of Chair, has a legal

obligation to provide official use of the Albanian language. However, since late 2013 the Municipality

Council introduced the Turkish language as a third official language of the municipality. With this Chair

became one of the municipalities which use three official languages in official communication.

2.7 % of the total number of active business entities at the national level are located in the Municipality

of Chair. The total unemployment in municipality of Chair is 5.438 which implies that this municipality is

with the highest number of unemployed people compared to other municipalities in the Skopje region.

The population density in the Municipality of Chair is the largest compared to any municipality in the

country. If done comparison with the City of Skopje where the density varies in different parts of the city,

and on average is 888 inhabitants / km2, for the municipality of Chair is 16.193 inhabitants / km2. There

are 17.107 households (out of 146.566 in Skopje and 564.296 at national level) and 17.127 dwellings (out

of 163.745 in Skopje and 698.143 at national level). The average number of household members in the

Municipality is 3.79 persons, which is a number higher than the Skopje average which is 3.45 and national

average, which is 3.58.

The municipality of Chair is included in the group of municipalities with high birth rate and natural increase

in the country. The population inhabiting the municipality of Chair is characterized by significant changes

related to increasing youth participation and significantly reducing the share of the elderly population.

Dominant residents by age group are those between 5-24 years with 20.791 inhabitants and 25-44 years

with 20.552 inhabitants.

28

The significance of the project Reconstruction of water supply, sewerage and storm drainage, of 6 (six)

sections of the street Dizhonska no. 15, 17, 19, 21, 23A and 23 is evident when taken into regard the

specific settlement structure of the municipality. Municipality Chair borders the municipalities of Butel,

Centar and Gazi Baba. The Municipality has 14 settlements. This Project is intended to be implemented in

the relatively urbanized area of the municipality.

The citizens who live on the Dizhonska Street from different social groups (minorities, gender, language,

social, and economic status), are considered as direct beneficiaries of the Project. The citizens of these

streets will have improved quality water supply with sanitary-hygienic proper drinking water, but also

quick and efficient drainage of water. The streets have water supply built 30 years ago and sewerage

networks that do not meet the needs of the local population for quality drinking water supply and

wastewater drainage.

The direct beneficiaries of this project are about 8.000 citizens inhabitants who live on Dizhonska street

mainly in individual housing facilities, and a small number of them in collective housing facilities. The

number of inhabitants as well as the housing facilities is constantly growing which indicates the current

water supply and sewage system is unsustainable in the medium and long term.

Cultural facility in the immediate vicinity of the subject location represents the Uhud Mosque. Facilities

that perform educational activities near the subject location are the primary schools

"PetarZdravkovskiPenko", "RajkoZinzifov", and "Vasil Glavinov". The construction of water supply network

and sewerage network will contribute to health safety, especially safety of children. This project will be of

great benefit for local communities and will improve the living standard, including the quality living

standard of socially deprived persons. The project is vital for residents and for municipal public institutions

such as primary schools, health care institutions, local small businesses, mosques. As there are no planned

traffic details in the project design, the Municipality undertakes the responsibility to apply a proper

horizontal and vertical signalization on the targeted streets and prepare a traffic documentation before

start of works.

The indirect beneficiaries of this project are the citizens of the other settlements in municipality of Chair

and City of Skopje which use these streets in their daily functioning and other citizens which have relatives

and friend which live on the street “Dizhonska.

2.1.2 Institutions, rules, and behavior

According to the documents provided by the Municipality of Chair, the citizens identify the development

of the municipal infrastructure as one of the key development priorities. According to Article 22 of the

Law on the Units of Self-Government, urban planning, environmental protection, to plan local economic

development, communal services (including water supply and sewage, public lightening, construction and

rehabilitation of streets, horticulture and landscaping), as well as services in the field of culture, sport,

social and child protection, education, health protection, etc. Based on previous experience with other

development projects, the municipal administration can manage the realization of the project. The

Municipality has implemented several Projects for improving municipal services supported by the various

international donors.

Access to water is considered a basic need and there is solidarity among all citizens for resolving this issue

for the residents living in the targeted streets. It is very important to note that the municipality has the

intention to improve the water supply and sewage network to all local communities. Additionally,

29

investments will be made to road infrastructure, plumbing and sewage system, etc. These investments

are supposed to overcome the prevailing problems, to improve the quality of life of permanent residents.

By implementing this strategically important project, the municipality is expressing its willingness to solve

the issues of importance to citizens and to fully implement its mission of being citizens’ service.

The mayor, the municipal council, and the municipal administration strive to achieve good communal

infrastructure. This approach will improve the overall health of municipal residents and will contribute to

livelihood of communities.

2.1.3 Stakeholders

There are several relevant stakeholder groups for the implementation of the project. The first stakeholder

group is the local authorities, i.e., the Mayor, the Municipal Council, and the municipal administration of

the Municipality of Chair. The Municipal Council of Chair has 27members representing different political

parties DUI (9), SDSM (4), VMRO-DPMNE (4), AA (2), BESA (8). The decision for borrowing was supported

by majority (23) members of the Council, which means that a political consensus is achieved on this issue.

There is a strong commitment on behalf of the municipal bodies and administration members to the

development of the project and continuous upgrading of the infrastructure in the municipality.

The citizens of the targeted streets represent another relevant stakeholder group. There are strong

interest and support on behalf of this stakeholder group for the realization of the project. The citizens

have frequently submitted their complaints about the current situation with drinking water supply and

wastewater drainage in the streets that are subject to this Appraisal, which again implies that the citizens

are fully in favor of the Project

The project will be beneficial for the whole community. The current composition of the Municipal Council

and the Mayor are in favor of the project. There are no risks or problems that can endanger the realization

of the projects nor exclusion of some social group from project benefits. The projects will be for

everyone’s benefit and wellbeing.

2.1.4 Citizens engagement

According to the Law on Local Self-Government (Article 25), citizens can participate in the decision-making

processes at the local level through citizen initiatives, citizen gatherings, and local referendums.

Furthermore, each citizen has the right to suggest proposals to the municipal bodies. According to Article

30 from the Law on Local Self-Government, the Municipality is obliged to consult the citizens (through the

organization of public debates, surveys of citizens' opinions, and calls for proposals) in the process of

development of local policies and strategic documents.

The municipal government also regularly carries out consultations with citizens to prepare annual work

programs, municipal budgets, and other relevant policies and activities. The Municipality of Chair is

committed to regular communication of municipal decisions and actions to its citizens. Relevant municipal

information, documents and news are published on the Municipality website (www.cair.gov.mk) and

through its Facebook page (https://www.facebook.com/Komuna Chair-Municipality of Chair). The

Municipality's Facebook page also represents one channel for informal communication with the citizens.

The municipality has well established practice of citizens’ engagement activities in monitoring project

implementation process. This includes placement of feedback drop box, annual public consultations, as

well as municipal practice of “open doors” which allows citizens’ to schedule an appointment with the

Mayor on their request. Additionally, councilors have regular meetings with citizens in local communities.

30

This participative practice ensures the possibility of residents to influence on necessary changes if they

arise during the implementation of the project if need.

All these channels as well as direct contacts with municipal administration were used by the citizens in

their complaints about the current situation with drinking water supply and wastewater drainage in the

streets that are subject to this Appraisal.

On January 15 2021, the administration of the Municipality of Chair organized a public hearing about the

project. The public hearing was attended by 29 participants, out of which, 2 were representatives of the

municipal administration, 1 councilor, 2 representatives from the educational institutions, 2 from the civil

society organizations, and the rest were interested citizens residents of the streets. Out of 29 participants

at the public hearing present were 3 women. The head of Local Economic Development Unit, Mr. Selman

Reci informed the citizens about the financial technicalities of the possible borrowing and after explained

the technical part of project. Also was explained the strategic dedication of the municipality for

improvement of the local infrastructure. The citizens on this occasion raised the need to improve the

water supply and sewage system in the targeted streets. The streets have water supply built 30 years ago

and sewerage networks that do not meet the needs of the citizens for quality drinking water supply and

wastewater drainage. After the public hearing, it was concluded that the project "Dizhonska" no. 15, 17,

19, 21, 23A and 23 to be treated with the financial sources from the borrowing. The representative from

the municipality, expressed positive conclusions from the public debate, suggesting that the t the citizens

will continue to be most transparently involved in the whole process during the project implementation

and their remarks will be considered to find a positive solution of the same.

The municipality has implemented many projects for improving municipal services in cooperation with

national and international institutions and municipalities. It has experience in managing different foreign-

funded projects and programs. It can be concluded that the municipality is the required knowledge and

expertise required for the implementation of the project for the "Dizhonska" no. 15, 17, 19, 21, 23A and

23, envisaged to be financed from the Second MSIP funds to the Government of the RNM.

The project is expected to positively impact the overall quality of life of the citizens of the municipality

and is recognized as such by the citizens.

2.1.5 Social risks

The assessment of potential social risks regarding the implementation and the project's impact did not

identify significant issues that could jeopardize the project's realization. Urban planning is one of the key

issues raised by the citizens, while also emphasizing the necessity of reconstruction of the streets in the

urban districts that are subject of this Appraisal in particular. The project enjoys the support from the

current Municipal Council and municipal administration, from citizens are not expected to have an impact

on the realization of the project as there are affected by old communal infrastructure. The frequent

complaints by the citizens about the current state of the streets that are a subject of this Appraisal, implies

that the citizens are supporting the initiative for reconstruction.

The municipal government is committed to continuously work on developing the municipality

infrastructure, which is planned in the annual work programs of the Municipality, local development

documents, and action plans. The project was adopted in the Detailed Urban Plan of the Municipality of

Chair and was adopted as a priority project by the Municipal Council.

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Since the streets that are subject to this Appraisal are set on municipal property, no expropriation issue is

expected to be raised.

2.2 OTHER FIELDS OF CONSIDERATION

The project is expected to increase the accessibility of municipal services to citizens living in the street

Dizhonska. Furthermore, the project is expected to increase access to the drinking water, increase the

amount of the water for personal hygiene and improving the standard and quality of living. The water

supply network will be built according the standards for quality recommended by the World Health

Organization (WHO) in order to reduce the level of contamination.

2.3 RESETTLEMENT ISSUES

The project does not involve any resettlement or land acquisition issues; the project consists of reparation

of existing road infrastructure, without any widening or other route alterations.

The project will improve the water supply of the local communities, will contribute to attracting business

investments, and will improve the overall health and wellbeing of inhabitants of settlement subject to this

Appraisal. Citizens will be receiving the water in their current locations. Municipal investments in water

supply and sewage system will instigate property investments as well will increase the value of the

properties in the streets.

2.4 CONCLUSION ON THE PROJECT POTENTIAL SUCCESS AND RECOMMENDATION

The municipality doesn’t have any strategic documents in this area, but the project is in line with the

Annual development program for 2021 of the municipality of Chair as well Detailed Urban Plan (DUP), and

will contribute to achieving the vision of the municipal administration for improvement infrastructure in

all settlements and communities of Chair municipality.

There are no significant social risks for the implementation of the project. The municipal authorities

demonstrate a strong commitment to the realization of the project and the continuation of the

development of the infrastructure in the municipality. The project also enjoys the strong support of the

citizens, as indicated during the consultation process regarding local priorities.

Expected project results are:

• Improved the communal infrastructure on the street “Dizhonska”;

• Improved the social and health welfare to the citizens which live on the street “Dizhonska”;

• Provided quality supplying with drinking water for the citizens;

• Efficient, effective and safe disposal of wastewater;

• Increased the quality of life and well-being of the citizens;

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3 Environmental Impact

The project consists of several sub projects with activities on the reconstruction of a water supply network

and sewerage network, on the streets "Dizhonska" no. 15, 17, 19, 21, 23A and 23 in the Municipality of

Chair, Skopje. The project design also proposes the system for the drainage of storm water from the

streets’ surface and storm water that gravitates towards street "Dizhonska". The Project does not

33

envisage removal of old pipes, they will stay in function until final connection of the new water supply and

sewerage networks. Afterwards, the existing old pipes will remain under the ground, but without function.

Around 8000 inhabitants live on main street “Dizhonska” mainly in individual houses, and a small number

of them in collective residential facilities. The number of inhabitants as well as the residential facilities is

constantly growing. The streets have water supply built 30 years ago and sewerage networks that do not

meet the needs of the local population for quality drinking water supply and wastewater drainage.

Therefore, the Main Project has been prepared for water supply network, storm and fecal sewerage for

the streets in order to provide quality water supply to the local population with sanitary-hygienic proper

drinking water, but also quick and efficient drainage of storm water. The existing water supply network,

atmospheric and fecal sewage system are very old, so the reconstruction of the communal infrastructure

is very important for improving the citizens quality of life.

Polyethylene pipes will be installed in different lengths along the route of the water supply (125 mm wide)

and sewerage network (250mm wide) in a total length of 1000 m. The average depth of the excavation

for the water supply and sewerage network is 1.5 m, and the width is 0.8 m by laying the pipes on sand of

0.1 m. The designed fecal sewerage is planned to be constructed with polypropylene corrugated sewer

pipe with a diameter of 250 mm resistance to external load. For the acceptance of the storm water from

the street, construction of a catchment channel (3 m wide) is envisaged, covered with a canal grid placed

in a transverse direction of the street and it will efficiently accept the water taking it to the primary storm

sewerage. Individual user connections to the water supply network are also provided.

The lengths of the subject sections on the street "Dizhonska" for the water supply network is:

- "Dizhonska" no. 15 L = 196.20 m

- "Dizhonska" no. 17 L = 180.00 m

- "Dizhonska" no. 19 L = 180.00 m

- "Dizhonska" no. 21 L = 210.00 m

- "Dizhonska" no. 23A L = 70.00 m

- "Dizhonska" no. 23 L = 165.32 m.

The lengths of the subject sections on the street "Dizhonska" for the sewerage network is:

- "Dizhonska" no. 15 L = 180.00 m

- "Dizhonska" no. 17 L = 180.00 m

- "Dizhonska" no. 19 L = 178.73 m

- "Dizhonska" no. 21 L = 205.83 m

- "Dizhonska" no. 23A L = 69.96 m

- "Dizhonska" no. 23 L = 170.00 m.

34

3.1 LOCATION OF PROJECT SITE

All streets included in this project are located in the urban settlements of municipality of Chair (see

Chapter 1.3.3, PAD Chapter 1). Dizhonska Street is located in the Municipality of Chair in northern part of

the city of Skopje. It intersects with ‘’John Kennedy’’ street from the south part and the street" Vtora

Makedonska Brigada "in the northern part. The street is located in a relatively urbanized area of the city.

More or less parallel to the street "Dizhonska" is placed the street "Lazo Trpovski" on the west side and

the local street "Gjorgji Tomovski" on the east side. Cultural facility in the immediate vicinity of the subject

location represents the Uhud Mosque. Facilities that perform educational activities near the subject

location are the primary schools "Petar Zdravkovski Penko" (350m on the north), "Rajko Zinzifov" (210m

оn the west), and "Vasil Glavinov" (450 m on the west).

The micro location of all sub projects is nearby family houses and residential buildings.

Additionally, nearby is institution in which health care is provided - Rehabilitation Center (on the

northwest side of the subject location).

Project location is presented in Figure 13, respectively.

Figure 13. Location of the sub-projects

3.2 MAIN PROJECT ACTIVITIES WITH ENVIRONMENTAL IMPACT

For each sub-project related to reconstruction of the water supply network, storm and sewer network there are different project activities (provided in the main design for each project), but mainly the general reconstruction activities are: excavation of soil, cutting of asphalt and concrete, temporary removal of the street pavement, backfilling and asphalting after the installation of new pipes. Main activities are shown in following table 9.

Table 9. Main project activities with potential environmental impact

35

Construction of water supply,atmospheric and sewer network on Dijnoska streetno.

15,17,19,21,23a and 23

Planned project

activities during

Preparatory work

Planned project activities during

Construction phase

Duration impact

during

Construction

phase

Planned project

activities during

Operational phase

- Marking the

route;

- Cutting of

concrete and

asphalt

- Excavation and removal of the

soil

- Installation of pipes under the

ground

- Backfilling, asphalting and other

pavement works

-Removal of excess excavated

material by loading,transport to

landfill

Short term within

Municipality of

Chair

- Maintaining

- Timely removal

of all detected

irregularities -

defects

The negative impacts that may arise from the above project activities will be of local importance within the Municipality of Chair and short-term. They are presented and explained in the following chapter.

3.3 MAIN ENVIRONMENTAL IMPACT AND SENSITIVE RECEPTORS

The environmental impact from this type of project activities appears during all three phases: 1. Preparatory phase - preparation of the terrain for the construction phase; 2. Construction phase - construction of water supply, storm and sewer network; 3. Operational phase (maintenance).

The preparatory phase has a short duration with preparation of the terrain for the construction phase. This phase is limited in duration and depends on the dynamic plan for execution of construction activities, and at the same time it depends on weather conditions. Also, during this phase, the initial measures for environmental protection should be undertaken: organizing of movement and work of construction machinery, as well as placing appropriate containers for waste collection and mobile toilets.

The expected environmental impact during the construction phase will be local, short term and will not have significant adverse environmental impact. Incompliance with OH&S requirements, increased level of noise, improper waste management and possible air and water emissions could be the main environmental and social issues to be taken into consideration. Sensitive receptors are the local population (who lives/work) and employees.

The Contractor must provide marking, securing and application of good construction practice in order to minimize the possible risk of injures of workers and local population during construction work. In this line, the Contractor should prepare and imply OH&S Plan, including community safety measures, considering the communicated needs of the local population. Considering the current situation with pandemic COVID-19 infective disease in the country, in addition to the measures for safety and protection at work, the OH&S plan should also include measures for prevention of COVID-19. The Contractor is required to follow/update and implement the measures that are currently in force and adopted by the Government

36

as binding at national level, as well as the Guideline considerations provided by the World Bank through the MSIP2/PIU. Official site for information related to COVID 19 on national level is www.koronavirus.gov.mk.

Another step is preparation of Traffic Management Plan providing easy access of the local population to their homes, institutions and businesses. The Plan should include the re-routing directions and works time schedule. It shall be developed in prior consultation with the Municipal administration, aiming to propose most adequate solutions for movement of the local business needs, population and access of the construction mechanization to the project sites.

Prior to the commencement of the construction activities, the Municipality of Chair should prepare Information Note/Press to inform the wider public about the planned activities, the date and time of their start. Informing the wider public should be done through a Notice / Announcement that will be published on local media (TV, radio, bulletin board in the municipal building and the website of the municipality (https://chair.gov.mk/), social media, as well as information notices on public places, such as local markets, shops, ambulances, bus stops, etc. The available public Complaints Dropbox within the municipal administration building shall also be used to initiate feedback from the community and to provide constructive response mechanism. During the replacement of pipes, there will be a notification to the consumers about the planned timing of the short intervals of disconnection from the water supply, necessary for replacement of the devices.

In case the Contractor needs to place a camp for keeping and maintaining the mechanization equipment, worker’s facilities for accommodation, catering and bathrooms, etc., it shall ensure that wastewater collection and treatment (communal as well as washout of the mechanization), hazardous materials storage, clearing of soil and vegetation and collecting any waste generated, shall be rehabilitated without any damage to the environment.

In the preparatory and construction phase i.e., during the implementation of sub-projects are expected

following emissions:

Air emissions will be produced by clearing the terrain, dust emissions from construction activities during

loading and unloading of the soil material and demolition wastes, removal of the existing asphalt layer,

exhaust gases from construction machinery and transport vehicles (CO2, NOx, PAH, SO

2 and suspended

particulates PM10

, PM2.5

), fugitive emissions of volatile organic compounds from the deposition of the

bitumen emulsion and emission of exhaust gases from the operation of construction machinery. From the

above-mentioned influences, the fugitive dust has the greatest meaning. In the construction phase, there

will be additional fugitive emission of floating dust that will appear during the installation of fine sand

around the pipes and the burial of gravel from the excavation. In order to reduce air emission impact, the

Contractor should implement mitigation measures given in the Environmental Mitigation Plan.

As result of usage of the heavy construction machinery and equipment in open area, the sensitive

receptors that will be exposed on increased level of noise and vibrations. The sensitive receptors of the

planned project activities are citizens living and working near the project locations. According to the Law

on noise sensitive protection (Official Gazette No. 79/07, 120/08, 1/09) all these areas have been identified

in the same noise areas. According to the level of sensitivity prescribed by the Rulebook for locations of

the measurement stations and sites (O.G. No.120/2008) and Rulebook on the limit values of noise in the

environment (O.G. No.147/2008), the project locations belong in area with II degree of noise protection

(noise limit values are 45dBA for night and 55dBA for day and evening). The Contractor’s machinery and

equipment (trucks, excavator, loaders) will not exceed level of generated noise higher than 85dB and

http://www.koronavirus.gov.mk/

37

102dB respectively, in compliance with the Rulebook on closer types of special noise sources as well as

conditions that need to be fulfilled by facilities, equipment, installations and equipment, installations and

devices that are used in open space in terms of noise emission and noise protection standards (O.G.

No.142/2013) during the working hours from 07 to 19. The Contractor shall submit to the Supervisor for

approval a list of intended machinery for use, with data on relevant technical features concerning air and

noise emissions in the environment. Preventive measures for noise reduction within the project locations

in the settlement, are given in the Environmental Mitigation Plan.

Тhe project takes into account the hydro-technical conditions provided by the PE ''Water supply and

Sewerage-Skopje'' (arch.no. 1301-604/2 from 26.02.2016). These conditions have been obtained in

accordance with the legal obligations from Law on Drinking water supply and urban waste water drainage

(Official Gazette No.68/2004, 17/2011, 54/2011, 163/2013, 10/2015, 147/2015, 31/2016), the Program

for arranging construction land of the municipality of Chair and the Program for arranging construction

land of the city of Skopje. As stated in those hydro-technical conditions, the new fecal sewer will be

connected to an existing fecal sewerage on main Dizhonska Street (Ф300mm) and part through the fecal

sewerage on John Kennedy Street (Ф500mm). Storm water system should be connected to an existing

storm water sewer on Dijonska Street (Ф400mm, Ф500mm, Ф600mm) and on Lazo Trpovski Street

(Ф1000mm).

PE ‘’Water Supply and Sewerage – Skopje’’ under the jurisdiction of the Mayor of the City of Skopje, is

responsible body for management and maintenance of the water supply and sewerage system in city of

Skopje. Currently, the fecal wastewater from the city, through the main collectors on the left and right

banks of river Vardar, without treatment is discharged into the river Vardar at points near "Pivara" - Skopje

and at the bridge "Bliznak" at the "Serbia" Boulevard1.

According the national water related legislation (Law on waters - Official Gazette No. 87/08, 6/09, 161/09,

83/10, 51/11, 44/12,163/13 and secondary legislation) urban wastewaters should be treated in

Wastewater treatment plant (WWTP) before discharge in the recipients. As city of Skopje does not have

WWTP for treatment of the communal waters of its citizens, in November 2019, the Ministry of Finance

signed loan agreement with EBRD and EIB for construction of the WWTP for city of Skopje. The entire

technical documentation has been prepared an approved, and 2025 is foreseen as final date when the

WWTP shall be finalized and operational. The Public Enterprise will also operate the new WWTP for the

City of Skopje.

During the project activities, different waste streams could be found on the construction sites, mainly

waste from excavation of soil, cutting concrete and asphalt, curbstone (Dizhonska 21, communal waste

generated by the workers, as presented in Error! Reference source not found.10. The generated waste

streams should be selected and classified according to the List of types of waste (Official Gazette of the

Republic of Macedonia No. 100/05). For proper waste management (according the national waste

legislation and good practices), it is essential for the Contractor to prepare and implement the Waste

Management Plan (WMP). The Contractor shall collect, transport and finally dispose the inert waste in

Landfill Drisla (about 13 km from the Project location) as well to handover the communal waste to the PE

Communal Hygiene – Skopje. Keeping records of temporary and final disposal of waste shall be done by

the Contractor.

1 This information is stated in the LEAP 3 (Local Environmental Action Plan) 2020 - 2026 for the City of Skopje.

38

Table 10. Estimated values of the generated different waste streams during construction activities

Type of waste and Code ______________________ Street name and Quantities

Type of network

Soil

17 05 04

Old asphalt

17 03 02

Dizhonska 15

Water supply 100,86m3 709.2m2

Fecal sewer 126,88 m3 432 m2

Storm water 6.41m3 7,2 m2

Dizhonska 17

Water supply 92,16 m3 432 m2


Storm water 6,41m3 7,2 m2

Dizhonska 19



Storm water 6,41 m3 7.2 m2

Dizhonska 21

Water supply 107,52m3 168 m2

Fecal sewer 144,90 m3 148,8 m2

Storm water 6,41m3 7.2 m2

Dizhonska23a




Dizhonska23

Water supply 84,99 m3 397,8 m2



In case of incidents, such as spill out of oils, lubricants, fuel, other substances that may be considered as

hazardous waste, the Contractor shall proceed with authorized entity for handling of such waste of the

liston:http://www.moepp.gov.mk/wp-content/uploads/2014/11/Registar-za-Transport-opasen-

otpad.pdf.

Possible water pollution may occur because of improper waste management, especially because of the

close vicinity of Vardar River (around 1km south from project locations) and Serava River (around 1 km

north-west from project locations), which is left tributary of the River Vardar. According to Regulation on

Classification of waterways, lakes, reservoirs and groundwater (“Official Gazette of RM” No. 18/99) the

water characterization of Vardar River in this section is II class, while of river Serava is III class. In order to

prevent adverse impact on water quality the generated waste streams from project activities should not

be disposed near or in the riverbed of these water recipients.

http://www.moepp.gov.mk/wp-content/uploads/2014/11/Registar-za-Transport-opasen-otpad.pdf

http://www.moepp.gov.mk/wp-content/uploads/2014/11/Registar-za-Transport-opasen-otpad.pdf

39

At a location where construction activities are planned to be carried out, no endemic species of

flora/fauna or protected species of nature have been identified, as well as characteristic natural habitats

that would be directly endangered, thus no impact on biodiversity is expected. There is not planned

removal of the vegetation within the Project activities.

The environmental impacts are expected on short-term basis- during the construction period and the

impacts will be with minor and local significance in the Municipality of Chair. The good construction

practice and associated measures (mentioned bellow) could prevent and/or mitigate the short-term

adverse impacts. The main risks are safety and health for workers and community risks that could appear

as a result of very urban area and surrounding of the project sites. The major impact is expected as a result

of traffic disturbance during the construction period, improper waste management with different waste

streams, noise from the outdoor equipment (near residential objects and family houses) and pollution of

ambient air. The Environmental Impact Assessment Reports for all sub-projects were prepared. The EIA

Elaborate/Reports were approved by the Mayor of the Chair Municipality, as presented in Table below.

Table 11. Administrative numbers of Decisions for approval of the EIA Elaborates

Name Prepared by Number of Decision for EIA approval

Water supply, atmospheric and fecal sewerage on street Dizhonska 15

Mitko Korkutoski UP1 No. 09-191/5 from 19.01.2021 - Municipality of Chair


Mitko Korkutoski UP1 No. 09-191 from 19.01.2021 - Municipality of Chair





Water supply, atmospheric and fecal sewerage on street Dizhonska 23 and 23A


The EIA Elaborates were prepared in accordance with national regulation and contain description of the

main project goals, main project activities, photos of the locations where the project activities will be

performed and the environmental mitigation measures.

The proposed mitigation measures are presented in Tables of Mitigation and Monitoring Plan, which

should be implemented by the Contractor. The Supervisor has main obligation of providing monitoring of

their implementation.

3.4 ENVIRONMENTAL MITIGATION PLAN FOR THE PROJECT: CONSTRUCTION OF WATER SUPPLY, SEWERAGE AND STORM DRAINAGE ON DIZHONSKA STREET NO. 15,17,19,21,23 AND 23A

Potential impact Impact scale Proposed mitigation measures Responsibility

Project activity: Pre-constructionphase – Markingouttherouteforconstruction of water supply network, atmospheric and faecal sewerage on Dizhonska street no.

15,17,19,21,23 and 23a

Possible adverse social

and health impact to the

population and to the

employed personnel due

to:

• Non-compliance with strict OH&S standards and work procedure – Injury near the construction site • Inappropriate public access to households, commercial objects etc.

Local Short term/minor

✓ Provision of the information via municipality web site (https://chair.gov.mk/)social media about the construction activities – start and finish of work and duration of work;

• Setting up a Dropbox for complaints and praise in a publicly accessible place in the municipal administrative building of Chair and introducing a mechanism for feedback and response.

✓ Preparation, approval and implementation of the OH&S Elaborate with community safety measures, including measures/plan for prevention of COVID -19 for the construction site,

✓ Application of good practice for marking out the construction sites including:

• Ensure the appropriate marking out the construction site;

• Placement of attention signs especially for limitation of speed driving near the

construction sites, where appropriate;

• Warning tapes and signage need to be provided;

• During construction activities access to the family houses, commercial buildings, public

buildings, etc. should be provided;

• Forbidden entrance of unemployed persons within the warning tapes;

• Health and Safety measures should be applied: a) Security measures like: perimeter

fence, life jackets, use of proper protective clothing and equipment by employees,

warning signs for the public around the construction site; b) Maintain a good level of

personal hygiene-have on site installations for washing, cleaning; c) Health protection,

first aid kits and medical service on sites d) Apply the emergency and normal first aid

procedure for any injury if such occur through construction work;

• The street and around sidewalks/ small roads should be kept clean;

• The mobile toilet should be placed on the construction sites;

• Machines should be handled only by experienced and trained personnel, thus reducing

the risk of accidents;

• Contractor;

• Supervisor

• Municipality staff (Communal Inspector and Construction Inspector)

https://chair.gov.mk/

41


• Constant presence of fire-fighting devices should be ensured in case of fire or other

damage;

• All workers must be familiar with the fire hazards and fire protection measures and must be trained to handle fire extinguishers, hydrants and other devices used for extinguishing fires;

• Larger quantities of flammable liquids should not be kept on the sites along the construction sites.

Project activity:Constructionphase - Construction of water supply network, atmospheric and faecal sewerage on Dizhonska street no. 15,17,19,21,23 and 23a

Possible emissions by

transportation vehicles

and impact on air

quality due to:

- gases emissions of dust-suspended particulates

- emissions by the mobile sources (vehicles and construction machinery of CO

2, NOx, PAH, SO2)

Local

Short term during

the construction

Minor

• Construction materials should be stored in appropriate places covered to minimize dust;

• Vehicles and construction machinery will be required to be properly maintained and to comply with relevant emission standards;

• Use of standardized fuels for the mechanization and switching off engines of the mechanization when it is not in work, for reducing gas emissions;

• Vehicles that perform transport of gravel, grit, soil should be covered or closed;

• Usage of protective masks for the workers if the dust seems to be appeared;

• Restriction of the vehicle speed (30-40 km/h) within the construction location;

• Use of sprayers that do not contain chemicals and are on a water base – for reduction of the dust;

• Construction site, transportation routes and materials handling sites should be water-sprayed on dry and windy days;

• Stopping work or reducing the amount of construction work if register intense dust emission in order to determine the cause of the issue and to take measures for its elimination;

•

•Contractor •Supervisor •Municipal staff (Environmental Inspector)

Possible noise

disturbance as a result

of outdoor equipment

usage and

transportation vehicles

driving to the sites

Local

Short term /major

• The level of noise should not exceed the limits of the Rulebook on the limit values of noise in the environment (O.G. No. 147/2008), for the project locations belonging in area of II degree of noise protection: 45dBA during the night and 55dBA during the day;

• Use of appropriate and technically functional equipment and mechanization, possessing Statement of Compliance for noise generation in open space below 102 dB (A);

• The construction work should be not permitted during the nights, the operations on site shall be restricted to the hours 7.00 -19.00h;

•Contractor •Supervisor •Municipal staff (Environmental Inspector)

42


Possible environmental

impact on water bodies

of Serava and Vardar

rivers could occur due

to ground contamination

from the spillage of

materials such as vehicle

fuel, motor oils and

lubricants, different

waste etc.

Local

Short

term/Medium

significance

• Possible hazardous waste (motor oils, vehicle fuels, lubricants) should be collected separately and authorized company should be sub-contracted to transport and finally dispose the hazardous waste;

• The temporary/final disposal of the waste along the rivers Vardar and Serava is prohibited.

• Contractor

• Supervisor

• Municipal staff (Environmental Inspector)

Possible adverse

environmental impact

and health effects could

be occurred as a result

of generation of the

different waste streams.

Local

Short term /major

• Identification of the different waste types at the construction site (soil, sand, bottles, food, parts of pipes, paper, broken concrete etc…);

• Classification of waste according the national List of Waste (O.G. No.100/05)

• The main waste would be classified under the Waste Codes: 17 03 02 – old asphalt, 17

05 04 – Excavated soil, and small amount of solid municipal waste could be found (food,

beverages) as well as packaging waste (paper, bottles, glass, etc.).

• Contractor

• Supervisor

• Municipality staff (Communal Inspector)

The inappropriate waste

management and not in

time collection and

transportation of waste

streams

Local

short term/ major

• Collection, transportation and final disposal of the inert and communal waste by the PE Communal hygiene – Skopje

• Disposal of the inert waste by the Contractor should be performed on the regional waste landfill Drisla at about 13 km from the project location

• Transportation and Handover papers to the landfill Drisla shall be kept and provided as proofs;

• The materials should be covered during the transportation to avoid waste dispersion;

• Burning of construction waste should be prohibited;

• If hazardous waste (motor oils, vehicle fuels) occur it should be collected separately and authorized collector and transporter should be sub-contracted to transport and finally dispose the hazardous waste, from the list on: http://www.moepp.gov.mk/wp-content/uploads/2014/11/Registar-za-Transport-opasen-otpad.pdf

• Fulfillment of the Annual Report for non-hazardous waste management by the Mayor of Municipality and reporting to the Ministry of Environment and Physical Planning;

Municipality staff (Communal Inspector) • Mayor of the Municipality • PE Communal hygiene – Skopje

43


Possible impacts on

landscape and visual

aspects

Local/ short term/certain to happen, minor impact

• Good construction practices have to be implemented – including fencing and protection

of construction site;

• Removal of curbs, gutters, manholes, demolition of fences and buildings and similar

obstacles should be done in such a way that it does not affect the aesthetic appearance

of the road and the surrounding area;

• Full clean-up of the construction site immediately after accomplishment of construction

activities;

• Collection of the generated waste on daily basis, selection of waste, transportation and

final disposal on appropriate places

• Contractor

• Supervisor

• Communal

Inspector/Environm

ental Inspector

3.5 ENVIRONMENTAL MONITORING PLAN FOR THE PROJECT: CONSTRUCTION OF WATER SUPPLY, SEWERAGE AND STORM DRAINAGE ON DIZHONSKA STREET NO. 15,17,19,21,23 AND 23A

What Parameter is to be monitored

Where is the parameter to be monitored

How is the parameter to be monitored

When is the parameter to be monitored (frequency

of measurement)

Why is the parameter to be

monitored

Responsibility

Construction Operation

Project activity: Pre-construction phase - Marking out the route for construction of water supply, sewerage and storm drainage on Dizhonska street no. 15,17,19,21,23 and 23a

The safety protection measures applied for the workers and local population. Application of preventive measures against COVID-19 by all workers on the site

On the construction site

Visual check

At the beginning of the pre- construction works (first day) focused on the preliminary measures;

To prevent health and safety risks – mechanical injuries To be in compliance with national communal health regulation and OH&S standards

Contractor /Supervisor Environmental Inspector /Inspector for communal work at the Municipality

Project activity: Construction phase - Construction of water supply, sewerage and storm drainage on Dizhonska street no. 15,17,19,21,23 and 23a

44





of measurement)


monitored

Responsibility


Exposure of loud noise from vehicles machinery and electric tools

On the construction sites

Review the noise level technical specifications of the used vehicle mechanization and equipment for their use outdoor

On the commencement of works; for all vehicles and equipment

To protect the workers against exposure to loud noise taking into account the technical specifications of the equipment and time duration of the work outdoor

Contractor /Supervisor Environmental Inspector /Inspector for communal work at the Municipality

Noise level On the construction site

Monitoring of the noise levels dB (А) with appropriate monitoring devises

In case there are complaints from the local population and in accordance with the national legislation

To monitor if the noise level is above/or below the acceptance noise level for specific type of area

Contractor Company authorized to performed environmental noise level measurements sub-contracted by the Contractor Supervisor Environmental Inspector to collect the noise level measurements

Primary selection of the waste streams as they are generated at the spot

On the construction site

Review the documentation – identification of the waste type according the List of waste

At the beginning of work with new material/s

To separate hazardous from the non-hazardous waste as well as inert from biodegradable waste

Contractor Supervisor

Collection and transport as well storage of hazardous waste (if any occur). It is not expected in

On safety temporary storage

Review the transportation list and conditions at the storage facility

Before the transportation of the hazardous waste (if there is any)

To improve the waste management practice on municipality and national

Authorized Contractor for collection and transportation of

45





of measurement)


monitored

Responsibility


high quantities (maybe some packaging, batteries, waste from motor oils, etc.)

level/In order to be in line with the environmental requirements for the hazardous waste management. Not to dispose the hazardous waste on the municipal landfill.

hazardous waste (if any occurs) subcontracted by the Contractor, Environmental inspector from Municipality

Collection transportation and final disposal of the solid waste

On the site

Visual monitoring and reviewing the transportation and disposal lists from the suppliers

After the collection and transportation of the solid waste on a regular basis each day

Not to leave the waste on the spot (especially not in greenery) to avoid the environmental and health impacts to the residents to have the real data for generated waste streams and to improve the waste management

Contractor who need to sign the contract with licensed company for collection, transportation and disposal of the solid waste

Preserved water courses Near the project sites

Visual checks of the rivers Vardar and Serava riverbeds, records for visual inspections

During the project activities (once a week)

In order to prevent additional pollution of the riverbeds

Contractor Supervision Environmental and /or Communal Inspector

4 Technical solutions

47

4.1 DESCRIPTION

The 6 (six) sections on the street “Dizhonska(section Dizhonska no. 15; section Dizhonska no. 17;

section; section Dizhonska no. 19; section Dizhonska no. 21; section Dizhonska no. 23A and section

Dizhonska no. 23)"are in urban area of Chair municipality and they are part of the local communal network

in the municipality of Chair. All 6 (six) sections of the street “Dizhonska” are very important for normal

functionality of the citizens live in this urban part of municipality of Chair. The existing water supply

network, atmospheric and fecal sewage system are very old, so the reconstruction of the communal

infrastructure is very important for improving the citizens quality of life. Namely, as basic parameters for

the detail design are used all available substrates and data, from which are receiving information for the

current situation of the above sections on the street “Dizhonska”, and they are:

- Project scope from the Investor;

- Updated geodetic substrate;

- Excerpt from the DUP for planning scope “Skopje North – central part – West” C.M. Chair;

- Fields prospecting, measuring depths of the connection feces and atmospheric manholes together

with the team of Public enterprise “Water supply and Sewerage” – Skopje;

- Data from the existing installations received from the relevant institutions;

- Approval received from the relevant legal entities in RNM;

- Suitable hydraulic conditions for connection to external water supply and sewerage networks, issued

by the relevant enterprise “Water supply and Sewerage” – Skopje;

- Valid legal and technical regulations and

- All legal and by legal acts which regulate this kind of projects.

The all technical documentation for all 6 (six) sections on the street “Dizhonska” contain all

necessary documents according the Construction law of RNM i.e. the technical documentations are

prepared in accordance with the positive legal regulations in the RNM. Also, for each section according

the detailed design there is approval for reconstruction issued by the Chair municipality.

The main purpose of the proposed technical solution for the all 6 (six) sections of the street

“Dizhonska” is to provide for their long run improvement by maximizing the technical life of water supply

and sewerage network, thus meeting the needs of the local communities. This project will contribute to

the benefit of the local population, by improving the quality of potable water and environmental

protection of the citizens. The general technical details for reconstruction of the all 6 (six) sections of the

street “Dizhonska” are described below.

4.1.1 Water supply

In the next table we present details for the each section of the street “Dizhonska” about the

length of the water supply network and the type and diameter of the pipes.

Table 12. Details


“Dizhonska”

Water supply

network length

(m)

Type and diameter of the pipes

Dizhonska no. 15 196.20 HDPE PE100RC, DN125mm according the EN

12201-2 / DIN V ENV1046 - NP 10 bars

48


12201-2 / DIN V ENV1046 - NP 10 bars


12201-2 / DIN V ENV1046 – NP 10 bars

Dizhonska no. 21 210.00 HDPE PE100 RC, DN125mm according the EN

12201-2 / DIN V ENV 1046 – NP 10 bars

Dizhonska no. 23A 70.00 HDPE PE100 RC, DN125mm according the EN

12201-2 / DIN V ENV 1046 – NP 10 bars

Dizhonska no. 23 165.32 HDPE PE100 RC, DN125mm according the EN

12201-2 / DIN V ENV 1046 – NP 10 bars

Total 1,001.52

➢ Horizontal solution

The horizontal solution of the pipes is in accordance with the existing conditions on the location

and schedule of the existing underground installations. With the detailed design is planned connection of

the new designed line to the existing water supply networks on the street “Dizhonska” with profile 150

mm. The connection is planned to be performed with inbuilt sets. For the all 6 (six) sections of the street

“Dizhonska” are planned connections to the individual users. The connection will be performed with

coupling on the new designed pipes.

➢ Vertical solution

The longitudinal level solution of the new designed water supply networks are planned in

accordance to the terrain conditions, the elevation of connection as well the existing underground

installations. The longitudinal level solution of the pipeline is designed in the limits of digging from 1.00

m to 1.40 m from the elevation of the terrain do the longitudinal level (lower elevation of the pipe). About

the calculation of the earth masses for the water supply used is width of trench of 0.8 m.

➢ Material for the water supply pipes

For reconstruction of all water supply networks planed are water supply pipes for sanitary water

supply network HDPE PE RC with head welding, DN 125 mm I DN90 mm in accordance to the EN 12201-

2/DIN V ENV 1046 (certified for drinking water), with working pressure of NP10 bar.

➢ Objects on the route

The air valve who is located in the manhole is considered as the highest point on the section

Dizhonska no. 21. The main function of the air valve is to release the air who is collect at the highest points

of the pipeline and to prevent occurrence of the vacuum when there is emptying of the pipeline, such as

occurrence of small quantities of wind in the process of operation of the pipeline. The air valve is with

diameter DN 50 mm.

➢ Fire hydrants

Fire hydrants are planned to be installed undergrounded on the maxim distance of 150 between

each in accordance with the rulebook for hydrant network and the technical literature. The planned fire

49

hydrants are divided in different types (according the detail design). Which type where will be installed

depends does the fire hydrants are planned to be in the middle of the route or on the end of the route or

depending of the diameter water supply pipe). The number of the underground fire hydrants of the

sections is the follow:

- Section Dizhonska no. 15 – 2 fire hydrants;



- Section Dizhonska no. 21 – 2 fire hydrants and

- Section Dizhonska no. 23 and 23A – 3 fire hydrants.

In the next figure we present transverse section of water supply network trench, detail of the types

of underground fire hydrants and inbuilt set.

Figure 14.Transverse section of water supply network trench

Source: Detailed design

Figure 15.Detail of the types of underground fire hydrants

50

Source: Detailed desing

51

Figure 16.Detail of inbuilt set


4.1.2 Sewerage

In the next table we present details for each section of the street “Dizhonska” about the length of

the sewerage, number of manholes and diameter of the pipes for sewerage.

Table 13. Details


“Dizhonska”

Sewerage

length (m)

Number of

manholes

Diameter of the

pipes

Dizhonska no. 15 180.00 9 DN 250 mm

52




Dizhonska no. 23A 69.96 2 DN 250 mm


Total 984.52 44

➢ Horizontal solution

The route of the canals will in parallel with the water supply networks on the section Dizhonska

no.15; 17; 19; 21; 23 and 23A, but respecting the proposals from the expert literature about the minimum

distance between two neighbored installations. The connection of the main fecal sewerage is on the street

“Dizhonska” with profile Ø 250 mm, in existing revisions manholes.

➢ Vertical solution

The slopes of the designed canals are determined with minimum and maximum fall in accordance

with the adopted diameter of the pipes, listed in the hydro technical conditions. Adopted are diameters

of the pipes OD 250 mm and OD 200 mm and they are determined depending of the request of Public

enterprise “Vodovod and Kanalizacija – Skopje”.

The maximum slope of the designed canals is conditioned by the configuration of the terrain, but

also the profile of the pipe. While the minimum longitudinal slope of the canals is adopted in accordance

of the diameter of the pipe and in order to ensure a minimum charge in canals.

For the control of the operation of revision manholes are planned mobile prefabricated reinforced

concrete revision manholes with Ø 1000 mm on the distance bigger than 50 m for pipe diameters of DN

250 mm. About the calculation of the earth masses used is width of trench of 0.8 m.

➢ Material for the fecal sewerage network

Designed fecal sewerage network is planned to be made of polyethylene corrugated sewer pipes

with outer diameter OD 250 mm and OD 200 mm with resistance to external load SN8 according the EN

13476-3 standard. Revision manholes are planned to be mobile type from prefabricated elements. The

manholes will be covered with quality heavy lids due heavy vehicles passing on the street.

53

Figure 17.Transverse section of fecal sewerage network trench


Figure 18.Detail of revision manhole


4.1.3 Storm drainage

For accepting of the storm waters from the section of the street “Dizhonska” planned is

construction of catchment concrete canal covered with grate placed in the transverse direction of the

street and it will efficiently accept the waters and transfer them to the primary atmospheric sewerage.

The length of the grate is 3.00 m because it is conditioned of the width of existing street.

54

The canal will be constructed with catchment grate with class of load capacity for heavy traffic load

that has ability to accept the waters. The drainage of the waters from the catchment canal will be through

plugs corrugated polyethylene pipes from the catchment to the nearest atmospheric manholes with

diameter DN/OD 200 mm.

Figure 19.Detail of catchment concrete canal with grate


4.1.4 Earth works

The pipes of the mixed sewerage are set in trench with variable depth and constant width of the

trench. The depth is conditioned of the terrain and the longitude level of the mixed sewerage, while the

width is in function of the diameter of sewer pipes. Before setting the sewer pipes, on the bottom of the

trench is planned to set one layer of sand with a thickness of 10.00 cm. Up to 30.00 cm above the top of

the pipes is planned to be covered with sand, while the rest part of the trench will be covered with crush

stone material and everything compacts until the required compaction is achieved. After the completion

of the works on the sewerage and storm drainage, according the new detail design there will not be mixing

of the both.

4.1.5 Asphalt works

The last layer on the sections of the street “Dizhonska” will be performed according the detail

design:

- Coating with bitumen emulsion (400g/m2) for cohesion of the old and new asphalt;

- Placement of layer from bituminized bearing course BNS 22-C (thickness 7 cm) and final layer with

asphalt concrete AC 16 (thickness 5 cm), ,above the layer of crushed stone material with the necessary

compaction according the regulative.

55

4.2 ANALYSIS AND EVALUATION

This project will contribute to improve the situation with more quality communal infrastructure

on the all 6 (six) sections of the street “Dizhonska” in Chair municipality. This project is expected to provide

potable water for the all citizens of the street “Dizhonska” because the existing water supply system

doesn’t satisfy the necessary quantities. Also with this project will be increase the quantity of the water

for personal hygiene i.e. to improve the standard and quality of living. The new reconstructed sewerage

will improve the quality of life of the citizens because the existing sewerage is in very bad conditions and

doesn’t satisfy the need of the citizens. Namely, the storm drainage will solve the problem with the

atmospheric water from the streets i.e. the atmospheric water from the streets will be accepted in the

existing collector. It is assumed that all construction works will be performed in a period of 12(twelve)

months.

4.3 CONCLUSIONS AND RECOMMENDATIONS

The main purpose of this project is to provide to the citizens of municipality of Chair social and

environmental benefits, increasing the quantity and quality of the existing water supply and sewerage

system. With this project will decreasing the water losses from the water supply network. Also the

municipality will reduce the cost for defects on the water supply and sewerage and there will not be any

more mixing of fecal sewerage with the storm drainage. With this project the Chair municipality to the

citizens which live in these 6 (six) sections of the street “Dizhonska” will provide complete, modern and

quality communal infrastructure and because of that it is very important and necessary this project to be

implemented.

4.4 ALTERNATIVE SOLUTIONS

Municipality of Chair is obliged to provide more quality communal infrastructure for the citizens of

the all settlements. Alternative solution is to repair of the damaged pipes of the communal infrastructure.

This alternative solution is simplerandcheaper, butthisalternativesolutionhasthefollowingrisks:

- This solution is short-term related to the quality compared with the solution presented in the

detail design;

- This solution produces bigger costs for maintenance of the communal infrastructure of the

municipality of Chair and

- This solution will not provide the necessary quality communal infrastructure and comfort for the

citizens of municipality of Chair.

5 Financial analysis

57

Тo assess the profitability of sub-projects, financial analysis section of the project appraisal

document will present the following information:

• PROJECT COST

• CREDIT CAPACITY

• LOAN REPAYMENT

• REVIEW OF THE MUNICIPAL ACCOUNT

• FINANCAL ANALYSIS

• SENSITIVITY ANALYSIS

5.1 PROJECT COST

The project assumes reconstruction of water supply network in the length of 1,001.52 m as well as

reconstruction of fecal and storm-water drainage in the length of 984,52m, on the street Dizhosnka 15,

17, 19, 21, 23 and 23a. The total investment costs are MKD 39,823,849 (Euro 647,542.25) include VAT.

The Municipality of Chair requires a loan from the Second MSIP, in the amount of MKD 39,724,359.67

(Euro 645,924.12). The loan represents 99.75%% of the investment costs for this project according to the

Council Decision number 08-428/9 from 17.02.2021 while the rest of investment (0.25%) will be financed

with municipal own sources according to the Council Decision number 09-677 from 11.03.2021.

The basic project design presents division of project investment costs into the following main

construction activities: preparatory works, procurement and installation of pipes, earthy-works, digging a

trench and returning to the original state. The table below shows the estimated costs of main categories

for all streets separately, which are the sum of several items given in the bill of quantities calculation in

the basic design.

Table 14. Investments costs of the project

Source: Own calculation according municipality data

It is assumed that construction works will last approximately 6 months, which means that all the

above-mentioned investment costs will be carried out during 2021.

58

5.2 LOAN REPAYMENT

According to the Decision for long-term borrowing, no. 167/7 date 27.01.2021, the Municipality of

Chair will borrow funds in the amount of MKD 39,724,359. (EUR 645,919.66) for reconstruction of water

supply, fecal and storm drainage sewerage on street Dizhonska 15.17.1.21.23 and 23a through the Second

MSIP funded project. The loan covers 99.74% of the investment while the remaining 0.26% are municipal

contribution. The interest rate will be 3% p.a. carried out on the 12 years of the loan and that the payments

will be annually equally split up between the 9 years after the 3 years of grace period. The payments are

envisaged to be done semi-annually. The proposed amount of the loan is MKD 39,724,359. The assumed

date of disbursement of the loan is March 2021. The annual payment has been calculated to MKD

4,413,816.00(Euro 71,769.36) (see tables below).

Table 15. Calculation of the annual capital repayment

Loan repayment Unit Values

Amount of loan (MKD) MKD 39,724,359

Interest rate % 3%

Duration of loan Years 12

Grace period Years 3

Annual Payment MKD 4,413,816 Source: Own calculations based on the data received by the municipality

Table 16. Calculation of the repayment of the loan

Source: Own calculations based on the data received by the municipality

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5.3 CREDIT CAPACITY

The municipality borrowing limit based on 2020 financial data is MKD 204,485,557 or Euro

3,324,968 Revenues by accounts are presented in the Table below.

Table 17. Revenues of municipality Chair

Account Description Amount

71 Tax revenues 107,653,170

713 Property tax revenues (part of the tax revenues) 44,048,511

72 Non-tax revenues 604,569

731120 Revenues from sales of capital goods owned by the municipalities

0

733 Land sales and non-material investments 43,230,954

741115 Earmarked donations from VAT revenues 15,797,316

Total operating revenues (MKD) 211,334,520

Total operation revenues (Euro) 3,436,334

45 Debt Service (MKD) 6,848,963

Total operating revenues – Debt (MKD) 204,485,557

Total operating revenues – Debt (Euro) 3,324,968

Max debt service (30% of total operating revenues - debt) MKD 61,345,667

Max debt service (30% of total operating revenues - debt) Euro 997,491

Source: Municipality of Chair

The property tax rate in the Macedonia varies between 0.05% and 0.2% and in Municipality Chair

the property tax rate for the residents who have their living address in their property is 0.05%, 0.1% if

their living address is different of their property address and 0.2% for the commercial subjects. The

property tax revenues take up around 31% of the total tax revenues. In addition, it is important to note

that the loan for the project amounts to MKD 39,854,689.44 including VAT is below the municipality credit

capacity as presented above. Also, the annual annuity is in part of determined limit. It can be inferred that

the municipality has the financial capacity to repay the loan.

5.4 REVIEW OF THE MUNICIPAL ACCOUNT

Based on the analysis of the municipal data for the realized revenues and expenditures over the

last three years (2018-2020), the operational costs for the municipality as a whole are financed from the

operational revenues and part of the net surplus supplements financing of the municipal capital

expenditures. This means that with continued revenue savings with the same intensity the municipality is

able to settle its operational costs and thereby provide consistent operation and maintenance of the

municipal infrastructure.

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Table 18. Revenues and expenditures of municipality Chair

Source: Municipality Chair, Finance department

The Municipality’s accounting system is cash based and for the purpose of this analysis in defining

the operational flow the short-term and long-term municipal receivables are taken into account and an

appropriate adjustment of the operational flow have been corrected.

Table 19. Accounts payable/receivable

Source: Municipality Chair, Finance department

The table shows that average balance of short-term receivables and liabilities of the Municipality is

equal to MKD 5,005,023.If the average net operation deficit for the period 2018-2020 is adjusted for the

average net account payables it will be equal to 4,112,165 MKD. Currently the Municipality has annual

long-term debt in the amount of MKD 4,565,974 from the MSIP II .If on top of that we add a cost of the

new potential long-term loan in the amount on of MKD 4,413,786 per year then the municipal deficit will

increase and will be equal to MKD 13,091,955. Hence, based on the above information the general

conclusion is that the financial performance of the municipality to regular service its long-term debts can

be assessed as “at risk”.

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Table 20. MSIP loan repayment capacity of municipality Chair

Average operation deficit 2018-2020 - 9,117,188.00

Average net accounts receivable 5,005,023.00

Annual Debt Repayment obligation (outstanding principal of MSIP loan) - 4,565,974.00

Annual Obligation (potential loan) - 4,413,816.00

Net operating deficit after debt obligation - 13,091,955.00

Assessment “at risk” Source: Own calculation based on municipality data

Even though based on the municipal data of expenditures and revenues, receivables and payables

for the period 2018-2020, the Municipality Chair capacity in servicing its debt is at risk, the municipality

proposes an action plan which allows them to increase collection of its own revenues, in order to

rationalize expenditures and decrease the municipal short-term debt.

First, Municipality Chair will update both tax databases, for property tax payers and communal fee

payers. In addition, Municipality Chair should create new tax database for owners of land (construction

and agricultural) because this database does not exist. Until now, Municipality collected property taxes

only from buildings’ owners where the average collection for the last three years is not so bad and is

85.64% and this is an encouraging fact but there is still room for improvement. The municipality has not

established a database of landowners, so the income would be really high due to the fact that the

municipality has large agricultural areas.

Table 21. Collection of Property tax & Communal fees (%)

% of collection 2018 2019

2020 Average (2018-2020)

Property tax 55.10% 110.33% 78,36% 67.51%

Communal fees 42.95% 78.72% 42,19% 47.33% Source: Municipality Chair, Finance department

Third, time needed to create landowner database is 2 years. Estimation is that in the first two year

revenues from this source will be partial i.e. MKD 1,000,000 on the yearly base, which is a realistic revenue

projection for the municipality, and the biggest impact would be the implementation project for

construction of water supply, fecal and atmospheric sewerage on street Dizhonska 15,17,19.23 and 23a.

5.5 REVIEW OF WATER SUPPLY AND FINANCIAL RESULT OF PE VODOVOVANDKANALIZACIJA SKOPJE

A) General description of the water supply system in the municipality Chair

The municipality Chair is located in the northern part of the City of Skopje. The water supply for this

municipality is from “System high Rashche“including the pump station Nerezi-Lepenec.

According to the cadaster date on PE ”VodovodandKanalizacija Skopje” the water supply network

in the City of Skopje is 1,065km long, out of which the length of the network in the Municipality of Chair

is 69km.

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B) Water production

PE Vodovod andKanalizaicja Skopje supplies with drinking water a population of over 600,000

residents of the City of Skopje. The water demand for the City of Skopje is almost fully satisfied with Rashce

springs consisting of Rashche 1 and Rashche 2. Depending on their generosity, if needed additional water

quantities are provided from the wells of the first and second wells areas. The water from the wells is

pumped directly in to the network. This hydraulic system has the capacity to produce a minimum 288

l/c/d and maximum 900 l/c/d, and this capacity is sufficient to ensure uninterrupted water supply to the

residents of the City of Skopje.

According to the Annual work report for 2019 the PE Vodovod andKanalizacija produced in total

102,272,083m3 water which is 1,34 % less compared to2018 i.e. water production in 2018 was

103,670,229м3, and 4.62% less compared to 2017. In 2019, 45,000kg of chlorine were used for

disinfection of drinking water. Fecal and atmospheric pumping stations pumped 45.175.064m3 of waste

water.

C) Water losses

Water losses are inevitable in any water supply systems and the reasons for losses can be different

such as:

- The age of water supply system

- Terrain configuration

- The type and quality of materials for pipelines and other elements

- The degree of technological development

- Available equipment

Water losses also including non-revenues amount of water.

Water losses can be divided into:

1. Real losses arising from leakage of connection pipes, leakage of transportation pipes, backflow

leakage and

2. Administrative losses which arising from unmeasured, not paid consumption, illegal

consumption, error when reading water metasets.

According to the Annual work report for 2019 of the PE Vodovod and Kanalizacija Skopje, the water

balance for 2019 is as following:

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Table 22. Water balance for 2019

Source: Vodovod and Kanalizacija Skopje

According to the data from the table, the total water production for 2019 is 102,272,083m3. The

second important category of the water balance is the amount of legal consumption for the needs of

households and other users (industry, economies and institutions) for which are invoiced 38,471,458 m3

water or 37.62%.

The review shows that unvoiced water is 68,800,625m3. Of which the major part i.e. 30,184,252m3

of water refer to unvoiced water for legal consumption of current rinsing of tanks, water supply and

sewerage networks, water used for fountains, watering public green areas etc., 6,941,796m3are losses

from commercial consumption (illegal consumption and inaccuracy of water meters) and 26,674,577m3

are physical losses of water. Water losses (calculated real losses) which are 32.87% (33,616,373m3) of the

incoming water volume in the system is a big challenge for the PE to continue to reduce them.

D) PE financial result

PE Vodovod and Kanalizacija in 2019 shows better results compared to the regular operation in

2018in terms of reducing operating expenses and increasing revenue.

Table 23. PE financial result (MKD)

No Elements 2019 2018 2017

1. Total revenues 1,445,819,215 1,401,091,803 1,510,478,358`

2. Total expenditures 1,383,172,665 1,445,382,991 1,380,154,067

3. Profit from operation 62,646,550 -44,291,188 130,324,271

4. Income tax 18,045,005 9,989,464 24,977,139

5. Profit after tax 144,601,545 -54,280,652 105,347,132 Source: Vodovod and Kanalizacija

According to the national classification of the PE activities, 67.24% of the revenues are realized from

water supply of households and commercial entities including institutions.

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Table 24. Revenues according national classification of activities

No Description Realized revenues (MKD) Participation %

1. Water collection, treatment and supply 972,107,275 67.24

2. Wastewater disposal 451,193,296 31.21

3. Installation of plumbing installations, sewerage 15,447,322 1.07

4. Architectural activity 2,361,476 0.16

5. engineering and technical consulting 1,490,428 0.10

6. engineering and technical consulting 3,219,421 0,22

TOTAL revenues for 2019 1,445,819,215 100% Source: Vodovod and Kanalizacija Skopje

The follow table presents PE revenues by users:

Table 25. Income statement by users

No Description 2019 2018

1. Revenues from selling water 1,142,705,706 1,083,689,549

Revenues from economies 440,276,911 418,370,826

Revenues from households 702,428,795 665,318,723

2. Revenues from services 21,110,542 21,730,389

3. Manipulative cost for households 528,764 482,963

Total revenues from Water and services 1,164,345,012 1,105,902,901

4. Revenues from blinking water RZ Uslugi 55,204,103 38,198,211

5. Revenues from services PE KomunalnaHigiena 17,791,616 17,370,885

Total revenues from selling goods and services 1,237,340,731 1,161,471,997

6. Revenues from aboard 50,121 271,642

7. Revenues from sale of waste 1,150.746 /

8. Revenues from rent 120.504 167,433

TOTAL revenues 1,238,662,102 1,161,911,073 Sources: Vodovod and Kanalizacija

The revenues from selling of water participate with 85.67% in the total revenues realized in 2019

and the rest are: operating revenues (10.86%), financial revenues (2,69%) and capitalized own production

(0.78%).

e) Price of water

PE is financed exclusivity from fees for its services. Water supply and sewerage are billed at the

same invoice. The price is defined by the Law on drinking water supply and disposal of urban waste water

(Official Gazette no 68/04) and the methodology developed by the Ministry of Transport and

Communications.

In the invoice that PEVodovod and Kanalizacija - Skopje submits to the users, starting from

01.11.2019 is calculated and charged Compensation for maintaining the public city greenery. The fee for

maintenance of the public city greenery is calculated in the amount of 19.5% of the amount of the tariff

for drinking water supply and the tariff for collection and disposal of urban wastewater

Table 26. Service fee for water and sewerage (MKD/m3, without VAT)

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Service Households Other users RZ Service AD Skopje

PE Parks and Greenery

Drinking water supply 18.50 49.50 13.00 0.50

Wastewater collection 18.87 16.62 Wastewater treatment 0.84 0.84

Source:VodovodandKanalizacija Skopje

The bill from Vodovod comprises a few positions: water and sewerage, communal hygiene fee

(Vodovod passes this fee to PE Komunalna hygiene) and maintenance of public greenery fee (this fee is

passed to the PE Parks and greenery). Below is a report on produced and pumped water, consumed

electricity and average price

Table 27. Produced water, consumer electricity, consumer chlorine and average price

Water production

Electricityconsumed Paidelectricity Аverage price for

1kWh

Consumed chlorine

Average price

MKD.m3

102,272,083 15.804.352 87.987,237 5,50 45,000 0,248 Source:VodovodandKanalizacija Skopje

The average cost of water can be determined as 5.50 + 0,248= MKD 5.748 per m3.

5.6 ANALYSIS OF THE FINANCIAL FEASIBILITY OF THE PROJECT

5.6.1 Time horizon

The financial analysis uses a time horizon of 21 years for the projections. This period involves an

investment phase of 1 year, and production (exploitation) phase of 20 years. The exploitation phase

includes a grace-period of 3 years on the proposed loan from the World Bank and 9 years repayment

period for the loan.

The length of the time horizon is also in accord with the type of the project (infrastructure) and the

estimated useful life of the investment (more than 50 years).

5.6.2 Limitations of the analysis

The work on this appraisal was burdened by some limitations that could possibly influence its

quality. Namely, the pecuniary benefits of the project will be gained by residents and communal

enterprise, the loan will be repaid by municipality Chair and the currency risk will be taken by the

government.

5.6.3 Initial investment

The amount of the initial investment outlay has been estimated at MKD 39,823,849 including VAT.

The basic project design presents division of these costs into the following categories: Preparatory work,

procurement and installation of tubes, earthy-works, digging a trench and return to the original state.

The municipality does not make the initial investment, but it borrows this amount and repays the

debt in a 9‐year period after a 3‐year grace period. Therefore, the investment cost to the municipality is

equal to the discounted value of the future debt payments system.

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5.6.4 Inflation

Due to the de facto fixed exchange regime and the legal obligation of the National Bank of the

Republic of Macedonia to maintain the price stability in the country, the inflation rate is assumed to

remain stable at 2% on an annual level. This is taken into consideration when calculating the NPV.

5.6.5 Discount rate

The discount rate for the analysis can be determined in different ways. However, most of them are

based on the assumption that the project is financed from the budget of the state/municipality. In this

case, the project will be financed from borrowing. If the municipality could borrow on the open market,

it would have “crowded out” the private sector, thus the relevant discount rate would have been the

opportunity cost of capital.

Here, two elements exist that make this approach inappropriate. First, the municipality is very

unlikely to be able to borrow such an amount at market rates. Second, we know that the loan is supposed

to be from the World Bank MSIP funds to the Government of the Republic of Macedonia. Therefore, we

suggest using the highest possible cost of borrowing that international financial organization (IFIs) would

most likely charge for this kind of project, i.e., 3%.

5.6.6 Projection of operating cash flows

According to the technical documentation for the project for reconstruction of the water supply,

sewerage network and storm drainage on several branches of street Dizhonska, a main monetary benefit

generated by the implementation of this project will be reducing the cost of repairing the water supply

network and in signify cant reduction of leakage from the pipeline, so that the project revenues take the

form of cost savings due to the reduced water losses (reconstruction of app 1km of water supply network)

for the PE Vodovod and Kanalizacija Skopje as well as savings in the cost for street reparation for the

Municipality of Chair which will be elaborated in more detail in the Cost-Benefit Analysis section.

5.6.7 Costs and Benefits

Investment cost

The amount of the initial investment outlay as mentioned above has been estimated at MKD

39,823,849 including VAT.

Project benefits

CSE’s additional income from new water users

According to the information from the PE Vodovod and Kanalizacija Skopje (Letter no. 1301-717/2

dated 03.03.2020), reconstruction of the existing water supply network on the street Dizhosnka

15,17,19,21,23 and 23a is required because the current network is with unsatisfied profile and materials

and regular connection doesn’t existing. Moreover, the insufficient capacity of the water network does

not provide quality water supply to the existing users nor allow connection of the ones to the network. A

part of this, 20% increase in the number of dwelling on Dizhosnka streets 15,17,19,21,23 and 23a) is

envisaged according to the new urban planning documentation of Chair municipality. This imposes the

need for reconstruction of the water supply network, increase of its capacity in order to provide sufficient

water quantities for additional water users.

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Namely, currently 270 householders are connected to the existing water supply network. In the

next three-year period, it is expected that number of users will increase by 20% or additional 54

households. Based on municipal projections (according to the DUP) additional 10 households will be

connected in the first year after the project become effective, 20 new households will be connected in

the second year while the remaining 24 households will be connected in the third year. Consequently,

connection of new households to the reconstructed water supply network will create additional income

for the for PEVodovod and Kanalizacija Skopje

As presented in point 5.5 of this section, based on the latest available CSE’s annual documents, the

total invoiced household water for2019 was MKD 702,428,795.00. The price of 1m3 water for household

was MKD 18.50 so the total quantity of invoiced households’ water in 2019 was 37,969,124m3 (MKD

702,428,795.00/MKD 18.50)

Based on PE data, from 192,000 to 196,000 household invoices are delivered monthly on the

territory of the City of Skopje. If we take that average number of invoiced householders is 194,000

households ((192,000+196,000)/2), then the average annual quantity of consumed water per household

is 195.72m3(37,969,124m3/194,000).

Having in mind the above-mentioned assumptions, the annual additional income of the PE as a

result of provided additional quantities of 10,568.88 m3 water to the newly connected 54 users after the

third year of project implementation will be MKD 195,524. This income will be successively generated by

the PE in a period of three years i.e. in the first year it will be equal to MKD 36,208.20, in the second year

to 108,624.60 and in the third and further years in will reach the desired value of MKD 195,524. For the

purpose of this assessment the additional income is expected to increase by the rate of inflation.

CSE’s income from one-time fee for connection of new water users

After the project is being implemented, it will create opportunity for additional monetary benefit

for the CSE, as a result of adding new users to the water supply and the one-time fee they will need to

pay for their connection.

According to the information from the PE “Vodovod and Kanalizacija – Skopje”, the connection fees

for households are fixed and amount MKD 8,260 (connection charges of MKD7,000 plus VAT of 18%). Out

of this amount around 60% are used for the material and other costs for the connection of households to

the water supply system while 40% is income for the CSE.

Taking into account that according to the DUP, 54 new dwelling will be construct on Dizhonska

streets 15,17,19,21,23 and 23a in a period of three years the expected PE total income from new

connection would be MKD 446,040. This income will be gathered in line with the expected dynamic of

new users. Those in firs year it will amount to MKD 82,600, in the second MKD 247,800 and in the third

MKD 446,040.

Operating cost savings (reduced water losses due to pipe leakage)

Currently the PE provides water to 270 households on Dizhonska Street (where the project will be

implemented). Based on CSEs data for 2019, the yearly physical water losses as a result of leakages of the

old water supply network and equipment are determinate at 26,264,577m3. Having in mind that the total

length of water supply network in the City of Skopje is 1,065km the annual water loss per 1km of network

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is 24,264m3. It is estimated that 10% of those loses are result of the pipelines leakage in the secondary

water network or 2,426.4m3. The cost of produced 1m3 water is MKD 5.748.

In order to calculate the value of the operating cost savings, we will use the costs of water

production and expected reduction of water losses of the reconstructed network on the basis of the 2019

data. So, the annual operating cost savings of reduced water losses for the reconstructed 1,001.52m of

water pipelines would amount to MKD 13,968 (2,430.16m3*5.748). These savings are expected to increase

by the rate of inflation. Thanks to the type of the pipe and short length of the lines, we can consider a

constant stream of savings from this item.

Maintenance costs savings

Another source of revenue is the savings in the maintenance costs. The estimate of this figure is

based on the proportion of the length of the section to be reconstructed to the total length of the pipelines

in the water supply system and the total costs of maintenance.

The total cost for maintenance and repair of water supply system on the territory of Skopje is in the

amount of MKD 54,421,770 or MKD 51,100 per 1km network. Respectively, the annual cost for

maintenance and repairing of 1,001.55m of water network amount to MKD 51,179.

If we assume that the replacement of the old water supply network will save at least 20% of the

maintenance cost that gives an annual saved amount of MKD 10,236 to which is applied the annual

inflation rate of 2%. We assume that this whole amount will be saved during the project lifetime.

Recurrent Costs

Additional operating costs that will be incurred by the project compared to the current situation

are the cost for production of additional quantities of water for the newly connected water uses.

Currently, 270 households located on the streets Dizonska 15,17,19,21, 23 and 23a are regularly supplied

with a potable water from the PE “Vodovod and Kanalizacija - Skopje”. Upon reconstruction of the water

supply network on Dizhonska their number will increase from 270 to 324 households. By increased water

demand the quantity of produced water will increase as well.

According to the CSE’s data available which are presented in point 5.5 of this section and our

calculation on annual water consumption per household, the total annual recurrent cost for the 54 new

water users is assumed at MKD 60,750 (10,568.88 m3 *MKD 5.748 (price of water)). Based on PE data for

2019, the annual water consumption per household is determined at 195.75m3. The trend of recurrent

costs of water production will follow the projected water demand in three-year period. The inflation rate

of 2% is applied to the recurrent costs.

No supplementary salary is integrated in the yearly costs due to the staff already employed in the

PE “Vodovod and kanalizacija - Skopje”.

Other assumptions

Residual value

The estimated useful life of the reconstructed water supply network, sewerage and storm-water

drainage on the street Dizhonska is more than 50 years while the time horizon of this analysis is 21 years.

Therefore, a residual value in the amount of MKD 7,379,970 is included as project benefit in the last (21)

69

year of the evaluation. The residual value is calculated as the discounted value of all net future revenue

after the time horizon of the project until the end of the economic life of the infrastructure.

Modified Internal Rate of Return (MIRR)

In theory and in practice, MIRR is known to be better decision-making tool when measuring the

investment attractiveness of a certain project rather than IRR, thus we used MIRR in order to show the

desirability of the investment. Additionally, MIRR more accurately reflects the cost and profitability of a

project. There are several problems with the IRR, MIRR resolves two of them. First, IRR assumes that

interim positive cash flows are reinvested at the same rate of return as that of the project that generated

them.

This is usually an unrealistic scenario and a more likely situation is that the funds will be reinvested

at a rate closer to the municipality’s cost of capital. The IRR therefore often gives an unduly optimistic

picture of the projects under study. MIRR was developed to counter this assumption. Generally, for

comparing projects more fairly, the weighted average cost of capital should be used for reinvesting the

interim cash flows.

MIRR finds only one value while more than one IRR can be found for projects with alternating

positive and negative cash flows, which leads to confusion and ambiguity. In our analysis, while calculation

of the NPV (see Table 19) there are cash flows with alternating signs (negative cash flows followed by

positive cash flows), so the IRR can generate multiple rates of return that will make the NPV equal to zero.

This is unhelpful when trying to evaluate the project. Thus, we use MIRR because it gives more realistic

evaluation of the project. In our case, the calculations showed that the MIRR is negative value, adding to

a conclusion that the project is commercially non-viable.

Results of the financial analysis

As elaborated earlier, due to the high investment costs and, relatively low potential monetary revenues

coming from reconstruction of the underground infrastructure at the street Dizonskaas assumed, the

financial appraisal based on the above assumptions and procedure gives a negative NPV of MKD -

29,702,890 using a 5% discount rate (see Table 28 below). The results imply that the Project is

commercially non-viable. However, it should be taken into consideration that the implementation of the

Project will bring substantial immeasurable benefits. These benefits are elaborated in detail in the

following Costs and Benefits Chapter.

In our analysis, we used Modified Internal Rate of Return (MIRR). In theory and in practice, MIRR is known

to be better decision-making tool when measuring the investment attractiveness of a certain Project

rather than IRR. In our case, the calculations showed that the MIRR is -6%.

Table 28. Financial analysis (in MKD)

Source: Own calculation

5.7 SENSITIVITY ANALYSIS

The sensitivity analysis was performed using variations of 10% for both costs and benefits. According to

the sensitivity analysis in Table below, NPV is sensitive on the change of both costs and benefits but more

sensitive in case where cost is increasing by 10%. In addition, the municipality will have to consider options

to increase the benefits.

Table 29 Sensitivity analysis

Benefits Costs

-10% 10% -10% 10%

NPV (Denar) - 29,702,890 -30,020,226 -28,788,286 -25,847,857 -32,960,652

NPV (Euro) - 482,973.82 -488,134 -468,102 -420,290 -535,946 Source. Own calculation

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5.8 CONCLUSIONS

The total value of the project is MKD 39,823,849 including VAT and the assumption is that the

99.75% f project’s costs will be covered with loan. According to the existing regulation, the project’s cost

is lower than the loan capacity of the Municipality which confirms the eligibility of the Municipality to

borrow under the Second MSIP. But this new borrowing may significantly worsen the financial position of

the Municipality, because currently the municipality has deficit in amount of MKD 9,117,188.00 or EUR

148,246.95 which with the projected will increase to MKD 13,091,955 or EUR 212,877.73. Therefore,

improvement of the municipal financial performances by a strict and complete application of the

proposed action for increasing collection of municipal own revenues, rationalization of expenditures and

reduction of municipal liabilities, is essential for securing sufficient funds for regular servicing of municipal

long-term debt. The main project benefits will be borne by the PE Vodovod and Kanalizacija Skopje. The

analysis of the financial feasibility of the project showed that NPV is negative. However, with

implementation of this project the quality of life of citizens in these streets will improve, also the quality

of water which is very important for human health will improve, atmospheric water will be collected faster

and more efficiently.

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6 Cost-benefit analysis

6.1 GENERAL INFORMATION

6.1.1 Framework of the analysis

After verifying the financial viability of the project, the next step is to test the economic viability.

The initial step in testing the economic viability of a project is to identify, quantify and value the economic

costs and benefits. We expect that this study, together with the financial appraisal, will provide sufficient

basis for the decision-makers to decide on the acceptability of the project.

The main principles to be used in the appraisal are the following:

- Loan costs (interests) are omitted; - The benefits and costs are presented in constant value, i.e. increases of prices are excluded in the

analysis; - Taxes are excluded from the investment value; - Discount rate of 5% is applied.

6.1.2 Limitations and constraints of the study

The construction of water supply, sewerage and storm water drainage on street Dizhonska 15, 17,

19, 23 and 23a brings many benefits to the local population. This is mostly related to improving the quality

of drinking water which is important for human health, extending the number of users of communal

services provided by the PE “Vodovod and kanalizacija-Skopje”, reducing the costs of the public utility and

t supporting efficiency and financial position of the company.

There are some circumstances that will influence the scope and the quality of this study. The first

constrain was time available for the completion of the study which was too short for some more

sophisticated field research to be made. Therefore, the analysis relies on some widely accepted

approaches and measures to compensate for the lack of time for individual study.

Second, cost and benefits are distributed. Namely, the pecuniary benefits of the Project will be

gained by households and the PE, the loan will be repaid by the municipality and the currency risk will be

taken by the government. Third, due to the lack of national parameters or reliable CES data on expected

benefits from the reconstructed storm water network or sewerage network systems which can be used

as input in the analysis, we are forced to omit all potential positive or negative effects from those crucial

parts from detailed quantitative analysis within this study. This can be considered as a major burden in

the analysis.

6.1.3 Scope

At the beginning, it is necessary to define the scope of the cost-benefit study. Earlier, we said that

this approach looks at the project from a broader social point of view. Here, we need to define the

boundaries of the “society”. Since this is a municipal project and taking into account that the subject of

the project for reconstruction of water supply, fecal and atmospheric sewerage on street Dizhonska 15,

17, 19, 23 and 23a it is the municipality which acts as a borrower, we find it most appropriate that the

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point of view of the municipality will be taken. This means that the positive and negative impacts of the

project only within the municipality will be taken into consideration.

6.2 IDENTIFICATION OF THE RELEVANT COSTS AND BENEFITS

6.2.1 Project cost

The costs of the project were elaborated in the previous chapter and consist of the investment

outlay and the recurrent i.e., operations and maintenance costs. In addition, VAT of the investment is not

considered economic cost and therefore is not included in the cost-benefit analysis

6.2.1.1. Economic valuation of cost

The economic valuation of cost of the Project for reconstruction of water supply, sewerage and

storm drainage on street Dizhonska 15;17;19;21;23 and 23a are comprised of: investments outlay, the

recurrent i.e. operations and maintenance costs and costs for connection to the new network.

Economic investment outlay

The financial investment cost of the project is used as a basis to estimate its economic cost, by

correcting the non-skilled labour component in the investment with a shadow wage that takes into

account the current unemployment level in the country (with a Conversion Factor equal to 0.7). The

project economic investment value amount to MKD 30,666,052.

Table 30. Economic valuation of the investment outlay (in MKD)

Amount

without VAT Conversion

factor Share

Preparation work 1.687.451.20 0,70 1.181.215,70

Procurement of pipes 23.472.446,30 1,00 23.472.446,30

Installation of pipes 5.062.353,50 0,70 3.543.647,10

Return to the original state 3.526.773,00 0,70 2.468.741,10

TOTAL 33.749.024,45 30.666.050,20

Economic cost of new connections to the water supply system

As presented in the financial analysis the connection charges are also considered as cost of the

Project. According to the information from the PE Vodovod and kanalizacija – Skopje, the connection

charges for households are fixed and amount to MKD 7,000 (without VAT). Out of this amount, around

60% are used for the material and other costs for the connection of households to the water supply

system. Our assumption is that most of the materials will come from the domestic source. Due to the

presence of trade component a conversion factor of 1.0 will apply.

Economic recurrent costs

Project intervention should cause additional recurrent costs for production of additional quantities

of water for 54 new households. Based on CSE data from 2019, the price for production of one m3 water

is equal to MKD 4.87 (without VAT). Hence, the annual costs for production of water will amount to MKD

51,478 when all 54 potential households are connected to the water supply network.

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6.2.2 Quantifiable benefits

The main monetary benefits generated by the implementation of this project are:

1) Increased number of consumers

The most important monetary benefit from implementation of this project is opportunity for the

CSE Vodovod and Kanalizacija - Skopje to increase its number of consumers and by that to improve its

revenues by the following two items:

- First, increased revenues from connection of new consumer to the water supply network for

amount of MKD 378,000 (3,262.91 EUR) for next three years i.e. in the first year MKD 70,000, in

the second year MKD 140,000 and in the third MKD 168,000 MKD- all amount is without VAT

- Second, increased revenues from water consumption as a result of provided additional

quantities of water to newly 54 connected users, after the third year of project implementation

will be MKD 186,252 without VAT. This income will be successively generated by the PCE in a

period of three years i.e. in the first year it will be equal to MKD 34,491 in the second year to

103,473 and in the third and further years in will reach the desired value of MKD 186,252.

2) Reduction of cost for maintenance

The replacement of the old water supply network would reduce the costs for maintenance and

repair of the water supply network. According information from municipality Chair on Dizhonska 15; 17;

19; 21; 23 and 23a in total have 270 users from services of Vodovod and Kanalizacija Skopje.

As we explained in the previous chapter, if we assume that the replacement of the water supply

network will save at least 20% of the maintenance costs that gives an annual saved amount of MKD

8,674.58 without VAT.

3) Reduction of water losses

The yearly water loss in territory of Skopje is 26,264,577m3, the total length of water supply

network in the City of Skopje is 1,065km the annual water loss per 1km of network is 24,264m3. It is

estimated that 10% of those loses are result of the pipelines leakage in the secondary water network or

2,426.4m3. So, the annual operating cost savings of reduced water losses for the reconstructed 1,001.52m

of water pipelines would amount to MKD 11,837,29.

4) Savings in the municipal cost for reparation of the street Dizonska

According the statistical data (source: State Statistical Office) length of roads in Municipality Chair

is 12.39 km. Yearly average price for reparation of 1km road in Municipality Chair – MKD 2,165,498.86 /

12.39 km = MKD 174,777.88 den/km. Reconstruction of the road will reduce costs for reparation and it

will improve efficiency of spending at the private and municipal level, as less money will have to be spent

on repairs of road and cars. Estimation of the yearly costs for reparation of the streets is:

MKD 174777.88 x 1.00052 km =174,869 MKD without VAT

These savings are based on the municipality spending on reparation of roads.

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5) Savings in the vehicle operating costs (VOCs)

According from the information from municipality Chair, there are app 675 light vehicles registered

if streets Dizhonska 15; 17; 19; 21; 23 and 23a. The average age of the vehicles is around 10-15 years.

According to the information from the municipality, the average daily traffic (ADT) on these streets that

are subject to this appraisal is estimated at around 1150 vehicles (traffic count done by the municipality).

In order to approach the calculations methodologically it is important to say the following in order

to approach the calculations methodologically it is important to say the following: The econometric results

within the study Local road surfacing criteria from June 2004 prepared by Applied Pavement Technology,

Inc. for the US Department of transportation, shows the relation between the VOCs per a mile within 20

years period with the average daily traffic (ADT). Thus, for 1,000 ADT the VOCs are around US$900,000

for 20 years period per a mile.

The road length, under this project, is 1001,52 m which is a 0,622316 mile thus, in one year the

VOCs for 1,000 vehicles for crossing these 0,622316 miles local streets daily would be about:

US$900,000/20years*0,622316 = 28.004,22 or US$32,204.6 for 1150 vehicles. (28004,22 x

1,15=32.204,6). The implementation of this project indirectly will lead to improvement of the street

infrastructure, i.e. by replacement of the underground infrastructure on the street Dizhonska with

installation of the new water and sewage network and proper storm-water drainage on the streets as well

as by placement of new asphalt layers, the complete reconstruction on several branches of the street

Dizhonska will be undertaken by the municipality thus we can expect that VOCs to be lowered at least by

40% due to this project. Based on our estimations the additional economic benefit associated with the

project would be around US$32.204.6/0.4=12.881.603 annually or MKD 666,006. Exchange rate, date

15.03.2021 1US$ - 51.7012 MKD).

6.2.3 Unquantifiable benefits

Besides the major quantifiable benefits, there are also some important immeasurable benefits that

are expected to result from the implementation of the project and that need to be taken into

consideration. Some of these immeasurable benefits refer to:

1) Improving water quality

The current water supply network is older more than 50 years, with changing the old pipes and

installing with new ones, which are produced in accordance with the latest standards, the quality of water

will increase which is very important for human health.

2) Faster collection of atmospheric water

In case of heavy rains, as a result of change and reconstruction of the atmospheric network in these

streets, the water will be absorbed faster and floods on the streets will be prevented.

3) Public goodwill of the municipal administration

The implementation of the project is expected to increase the population’s perception and

confidence due to fewer complaints with water supply, and collection of atmospheric water.

4) Socio - economic impact

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The principal socio-economic benefit of the implementation of the project is the increasing living

standards for citizens, in term of water quality, collection of atmospheric water. Improved utility services

of the properties can significantly increase the land value to the benefit of the owners and also to the local

community due to the ability of the municipality authorities to increase the valuation of the property tax

base with in the municipality.

6.3 VALUATION OF THE COSTS AND BENEFITS

Public infrastructure projects, especially change of water supply and sewerage network, have direct

and indirect benefits. The importance of the water, its need and impact on local development and

provides an opportunity to raise the quality of life of the local population, but also opportunities for

additional investment in the private sector. This view is justified and it can be said that when calculating

cost-benefit analyses have financial benefits, but also future social development components.

The CBA will be built upon the financial appraisal of the project. The items previously valued at

market prices will be estimated using their economic values if relevant. The main principles to be used in

the appraisal of some specific items are given below.

6.4 OTHER ASSUMPTIONS

Inflation rate is neglected in calculations, as well as loan servicing costs. As in case of financial

analysis, the time horizon is 50 years and the discount rate of 5% is used.

6.5 VALUATION OF THE COSTS AND BENEFITS

The following table presents in one place the summary of comparisons between the situation

without and with the project.

Table 31. Summary of comparisons between the “without” and “with the project” scenarios

Without the project With the project Quantification of project benefits

- frequent interruptions of water supply due to defects;

- reduced water quality due to an old water supply network;

- water loss due to an old water supply network;

- flooded streets; - sewer spill; - negative influence on the

health of population.

- Increased water quality; - Reduced repair and

maintenance costs; - Improved quality of life of

local population; - Reduced water losses; - Faster absorption of storm

water; - Installation of hydrants.

- The number of consumers will be increased by 54 households;

- The water loss will be decreased by 10%;

- Reduction of CSE cost for maintenance in the amount of MKD 8,674.58 without VAT;

- At least MKD 174,869 annual savings in municipal road reparation

- VOCs annually lowered by MKD 666,006.

Source: Own analysis based on the information received by the municipality and Vodovod and Kanalizacija

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The cost-benefit analysis of the project is built upon the financial appraisal. Any irrelevant items

from the economic point of view are excluded. To provide economic valuation of the costs, previously

valued at market prices, revaluation of economic value is made by using conversion factors.

6.6 RESULTS FROM THE COST - BENEFIT ANALYSIS

The economic appraisal based on the above assumptions and procedure gives a positive ENPV of

MKD 183,707 or Euro 2,987 using 5% discount rate (see Table below). The results imply that the project

is attractive and desirable for implementation. Additionally, the calculations showed that the EMIRR is 5%

(using 5% discount rate) adding to a conclusion that the project is acceptable for financing from socio-

economic point of view.

Table 32. Cost-benefit analysis (in MKD)

Source: Own calculations based on the data received by the Vodovod and Kanalizacija and municipality Chair

6.7 SENSITIVITY ANALYSIS

The sensitivity analysis was performed using variations of 10% for both costs and benefits. According to

the sensitivity analysis in Table below, NPV is sensitive on the change of both costs and benefits but more

sensitive in case where benefits are lower by 10% and increased by 10%. In addition, the municipality will

have to consider options to increase the benefits.

Table 33. Sensitivity analysis Benefits Costs

-10% 10% -10% 10%

NPV (Denar)183,720 -2.001.818 2.215.158 2,360,861 -1,993,447

NPV (Euro)2,987 -32.712 36.019 38,388 -32.414

Source. Own calculation

6.8 CONCLUSION

The project will definitively improve the quality of life of citizens which living on these streets were project

will be implemented. Also, implementation of project allows to increase a number of consumer and that

means increasing of incomes for PE Vodovod and Kanalizacija. The benefits from this type of investment

are for long time such investment is made once every 30 years and the local government will enjoy greater

trust from citizens from these streets.

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7 Risk analysis

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7.1 TECHNICAL RISKS TO THE MUNICIPALITY

The term risk of the project refers to any unexpected or unforeseen events arising from side effects

or adverse results of the project. At the basis of any well-defined project there is a problem that needs to

be solved. Each project is followed by external and internal risk factors as a result of technical-

technological, commercial, financial, legal, contracting and other aspects of the project.

Risk events are related to natural disasters, environmental protection, legal restrictions, monetary

and fiscal effects, contract clauses, project solutions and specifications, procurement and supply, applied

technology and the performance of the project.

Reconstruction of the local streets contains general risk related to the increased traffic through the

settlements during reconstruction. Transportation of materials shall bring temporary bigger density of

vehicles through the road leading to the sites. Quality planning, correct calculations, and good start of the

management precondition risks during the project implementation. The criteria that need to be taken into

consideration in terms of project implementation are related to quality, costs and deadlines for

reconstruction. The investor is interested in criteria such as costs of project implementation, terms for the

project completion and meeting the required performance parameters. Risks during project

implementation are present in the following table.

Table 34. Technical risks

Risks Possible mitigation actions

Risks with documentation Meetings with the city administration and other institutions that already have done some road construction works in the past.

Risk with the tendering for potential investor

Preparing project appraisal study, review of documents, engaging experts for procurement and contract preparation

Risk with potential contractor, the contract or the interpretation of certain parts of the agreement

Preparing prequalification meetings and proper information for interested contractors, engaging experts in preparation of contract

Risk for quality performance of activities by the contractor during construction

Engaging experts in preparation of contract, preparing performance check lists, active monitoring of construction

Risk of increasing the investment value of the projected budget

Not extending the projected timeframe for reconstruction, better planning

7.2 FINANCIAL RISKS TO THE MUNICIPALITY

Every project that is subject to financial and economic analysis brings potential risk due to the fact

that analysis is based on predictions and assumptions that should be met during the life cycle of the

project.

The financial and the analysis of the economic viability of the project are based on some

assumptions. But, in order to improve the estimates and provide the decision‐makers with a broader

information basis, the analysis could be extended, by involving assumptions different from the ones used.

This would enable us to predict development of the project under different conditions.

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Once the project is implemented, the municipality will receive more revenues from taxes and

reallocate them to other municipal services. The implementation of the project is also expected to

increase the property value for houses and other residential or commercial objects on the streets, thus

increasing the growth of revenues from property taxes. According to all of these financial and economic

benefits, there is no risk that will endanger the implementation of the project activities.

Moreover, the municipality has implemented various similar infrastructural projects in the past,

some of which in collaboration with international institutions, which implies no risk for the municipality

to be able to implement large construction projects such as this one.

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8 Recommendations

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The global concept of the project fits well to provide better services to the citizens of Chair which

include providing of potable water for the all citizens of the street “Dizhonska” because the existing water

supply system doesn’t satisfy the necessary quantities. Also with this project will be increase the quantity

of the water for personal hygiene i.e. to improve the standard and quality of living. Namely, the new

reconstructed sewerage will improve the quality of life of the citizens because the existing sewerage is in

very bad conditions and doesn’t satisfy the need of the citizens. Also this project will have a positive effect

on the economic development and the value of the properties in those settlements, because the

settlements will become more attractive and covered with all the necessary water supply and sewerage

infrastructure in accordance with the current standards.

The assumptions this PAD were done carefully by consulting similar projects and documents

available at the time of preparing this project appraisal and by consulting administrative staff from the

municipality of Chair. This project definitely has different multiplicative positive direct and indirect effects

on the citizens of Chair municipality. When the project will be built and operative, the Council of

municipality need to adopt a Decision for transfer, management and maintenance of the new

reconstructed communal infrastructure on the street “Dizhonska” to the appropriate public enterprise.

Thus, the recommendation after appraisal is to proceed with this project.

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9 Annex

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9.1 DECISION OF THE MUNICIPALITY OF CHAIR FOR LOAN

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9.2 STATEMENT OF THE MAYOR OF MUNICIPALITY OF CHAIR

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The PAD was prepared by: Association for Democratic Initiatives (ADI) Consultants: Goce Dimovski, PhD c. Consultant Team Lead. Katica Mihajlovic, Consultant for Social impact. Marko Acevski, Consultant for EIA. Lindita Zuferi, Consultant for financial analyses. ADI would like to express many thanks for their generous and immense contribution, to official representative from Municipality of Chair and World Bank’s MSIP team – PMU office, Skopje, RNM.

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