“Construction of sewage network and wastewater treatment ...

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Republic of Macedonia Municipality of Gazi Baba

Project Appraisal Document

“Construction of sewage network and wastewater treatment plant in the settlement

of Jurumleri, municipality of Gazi Baba”

World Bank Municipal Services Improvement Project

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Skopje, December 2018

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The Project’s Appraisal Document was prepared by the Center for Promotion of Sustainable Agricultural Practices and Rural Development – CeProSARD

CeProSARD Str. 1550 no.8a Vizbegovo 1000 Skopje, R. Macedonia Tel/fax: + 389 2 3061 391 http://www.ceprosard.org.mk

CeProSARD would like to express many thanks for their generous and immense contribution to:

WB MSIP team – PMU office, Skopje Mr. Boris Georgievski, Major of the Municipality of Gazi Baba All representatives from the municipality staff who help in receiving the appropriate documentation All stakeholders who participate at the interviews Skopje, December 2018

http://www.ceprosard.org.mk/

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TABLE OF CONTENTS

1. INTRODUCTION ............................................................................................................................. 8

2. PROJECT DESCRIPTION ............................................................................................................ 10

2.1. General Information of the Municipality of Gazi Baba .......................................................................... 10 2.2. Demographic and economic profile ...................................................................................................... 12

2.2.1. Demographic profile .................................................................................................................................... 12 2.2.2. Economic profile ......................................................................................................................................... 14

2.3. General description of the project ......................................................................................................... 17 2.3.1. Current situation .......................................................................................................................................... 17 2.3.2. Future situation ........................................................................................................................................... 22 2.3.3. Strategic goals ............................................................................................................................................ 27 2.3.4. Knowledge and experience of the municipality of Gazi Baba ..................................................................... 27

2.4. Conclusions .......................................................................................................................................... 28

3. SOCIAL IMPACT .......................................................................................................................... 30

3.1. Sociological study ................................................................................................................................. 30 3.1.1. Social diversity and gender ......................................................................................................................... 30 3.1.2. Institutions, rules and behaviour ................................................................................................................. 31 3.1.3. Stakeholders ............................................................................................................................................... 32 3.1.4. Participation ................................................................................................................................................ 32 3.1.5. Social risks .................................................................................................................................................. 33

3.2. Other issues of considerations ............................................................................................................. 34 3.3. Resettlement issues ............................................................................................................................. 35 3.4. Conclusion on the project potential success and recommendation ...................................................... 35

4. ENVIRONMENTAL ANALYSIS ........................................................... Error! Bookmark not defined.

5. TECHNICAL DESCRIPTION ........................................................................................................ 55

5.1. Alternative solutions ............................................................................................................................. 62 5.2. Conclusion and recommendations ....................................................................................................... 63

6. FINANCIAL ANALYSIS ................................................................................................................ 64

6.1. Project costs ......................................................................................................................................... 64 6.2. Credit capacity ...................................................................................................................................... 65 6.3. Repayment of the loan ......................................................................................................................... 65 6.4. Financial Analysis of Municipal Capacity to Service the Long-term Debt ............................................. 66 6.5. Analysis of the financial feasibility of the project ................................................................................... 67

6.5.1. Time horizon ............................................................................................................................................... 67 6.5.2. Limitations of the analysis ........................................................................................................................... 67 6.5.3. Initial investment ......................................................................................................................................... 68 6.5.4. Inflation ....................................................................................................................................................... 68 6.5.5. Discount rate ............................................................................................................................................... 68

6.6. Projection of operating cash flows ........................................................................................................ 68 6.7. Other assumptions ............................................................................................................................... 75 6.8. Results of the financial analysis............................................................................................................ 75 6.9. Sensitivity analysis ............................................................................................................................... 79 6.10. Conclusions .......................................................................................................................................... 79

7. COST BENEFIT ANALYSIS ......................................................................................................... 80

7.1. General information .............................................................................................................................. 80

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7.1.1. Limitations and constraints of the study ...................................................................................................... 80 7.1.2. Scope .......................................................................................................................................................... 80

7.2. Identification of the relevant costs and benefits .................................................................................... 81 7.2.1. Project costs ............................................................................................................................................... 81 7.2.2. Quantifiable benefits ................................................................................................................................... 82 7.2.3. Unquantifiable benefits ............................................................................................................................... 83

7.3. Economic valuation of costs ................................................................................................................. 84 7.3.1. Economic valuation of costs ....................................................................................................................... 84

7.4. Other assumptions ............................................................................................................................... 86 7.5. Valuation of the costs and benefits ....................................................................................................... 86 7.6. Results from the cost - benefit analysis ................................................................................................ 86 7.7. Sensitivity analysis ............................................................................................................................... 88 7.8. Conclusions .......................................................................................................................................... 88

8. RISK ANALYSIS ........................................................................................................................... 89

8.1. Technical and implementation risks factors .......................................................................................... 89 8.1.1. Risk factors in the implementation phase of the project ............................................................................. 89 8.1.2. Risk factors from a technical aspect of the project ..................................................................................... 89 8.1.3. Environmental risk factors ........................................................................................................................... 89 8.1.4. Health and safety risk ................................................................................................................................. 90 8.1.5. Social risk factors ........................................................................................................................................ 90

8.2. Financial and cost-benefit analysis risk factors .................................................................................... 90 8.2.1. Financial and cost-benefit risks for the municipality .................................................................................... 90 8.2.2. Financial risk for the residents .................................................................................................................... 91

8.3. Unquantifiable risks .............................................................................................................................. 91

9. RECOMMENDATIONS ................................................................................................................. 92

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Tables Table 1. Settlements in the municipality of Gazi Baba .......................................................................................... 11 Table 2. Main demographic indicators .................................................................................................................. 12 Table 3. Increasing of population in the municipality of Gazi Baba ....................................................................... 12 Table 4. Live births according to gender ............................................................................................................... 13 Table 5. Population according to the gender in 2017 ............................................................................................ 13 Table 6. Population according to the age structure in 2017 .................................................................................. 13 Table 7. Population according to ethnic affiliation in 2002 .................................................................................... 14 Table 8. Main macroeconomic indicators .............................................................................................................. 14 Table 9. Activity of the population between 15 years and more in 2002 ............................................................... 16 Table 10. Active business subjects by sectors in 2017 ......................................................................................... 16 Table 11. Implemented infrastructure projects in the period from 2011 to 2016 ................................................... 28 Table 12. Pipes for vacuum pipeline for settlement of Jurumleri ........................................................................... 58 Table 13. Investment costs breakdown by categories (Denar) ............................................................................. 64 Table 14. Total investment costs breakdown by phases (Denar) ......................................................................... 64 Table 15. Current operating revenues of Municipality of Gazi Baba for 2018 ....................................................... 65 Table 16. Calculation of the annual capital repayment ......................................................................................... 65 Table 17. Calculation of the loan repayment ......................................................................................................... 66 Table 18. Revenues and expenditures of the Municipality of Gazi Baba .............................................................. 66 Table 19. Accounts payable/receivable ................................................................................................................ 67 Table 20. Current Annual Repayment Capacity of the Municipality of Gazi Baba ................................................ 67 Table 21. MSIP loan repayment capacity of the Municipality of Gazi Baba .......................................................... 67 Table 22. Calculation of yearly maintenance costs ............................................................................................... 70 Table 23. Calculation of yearly electricity costs..................................................................................................... 72 Table 24. Price for connection of household to the sewage system – collection system ...................................... 73 Table 25. Average yearly household costs for water supply in Jurumleri.............................................................. 74 Table 26. NPV analysis – 1st scenario (Denar) ...................................................................................................... 76 Table 27. NPV analysis – 2nd scenario (Denar) ..................................................................................................... 77 Table 28. NPV analysis – 3th scenario (Denar) ..................................................................................................... 78 Table 29. Sensitivity analysis ................................................................................................................................ 79 Table 30. Calculation of yearly maintenance costs ............................................................................................... 81 Table 31. Price for connection of household to the sewage system – collection system ...................................... 82 Table 32. Economic valuation of the investment outlay from loan (Denar) ........................................................... 85 Table 33. Economic valuation of the maintenance costs (Denar) ......................................................................... 85 Table 34. Summary of comparisons between the “without” and “with the project” scenarios ............................... 86 Table 35. ENPV analysis (Denar) ......................................................................................................................... 87 Table 36. Sensitivity analysis ................................................................................................................................ 88 Table 37. Targets and Indicators .......................................................................................................................... 88

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Pictures Picture 1. Location of the Municipality of Gazi Baba ............................................................................................. 10 Picture 2. Settlements in the municipality of Gazi Baba ........................................................................................ 11 Picture 3. Constructions * for which fund from MSIP 2 project are requested ....................................................... 18 Picture 4. The catchment area for which the construction of sewage network is planned .................................... 19 Picture 5. Beginning of the alignment of the catchment area - zone 2 for construction of sewerage .................... 20 Picture 6. Local road leading to the planned location for construction of a water treatment plant ........................ 20 Picture 7. Discharge of sewage from a residential building in an open canal ....................................................... 20 Picture 8. Open canal for water for maintenance of technical hygiene in households and storm water ................ 20 Picture 9. Existing vacuum station at CP 687/1 .................................................................................................... 21 Picture 10. Vacuum collector tank installed in vacuum station .............................................................................. 21 Picture 11. Location of facilities foreseen for construction in phase 3: vacuum sewage from branch 4 in catchment area 2, vacuum station and pumping station and treatment plant ......................................................................... 24 Picture 12. Route of sewage catchment area 2 - branch 4, location of vacuum station* ...................................... 57 Picture 13. Scheme of a treatment plant ............................................................................................................... 60 Picture 14. Connection between pumping station, equalization tank, MBBR reactor module and drainage of purified water ..................................................................................................................................................................... 61

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1. INTRODUCTION

The project assumes construction of sewage network and new wastewater treatment plant in the settlement of Jurumleri in the municipality of Gazi Baba. It has the capacity to accept and purify sewage water from approximately 3,500 residents. According to the last Census of Population and households, there are 2,983 residents and 773 households in the settlement of Jurumleri. The investment in amount of Denar 71,445,975 (Euro 1,161,723) including VAT will be covered by the long-term loan from the World Bank Second Municipal Service Improvement Project – MSIP2.

The relevance of the project comes from the fact that the location where the sewage waters will be collected and a sewage network and a wastewater treatment plant will be built is the biggest rural area that supplies the markets and restaurants within the region and the city of Skopje with early vegetables and fruits. Many times these agricultural products are sold on the markets in other municipalities within the country. The high underground waters in the settlement of Jurumleri and the presence of a large number of septic tanks increase the risk of pollution of agricultural products. This situation provides environmental harmful influences for the population health by leaking sewage substances in the surface and underground water and at the same time endangered the agricultural production.

According to the data received by the municipality and technical documentation, municipal residents from the settlement of Jurumleri do not have adequate sewage network and the sewage waters are individually collected in the septic tanks. The septic tanks are traditionally built and allow leakage of the sewage water into the ground. At the same time, disposal of sewage water from septic tanks spent a lot of time and money for the local population. Many households from this settlement rent cisterns for discharging their tanks and it is not rarely this cistern to be dispose directly into the river “Vardar”. Moreover, agricultural producers irrigate the agricultural crops with the water from the river or from the underground. From here, contamination of the underground and ground water is obvious under increased risk. Hence, with this kind of sewage water disposal the residents have no chance to produce organic agricultural products and to receive financial subsidies by the national and international support programs such as IPARD funds.

As a result, residents constantly complain to the Mayor and local administration about the existing situation. Therefore, the main purpose of the proposed technical solution is to provide improvement on a long run for collecting and disposal of sewage water into the wastewater treatment plant that will satisfy the needs of the residents in the municipality of Gazi Baba. Considering that most of the municipal residents work in agriculture, improvement of the conditions for production of organic, healthy and quality agricultural products will ensure economic development of the municipality due to the opportunity for development of small and medium businesses by the local population or foreign investors.

The Mayor and the municipal administration strive to achieve full coverage of infrastructural facilities for their residents including water supply and sewage network, construction and rehabilitation of roads, kindergartens and schools throughout the municipal territory. After the performed urban revision of the census of priority infrastructural services of the whole territory of the municipality of Gazi Baba, considering the number of residents, as well as the available utility and traffic infrastructure, the biggest priority was given to the construction of sewage network and wastewater treatment plant in the settlement of Jurumleri. Municipality has implemented various similar projects in the past, some of which in collaboration with international institutions, which implies that the municipality is able to implement large construction projects such as this one. The project is in line with the municipality's strategic documents, such as the Strategy for Local Economic Development of the Municipality of Gazi Baba for the period 2013-2016 and the Development program for sewage vacuum network and wastewater treatment plant for the settlement of Jurumleri for the period 2017-2018.

The project is relevant to the development objective of the MSIP because it is considered both cost-efficient and cost-effective over a long run and useful for the health of the residents and the environmental protection. No adverse social or environmental impacts were identified. Increasing the quality of the services provided in the municipality and

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increasing the social standards by keeping the environment clean and healthy, the project will undoubtedly contribute towards improvement of the quality of life and well-being on the residents, economic growth and decreasing poverty level, not only in a short-term but also in the longer-term perspective.

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2. PROJECT DESCRIPTION

2.1. General Information of the Municipality of Gazi Baba

Gazi Baba is a small urban municipality and it is situated in the north-western part of the Republic of Macedonia. According to its area, after the municipality of Saraj, it is on the second place in Skopje. According to its absolute altitude, Gazi Baba is included in the lowest municipalities in the country. The settlement’s area is ranging in the eastern part of the Skopje Valley, south eastern sub-slopes parts in Skopska Crna Gora, and covers parts of Skopje’s sub-urban zone, all on the left bank of Vardar. To determine it more precisely, its border begins from the junction of three borders of the municipalities Butel, Gazi Baba and Chair and continuous along the western border of park-forest Gazi Baba, passes beneath the complex of Faculty for Natural and Mathematical Sciences to the crossroad of the boulevard Nikola Karev and the street Belasica, turns along it to the bridge of the railway over the river Vardar, continuous along its flow along the outside borders of the municipalities of Idrizovo, Jurumleri, Trubarevo, Indzikovo, Singelich, Stajkovci, Strachinci, Cresevo, Bulachani and Rastak and the border of the municipality of Butel to the junction of the municipalities of Gazi Baba, Butel and Chair.

Picture 1. Location of the Municipality of Gazi Baba

Source: State Statistical Office

The municipality is consisted of 14 settlements, only Rastak is hilly and the others are lowland. There live 72,617 inhabitants, which makes it the most populated of all municipalities in Skopje and one of the most numerous in the country. Population density is 648 inhabitants per one km2, which is below the average for Skopje and almost eight times larger than the average in the country. The number of inhabitants has been increased for 8,575, i.e. for 12% since 1994 that is due to the mechanical influx by joining a part of the settlements.

The territory of the municipality of Gazi Baba is under the influence of Continental and Mediterranean climate, that cause appearance of cold continental and moisture periods, and in the summer hot Continental and dry Mediterranean periods. The average annual air temperature in the municipality of Gazi baba is 12.50C. Average monthly temperature in all three-winter months is above zero, the coldest month is January with an average air

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temperature 0.40C. Annual absolute maximal air temperature appears in July and August and is 42.40C. In average annually in the municipality, there are 117 summer days. Average ice period in the Skopje Valley is 84 days. Average annual relative air moisture is 70%. In the Skopje Valley, there is average fall of 515 mm/m2 precipitation that over the year is unevenly distributed by months and seasons. The most precipitation month is May with in average 61mm, after that November with 52mm rainfall, and with the lowest rain are August and July with 33mm rainfall. Rainfall in the Skopje valley is mainly from rain, and I the winter months the snow appears, as well. From the total average annual number of rainy days, only 17% are days with snowfall and sleet, and appear from November to March. The average annual number of rainy days is 112, and with snow is 25. Skopje Valley is characterized by an increased frequency of days with fog, mostly of a radiation character. Fog occurs in all hours of daylight, but with the highest frequency in the morning. In the municipality of Gazi Baba, there are 81 fog days.

Picture 2. Settlements in the municipality of Gazi Baba

Source: State Statistical Office

The most prevalent in the agrarian structure is the cultivated agrarian soil with 5,033ha, forests with 1,763ha and pastures with 1,433ha. The rural settlements of this municipality supply the city mainly with gardening cultures, milk and dairy products.

Here are located great number of industrial capacities, among the most important are the following: factory for production of chocolates and sweets “Evropa” JSC Skopje, company for production of soft drinks and beer “Pivara” JSC Skopje; company for production of different types of packaging “DS Smith”; pharmaceutical company for manufacturing drugs, cosmetic and chemical products and processing botanical raw materials “Alkaloid” JSC Skopje, Faculty of Natural and Mathematical Sciences, Faculty of Social Sciences, Faculty of Agricultural Sciences and Food, Hotel Continental, etc.

According to the newest territorial organisation, to this municipality has been joined the settlement Brnjarci, while the settlements Kolonija, Idrizovo and Madzari lost their status of settlements and have been joined to the urban zone of the Municipality of Gazi Baba, i.e. to Skopje – Gazi Baba.

Table 1. Settlements in the municipality of Gazi Baba

# Local

communities Absolute attitude

Area (km2)

Inhabitants (in 000) the agrarian structure of the areas (ha)

1994 2002 agrarian soil pastures forests total

Municipality Gazi Baba

316 112.0 11,853 72,617 5,033 1,433 1,763 8,229

1 Brnjarci 300 5.8 418 395 340 192 13 545

2 Bulacani 480 16.0 1,075 1,104 709 256 589 1,554

3 Goce Delcev 227 - - 1,405 - - - -

4 Idrizovo 227 7.3 1,771 1,589 624 3 1 628

5 Indzikovo 225 4.8 486 3,343 376 2 0 378

6 Jurumleri 227 4.6 3,330 2,983 341 3 1 345

7 Rastak 620 12.2 410 367 415 334 426 1,175

8 Singelic 260 6.7 673 23,915 507 5 6 518

9 Smiljkovci 270 - - 345 - - - -

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10 Stajkovci 240 4.9 490 3,532 447 16 - 463

11 Strachinci 400 6.7 1,037 1,185 253 256 76 585

12 Trubarevo 220 6.1 612 2,669 436 20 4 460

13 Cresevo 390 16.5 1,551 1,278 585 346 647 1,578

14 Gazi Baba 340 20.4 - 28,507 - - - -

Source: Popovski, V., Selmani, A. and Panov, N. (2006). Municipalities in the Republic of Macedonia, Local Government of the Republic of Macedonia and its Territory Division

2.2. Demographic and economic profile

2.2.1. Demographic profile

According to the last Census of population and households in 2002, the municipality of Gazi Baba has 72,617 residents, which makes it the most populated of all municipalities in the city of Skopje and one of the most numerous in the country. The total number of households is 20,336, i.e. 3.6 residents live in every household. The total number of dwellings is 22,815. Migration is one of the most significant factors for changes in population number. According to the last revised census of population, immigration in the municipality of Gazi Baba was bigger than the emigration in 2002. However, this number changed and today the immigration is lower than the emigration. According to the State Statistical Office estimates, total number of residents in the municipality of Gazi Baba estimated for 2017 is 76,947, which means that the number of residents has increased for 4,330 residents or 5.6%. A statistical data on the population and migration in the municipality of Gazi Baba, Skopje Region and the Republic of Macedonia are shown in the table below.

Table 2. Main demographic indicators

Demographic indicators Municipality of

Gazi Baba Skopje Region

Republic of Macedonia

Demography - according to the last revised census data for 2002

Total population 72,617 578,144 2,022,547

Total households 20,336 17,067 564,296

Average households members 3.6 4.1 3.6

Total dwellings 22,815 24,649 698,143

Total immigrated residents 686 5,547 11,861

Total emigrated residents 590 4,727 11,219

Demography - State Statistical Office estimates for 2017

Total population 76,947 627,558 2,075,301

Natural increase per 1000 inhabitants 0.5 3.2 0.7

Live births per 1000 inhabitants 9.9 12.4 10.5

Total immigrated residents 247 2,778 9,266

Total emigrated residents 262 1,828 9,103

Source: State Statistical Office, MAKStat database, 2017; Census of population and households, 2002

The rates of population movement considering natural growth, births and migrations per year (from 2008 to 2017) of the municipality of Gazi Baba are shown in the table number 3. The analysis shows negative average rates of natural growth (-0.2) and birth (-0.1), while the migration is zero.

Table 3. Increasing of population in the municipality of Gazi Baba Year Population 30.06 Natural growth rate Birth rate Migration rate

2008 75,260 1.0 0.4 -0.4

2009 75,490 -0.9 0.3 0.2

2010 75,701 0.6 0.2 -0.3

2011 75,893 -0.6 -0.4 -0.2

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2012 76,078 0.1 0.2 0.5

2013 76,310 -0.1 0.2 0.7

2014 76,510 -0.7 -0.2 -0.7

2015 76,636 -1.3 -1.0 0.7

2016 76,808 1.4 0.9 0.4

2017 76,937 -1.6 -1.5 -1.2

Average 76,059 -0.2 -0.1 0.0

Source: State Statistical Office, MAKStat database through years

Live births data for the municipality of Gazi Baba, Skopje Region and the country are shown in table 4. The analysis through years shows bigger number of male babies than females in the municipality of Gazi Baba, which is similar to the live births in the Skopje region and the overall country.

Table 4. Live births according to gender

Year Municipality of Gazi Baba Skopje Region Republic of Macedonia

Male Female Total Male Female Total Male Female Total

2013 468 421 889 4,154 3,908 8,062 12,093 11,045 23,138

2014 455 424 879 4,263 3,931 8,194 12172 11424 23,596

2015 418 382 800 4,233 3,810 8,043 11,959 11,116 23,075

2016 461 409 870 4,443 4,023 8,466 11,868 11,134 23,002

2017 402 357 759 3,969 3,784 7,753 11,160 10,594 21,754

Average 441 399 839 4,212 3,891 8,104 11,850 11,063 22,913

Source: State Statistical Office, MAKStat database through years

The next table gives an overview of a gender structure. The gender structure is approximately the same. The data shows slightly bigger number of female population in the municipality of Gazi Baba (49.6%), as well as in the Skopje region (49.2%), while in the country there is bigger number of male population in 2017.

Table 5. Population according to the gender in 2017

Gender Municipality of Gazi Baba Skopje Region Republic of Macedonia

Number Share Number Share Number Share

Male 38,156 49.6 309,016 49.2 1,039,283 50.1

Female 38,791 50.4 318,542 50.8 1,036,018 49.9

Total 76,947 100 627,558 100 2,075,301 100

Source: State Statistical Office, MAKStat database 2017

The age distribution and its share in the total population in the municipality of Gazi Baba, Skopje Region and the Republic of Macedonian in 2017 are given in table 6. The data are the same for the municipality of Gazi Baba, Skopje region and the overall country where the biggest part of the population is between 30 and 49 years old.

Table 6. Population according to the age structure in 2017

Repartition Municipality of Gazi Baba Skopje Region Republic of Macedonia


0-4 4,162 5.4 40,110 6.4 113,356 5.5

5-9 4,274 5.6 38,923 6.2 115,847 5.6

10-14 4,279 5.6 36,183 5.8 112,780 5.4

15-19 4,623 6.0 36,051 5.7 122,021 5.9

20-24 4,902 6.4 38,999 6.2 141,251 6.8

25-29 5,275 6.9 43,034 6.9 158,524 7.6

30-34 5,460 7.1 46,872 7.5 163,732 7.9

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35-39 5,913 7.7 49,287 7.9 160,228 7.7

40-44 6,084 7.9 47,397 7.6 151,303 7.3

45-49 5,449 7.1 44,099 7.0 144,798 7.0

50-54 5,150 6.7 40,984 6.5 144,560 7.0

55-59 4,716 6.1 37,092 5.9 136,613 6.6

60-64 4,695 6.1 36,872 5.9 126,839 6.1

65-69 4,461 5.8 34,132 5.4 106,419 5.1

70-74 3,109 4.0 23,444 3.7 71,737 3.5

75-79 2,326 3.0 16,803 2.7 53,783 2.6

80 and more 2,059 2.7 17,216 2.7 51,317 2.5

unknown 10 0.0 60 0.0 193 0.0

Total 76,947 100 627,558 100 2,075,301 100


Majority of population in the municipality are Macedonians (73.7%). From the other minorities there are: Albanians 17.2%, Serb and Roma people 2.9% and others with 3.4%. The minority repartition according to the last revised census of population is shown in table 7. Macedonians prevails in the Skopje Region and in the country as well, while Albanians takes the second place.

Table 7. Population according to ethnic affiliation in 2002

Repartition Municipality of Gazi Baba Skopje Region Republic of Macedonia


Macedonians 53,497 73.7 367,413 63.6 1,297,981 64.2

Albanians 12,502 17.2 133,893 23.2 509,083 25.2

Turks 606 0.8 12,216 2.1 77,959 3.9

Roma 2,082 2.9 24,225 4.2 53,879 2.7

Vlachos 236 0.3 2,580 0.4 9,695 0.5

Serb 2,097 2.9 18,152 3.1 35,939 1.8

Bosnians 710 1.0 10,946 1.9 17,018 0.8

Others 887 1.2 8,719 1.5 20,993 1.0

Total 72,617 100 578,144 100 2,022,547 100

Source: State Statistical Office, Census of population and households, 2002

2.2.2. Economic profile

Considering the State Statistical Office data, the following table presents infrastructure, education and economic data for the municipality of Gazi Baba, Skopje Region and the Republic of Macedonia. In the municipality of Gazi Baba, the transport is organized through 66km local roads of which 41km asphalted roads. There are 34 educational institutions where in 2017/2018 study year attend 6,902 children in the elementary school and 2,092 children in the secondary school. From the total population of 72,617 residents, 61,156 were literate, of whom 30,019 literate women in 2002. In the municipality, there are 2,720 active business subjects, while the GDP per capita is calculated on a regional level, since there are no available data on the municipal contribution.

Table 8. Main macroeconomic indicators

Macroeconomic indicators Unit Year Municipality of

Gazi Baba Skopje Region

Republic of Macedonia

Infrastructure

Local roads km 2017 66 1,440 9,733

Asphalted roads km 2017 41 965 5,232

Education

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Educational institutions Number 2017 34 488 1,184

Children that attend primary school Number 2017/2018 6,902 65,302 192,448

Children that attend secondary school Number 2017/2018 2,092 24,260 71,458

Population literacy at age 10 and more Number 2002 61,156 488,916 1,693,044

Women literacy at age 10 and more Number 2002 30,019 243,884 829,755

Economy

Active business subjects Number 2017 2,720 26,947 71,419

GDP per capita MKD 2015 - 386,876 269,996

Source: State Statistical Office, MAKStat database, 2017; Census of population and households, 2002

According to the last revised Census data for 2002, the total number of population in age of 15 and over is working age population. In the municipality of Gazi Baba their number is 57,716; economically active people are 29,326, of whom 67.4% are employed, while 32.6% are still looking for a job. The municipality has 49.2% economically inactive persons. Considering gender, there are 40.4% employed women. There are no new data divided by municipalities on employment and economic activity of the working age population.

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Table 9. Activity of the population between 15 years and more in 2002

Population activity Municipality of Gazi Baba Skopje Region Republic of Macedonia


Economically active

All 29,326 50.8 222,581 48.5 743,676 47.2

Employed 19,766 67.4 154,915 69.6 460,544 61.9

Employed women 7,991 40.4 65,447 42.2 174,974 38.0

Unemployed 9,560 32.6 67,666 30.4 283,132 38.1

Economically inactive 28,390 49.2 236,132 51.5 833,325 52.8

Activity rate 50.8 48.5 47.2

Employment rate 34.2 33.8 29.2

Unemployment rate 32.6 30.4 38.1

Source: State Statistical Office, Census of population and households, 2002

According to the last revised data from the Census of population and households in 2002, the activity rate in the municipality of Gazi Baba is 50.8, which is above this rate in the Skopje Region (48.5) and the country (47.2). The employment rate (34.2) is also above the employment rate in the Skopje region (33.8) and in the country (29.2), while the unemployment rate (32.6) is above the unemployment rate in the Skopje region (30.4) and below the unemployment rate in the Republic of Macedonia (38.1).

According to State Statistical Office, there were 2,720 active business subjects in the municipality of Gazi Baba in 2017. The most important and dominant sectors were the wholesale and retail trade with 33.9%; followed by the transport and storage with 13.8% and manufacturing industry with 12.6%. From the other active business subjects most dominant are the construction sector with 7.2%; professional, scientific and technical activities with 6.6%; other services 5.7%; accommodation and food services 4.2%; human health and social work 3.2%; administrative services 2.9% and information and communications 2.6%. The remaining active business subjects are represented with less than 2%. The following table presents distribution of the economic activities in the municipality considering the number of active business subjects by sectors in 2017.

Table 10. Active business subjects by sectors in 2017

Sector

Municipality of Gazi Baba

Skopje Region Republic of Macedonia


Agriculture, forestry and fishing 41 1.5 266 1.0 2,603 3.6

Mining and quarrying 6 0.2 70 0.3 201 0.3

Manufacturing 342 12.6 2,501 9.3 7,885 11.0

Electricity, gas, steam and air conditioning supply 12 0.4 113 0.4 172 0.2

Water supply, sewerage, waste management 15 0.6 85 0.3 255 0.4

Construction 195 7.2 1,967 7.3 4,814 6.7

Wholesale and retail trade; repair of motor vehicles 923 33.9 7,691 28.5 23,337 32.7

Transportation and storage 374 13.8 2,067 7.7 5,732 8.0

Accommodation and food service activities 113 4.2 1,313 4.9 4,559 6.4

Information and communication 72 2.6 1,128 4.2 1,689 2.4

Financial and insurance activities 9 0.3 236 0.9 427 0.6

Real estate activities 35 1.3 349 1.3 566 0.8

Professional, scientific and technical activities 179 6.6 3,560 13.2 6,948 9.7

Administrative and support service activities 78 2.9 1,039 3.9 1,698 2.4

Public administration and defence; social security 3 0.1 138 0.5 268 0.4

Education 34 1.3 488 1.8 1,184 1.7

Human health and social work activities 88 3.2 1,132 4.2 3,319 4.6

Arts, entertainment and recreation 46 1.7 623 2.3 1,335 1.9

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Other service activities 155 5.7 2,181 8.1 4,427 6.2

Total 2,720 100 26,947 100 71,419 100


2.3. General description of the project

2.3.1. Current situation

In the settlement of Jurumleri, the municipality of Gazi Baba, according the 2002 census, there are a total of 2,983 inhabitants. There is no sewage network in this settlement. Wastewater from residential buildings, business objects and facilities of the institutions are collected individually, in septic tanks, which are then cleaned and the wastewater is discharged into the river Vardar. Part of the technical wastewater from households is discharged into open channels. In this settlement, beside the residential buildings, there are 143 registered entities from the business sector, according to the Central Register of RM from 2017. Among the business sector, there are trade companies, production plants, agricultural associations and individual farmers, environmental civil society associations and association of disabled people. Some registered companies that work in this settlement are: ADONEKS Joint stock company for employment of disabled persons for production and trade, import-export Skopje, which carries out production of products of plastic masses for packaging, Production, Services and Trade Company BONIVES KOMPANI DOOEL s.Jurumleri Skopje - production of plastic products; Trade company for production, trade and services HIDROS DOOEL export-import Skopje - production of basic inorganic chemicals; Company for production and trade EVGENI DOO import-export Skopje-Wholesale of cereals, raw tobacco, seeds and animal feed; Association of Agricultural and Livestock Manufacturers ZELENA DOLINA Jurumleri-Skopje; Company for Agriculture, Trade and Services EVROPRODUKT-MSM DOOEL import-export Skopje - cereal processing (except rice), leguminous plants and oil seeds, Company for production of agricultural products TKM-MAMP DOOEL import-export Jurumleri Skopje which is engaged in growing of vegetables, melons and watermelons, root and bulky vegetables; Company for trade and services Z and V-COMPANY DOO export-import Skopje performs freight road transport and other organizations from the business sector. In this settlement, there is the Municipal Primary School Njegosh Jurumleri Gazi Baba Skopje and kindergarten, apothecary, post office, dental office, ambulance. It should be noted that the existing condition is very bad, because besides contamination of the surface waters of the river Vardar, inappropriate treatment of wastewater causes pollution of groundwater. By irrigation of agricultural land, pollution of agricultural products occurs. These agricultural products are sold on the local market, but they also use the local catering facilities in preparing food in the municipality of Gazi Baba and the city of Skopje, and many times, they are placed on the markets throughout Macedonia. These products represent an indirect threat to the health of users.

Out of this, the disposal of wastewater is a major problem. In order to solve this problem, the municipality undertook the activities for wastewater management in this inhabited area and financed the preparation of a project for construction of a sewage network and a treatment plant in the settlement of Jurumleri. In the past, the municipality made an attempt to build a gravitational sewerage network by applying several pumping stations and one main pumping station within the wastewater treatment plant for this settlement. Several branches of a sewerage network with large depths, 5-6m, are in the presence of underground water and are not operational because of the high costs for digging and shoring of the trenches. Since the system of gravitational sewerage network proved to be inadequate, during 2014 year, in order to improve the method of wastewater drainage, a forced technique was adopted with the acceptance and taking away wastewater, using a vacuum.

With the complete project for construction of vacuum sewage network with a wastewater treatment plant in the settlement of Jurumleri, envisaged is construction of:

i. vacuum sewerage network for wastewater drainage; ii. monitoring system for monitoring the vacuum pressure in the vacuum sewerage network; iii. vacuum station; iv. pipeline under pressure – collector;

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v. pumping station and vi. wastewater treatment plant.

The municipality predict the overall project to be implemented in 4 stages. The first and second stage are already in final implementation and include the construction of a pressure pipeline (collector), a construction facility on a vacuum station in which a vacuum collection tank and electric power is installed, as well as the construction of a vacuum primary and secondary sewerage with a monitoring system for catchment area - Zone 3. The municipality realizes these two stages with its own funds. Funds from the MSIP 2 project for construction of the above mentioned objects are required for realization of the third stage.

Through the borrowing from the MSIP 2 program, the municipality of Gazi Baba requires funds for objects of stage 3:

i. Construction of vacuum primary and secondary sewerage for catchment area - zone 2 - branch 4; ii. Procurement and installation of monitoring system for vacuum network for zone 2; iii. Finalizing the vacuum station with the purchase and installation of equipment; iv. Construction of a pumping station and v. Construction, procurement and installation of equipment for treatment plant with one modular reactor

MBBR for 1500 population equivalent (P.E.).

The fourth stage covers zone 1 and zone 4 together with both treatment plants of 1500P.E. and 1000P.E. Stage 4 is the independent entity and it is not essential to the functionality of the project.

Locations of objects for which the funds are requested from MSIP 2 project are shown in Picture no. 3.

Picture 3. Constructions * for which fund from MSIP 2 project are requested Source : Google Earth

*Note arms number 21-30 that belong to branch 4 and which are subject of construction are marked in red, the collector

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which has already been built is marked with green

The catchment area for which the construction of sewage network is planned in the settlement of Jurumleri consists of four zones as shown in Picture no.4. According the current project zone 2 is envisaged for construction.

Picture 4. The catchment area for which the construction of sewage network is planned Source: Main project for changes in the construction of vacuum sewage for the village Jurumleri (graphic part), Municipality of

Gazi Baba, with technical No. 029/2018-K

In each zone, primary and secondary vacuum sewerage network will be built, through which the wastewater is discharged to the vacuum station. In the vacuum station, wastewater will be collected in a vacuum collection tank. From a vacuum collection tank through 2 pressure pumps installed in a vacuum station, wastewater will be driven to pipeline under pressure - collector. The wastewater through the collector will be transported to a treatment plant located on the territory of the settlement of Jurumleri in the Municipality of Gazi Baba. The treatment plant will be built in the immediate vicinity of the Vardar River where the purified water will be released.

The value of the funds necessary for realization of the activities from the third stage that are requested as a loan borrowing from the MSIP2 project is 71,445,974.78MKD including VAT. For the realization of this phase of construction and procurement of equipment, a Decision was adopted by the Municipal Council for lending loan within the MSIP2 project, registered with archival No. 09-788/8 of 28.02.2018.

The development of infrastructure is the condition for a quality life of residents in the settlement of Jurumleri. The disposal of storm water and wastewater is not resolved. The number of inhabitants in the settlement of Jurumleri, according the 2002 census, is 2.983 inhabitants, or 773 households are registered. The treatment plant and the vacuum sewerage network with a monitoring system for the vacuum network for the discharge of wastewater is dimensioned for the area of a settlement that will include 3,858 population equivalent (P.E.) in 2045. The number of inhabitants in this settlement has a tendency to stagnate in the last 20 years, but the settlement has great potential

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for development in agriculture, with the possibility of developing primary and secondary processing of agricultural products and development of the food industry. This is the reason why the increased coefficient of population growth of 0.6% for a period of 13 + 30 years (up to 2045) was used for dimensioning in the design calculations.

The disposal of wastewater in the settlement of Jurumleri, the Municipality of Gazi Baba is not in accordance with the Law on Environment, Official Gazette of the Republic of Macedonia no. 53/05, 81/05, 24/07, 159/08, 83/09, 48/10, 124/10, 51/11, 123/12, 93/13, 42/14, 111/14, 44/15, 129/15, 192/15, 39/16 и 42/16); Law on Water (“Official Gazette of the Republic of Macedonia “ no. 87/08, 6/09, 161/09, 83/10, 51/11, 44/12, 23/12, 163/13, 180/14, 146/15, 52/16) and the Law on Drinking Water Supply and Drainage of Urban Wastewater (“Official Gazette of the Republic of Macedonia“ no.68/04; 28/06; 17/11). There is no sewage system in settlement of Jurumleri and wastewater from residential buildings, business objects and facilities of the institutions that descend in the settlement are collected individually, in septic tanks. Part of the wastewater used for washing and maintenance at residential buildings is discharged into open channels as shown in Picture 7. Discharge of water for maintenance of technical hygiene in households and storm water from the central parts of the settlement is done with open drainage channels as shown in Picture 8.

The current state of the site planned for the construction of the treatment plant and the route of the sewerage system in the Municipality of Gazi Baba, is shown on Picture 5 and Picture 6.

Picture 5. Beginning of the alignment of the catchment

area - zone 2 for construction of sewerage Picture 6. Local road leading to the planned location

for construction of a water treatment plant

Picture 7. Discharge of sewage from a residential building in an open canal

Picture 8. Open canal for water for maintenance of technical hygiene in households and storm water

Source of photos: Archives of CeProSARD 1

1 The CeProSARD team made an inspection of the existing situation on October 4, 2018

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In May 2015, a "Main project for vacuum sewers for the Jurumleri settlement" was developed with technical no. 022/2015-K and started with construction in phases. During the construction of the sewage system, changes were made to the project documentation related to the corrections and additions to the secondary sewer network according to the new requirements of the investor; setting up control manholes for vacuum control throughout the network; supplementing the project with a collector that accepts the water from the pressure pipeline to the river Vardar; complementing the project with wastewater treatment plant and division of the entire project documentation on the construction phases. The already constructed 950m gravity network in Jurumleri cannot be fully used for the project's purposes, except the gravity line where the pressure pipeline ends at the bus station. The gravitation line section with a length of 600.0m will be used starting from the bus station to the river Vardar.

The construction of the vacuum sewer, the vacuum station, the pressure pipeline - collector to the wastewater treatment plant together with the wastewater treatment plant in the settlement of Jurumleri, which are the subject of the project are in accordance with the current legislation, i.e. the Law on spatial and urban planning (Official Gazette of RM no.199 / 14, 44/15, 193/15, 31/16, 163/16 and 64/18) and the bylaws in the field. For the planning scope of the area where the sewage route passes, there is urban documentation, i.e. conditions for space planning and infrastructure project. In July 2018, an Infrastructure Project was developed in the Jurumleri settlement for a vacuum faecal sewage facility, a pressure pipeline - collector to a wastewater treatment plant together with a wastewater treatment plant CM Jurumleri, the municipality of Gazi Baba. This document is registered by the Trade and Services Company "Bild Urban" DOOEL Skopje with technical no. 0801/339/18.

The existing state of the horizontal route for running the vacuum sewage system is filled with built underground and above-ground phone line, above-ground and underground electrical line, built water supply system. These infrastructural installations have house connections to the users. The streets covered by the performance of the vacuum sewers are concrete or with asphalt construction.

On the cadastral parcel CP 687 with possession certificate1512 CM Jurumleri, which is owned by the Republic of Macedonia and is given with a long-term lease for the use of the municipality of Jurumleri, a construction facility has been built in which the vacuum station is located as shown in Picture 9. This parcel is in the immediate vicinity of a post office facility. The equipment required for this vacuum station to operate is: sewage, vacuum collector tank, vacuum pumps, pressure pumps, sewage drainage, vacuum connection valve, internal water supply system, internal drainage system. In the existing vacuum station, a vacuum collection tank for wastewater is installed, shown in Picture 10. The remaining equipment will be procured under this project.

Picture 9. Existing vacuum station at CP 687/1 Picture 10. Vacuum collector tank installed in vacuum

station

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Source of images: Archives of CeProSARD 2

Pressure pipeline - collector is already constructed with length L = 172.41m. This collector transports wastewater from the vacuum collector tank to the treatment plant. According to the Main project for vacuum sewage, pumps are envisaged to push the water from the vacuum collector tank to the collector pipeline transporting the water to the wastewater treatment plant. The water from the pressure pipeline - collector will be led to the location of the pumping station, i.e. to the treatment plant. The pump station is envisaged to be constructed at a cadastre parcel CP 914/1, as an integral part of the treatment plant in front of the pool for equalization. The pumping station will be connected to the sewage tank and will consist of 6 submersible pumps connected to the egalization tank.

On the envisaged cadastre parcel CP 914/1, on the total area of 1,055.69m2, construction of a treatment plant is foreseen. The water pollution of Vardar river, in which the wastewater is discharged, in the section from the part of the outlet of the wastewater channel from the city sewer of the city Skopje to the inflow of the Pchinja river, is classified in the third class of watercourses, in accordance with the Decree on categorization of waters in the Republic of Macedonia (Official Gazette of the Republic of Macedonia 18/1999). The quality of the discharged wastewater after the treatment in the newly constructed wastewater treatment plant should satisfy the physical and chemical standards for discharge in the surface water of the Vardar River and be categorized at least in the water category III according to the Decree on categorization of waters in the Republic of Macedonia (Official Gazette of the Republic of Macedonia 18/1999). The location itself has enough space for accommodating the equipment for 3 modular systems (2 x 1500 P.E. and 1 x 1000 P.E.), i.e. a type of treatment plant of a container type that uses a bioreactor with a mobile bearing. In addition to the location itself, there is an electricity network, 110kV transmission line TS Skopje 4 - TS Petrovec, owned by AD MEPSO, through which a direct connection with the distribution electric boards from the treatment plant will be provided. The land for the construction of the treatment plant is owned by the municipality3. The location of the wastewater treatment plant is located along the river Vardar itself. The envisaged location for the construction of the future wastewater treatment plant in the village of Jurumleri in the municipality of Gazi Baba has not been used and has not yet built facilities or other infrastructure networks.

The existing condition with the treatment of wastewater in the municipality is worrying, so a construction of a treatment plant is required, which is a legal obligation of the municipality, in accordance with Article 255 of the Law on Waters (Drainage, Collection and Treatment of Urban Wastewater) for all settlements with numbers above 2000 P.E. (population equivalent). The poor state of the wastewater treatment causes a number of environmental harmful effects on the health of the population and the residents of the municipality of Gazi Baba, and as a result of this situation they constantly complain to the mayor and the municipal administration about the situation. Therefore, the main goal of the proposed technical solution is to ensure long-term improvement and environmental protection, which will meet the needs of the inhabitants in the municipality of Gazi Baba and will protect the surface and groundwater from pollution.

2.3.2. Future situation

With the implementation of the complete project, a vacuum sewer system will be built in the entire settlement, which will include: vacuum station, pumping station, pressure pipeline collector from the pumping station to the wastewater treatment plant and wastewater treatment plant in the settlement of Jurumleri in the municipality of Gazi Baba.

In the third phase of the project implementation, for which financial assets from the MSIP 2 project are required, there is envisaged procurement of equipment and construction of:

1. Construction of vacuum primary and secondary sewage for catchment area - zone 2 - branch 4, which includes primary pipeline K21, to which the branches K22, K23, K24, K25, K26, K27, K28, K29, K27, K28, K29 and K30 are joined. The value of the activity is 18,034,285.86 MKD including VAT;

2 The CeProSARD team made an inspection of the existing situation on October 4, 2018 3 Census list with unregistered rights No.132 issued by the Agency for Real Estate Cadaster no. 1105-166846 / 2018 of October 12,

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2. Procurement and installation of a monitoring system for vacuum network for zone 2. The value of the activity is 2,045,294.00 MKD including VAT;

3. Finalizing the vacuum station with the purchase and installation of equipment. The value of the activity is 16,031,598.00MKD with VAT included;

4. Construction of a pumping station. The value of the activity is 9,134,690.66MKD including VAT;

5. Building of a construction part, procurement and installation of equipment for a treatment plant of a Moving Bed Bio Reactor MBR for 1500 P.E. The value of the activity is 26,200,106.26MKD including VAT.

The total amount of the investment in the third phase is estimated at Denar 71,445,975 including VAT.

Vacuum primary and secondary sewage network that will be built for catchment area - zone 2 - branch 4 will be in length of 2.558,90m. The sewage network of branch 4 is shown in figure 8. It will consist of a primary pipeline branch 21 with a length of L21 = 979,37m, to which the secondary branches will be joined: K22 with length L22 = 495,72m; K23 with length L23 = 148.22m; K24 with length L24 = 114.38m; K25 with length L25 = 265.45m; K26 with length L26 = 168,26m, K27 with length L27 = 165,92m, K28 with length L28 = 55,99m, K29 with length L29 = 28,38m and arm K30 with length L30 = 137,21m. The construction of the vacuum sewage network will be performed in the zone along the regional existing roads of 0.5-1.0m and will not enter into private property. The wastewater from the households and public buildings for the sewage network of branch 4 will gravitatively collect in 41 collector manholes in which 41 vacuum pressure valves will be installed. These collecting manholes will be placed on the street sidewalks. When the capacity of the household wastewater reaches a certain level through a vacuum valve, a pressure difference (vacuum and atmospheric pressure) will be created, which will push the wastewater from the collecting manhole to the vacuum sewage pipeline. By constructing a vacuum sewer system in the settlement of Jurumleri, there will be a possibility for future connection of all smaller collecting pipelines and connection of direct single connections. Through the vacuum sewage network, the wastewater will be pumped into a vacuum collection tank, which is installed in the existing vacuum station (Picture 9 and Picture 10).

The vacuum station is a pump station equipped with 3 vacuum pumps and a closed vacuum collection tank. The vacuum sewage is poured into a vacuum collection tank of 250l. The level regulator monitors the water level in the vacuum collection tank and put two pressure pumps into operation. If the water level in the vacuum boiler rises above the set value then the high-level detector stops and deactivates the vacuum pumps to prevent supply of wastewater. The vacuum station includes a biophilter, which has the function to prevent unpleasant odors that may occur on the exhaust side of the vacuum pumps. For the existing construction object vacuum station, equipment will be supplied such as vacuum pumps, pressure pumps, sewage drainage, vacuum connection valve, internal water supply system, internal drainage system. In the vacuum station, there will be a command table with automation, PLC control system and PLC and HMI application software for monitoring and managing the operation of the vacuum station. Equipment for monitoring the operation of each vacuum valve will also be provided for the monitoring of the vacuum station, showing a full overview of the operation of the vacuum station. The system will send the information to a central monitoring station and will have the possibility to store all the information for future use.

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Picture 11. Location of facilities foreseen for construction in phase 3: vacuum sewage from branch 4 in catchment area 2, vacuum station and pumping station and treatment plant

Source: https://ossp.katastar.gov.mk/OSSP/ accessed at 11.12.2018

The site for the construction of the treatment plant is about ten kilometres away from the centre of the municipality of Gazi Baba on the parcel CP 914/1, in the Cadastral Municipality (CM) Jurumleri, which is an area of 1,055.69m2. In total 612.00m2 will be used for the facility of the treatment plan of this cadastre parcel. The pumping station is planned to be built on the same parcel as an integral part of the treatment plant. Wastewater from the collector through the pumping station is taken to the equalization tank. In this pumping station 6 wells will be built, each with a depth of 10m. In each well six pumps will be set with features: capacity Q = 20-50l / sec, Hmin = 12m, use of two generators, working and reserve, each with a power of 170-200kW.

The treatment plant will be intended for the treatment of communal water without burdening industrial waters and will meet the standards laid down in the EU Urban Wastewater Directive (91/271 / EEC, 98/15 / EC) and the Rulebook on the conditions, the method and the emission limit values for discharge of wastewater after their purification taking into account the special requirements for protection of the protected zones (Official Gazette of the Republic of Macedonia No. 81/11)

The dimensioning of the sewage system and the treatment plant is done in accordance with the determined drainage norm for daily water consumption Qk = 150 l/day/resident. For determining this quantity of sewage (drainage norm), the water supply norm Q0 = 188l/day/ resident was used. The water supply norm has been adopted in accordance with the regulations of the Republic of Macedonia, according to which in cities it is necessary to provide water supply of 400l/day/resident and 300l/day/resident in the villages. Taking into account climate change and global trends in reducing water consumption, the adopted water supply rate of 188 l/day/ resident is acceptable in order to meet the needs of water for the population.

The treatment plant will consist of one reinforced concrete pumping station, three reinforced concrete wastewater collection tanks and three bioreactors with movable bed - MBBR (Moving Bed Bio Reactor). After full construction,

https://ossp.katastar.gov.mk/OSSP/

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the wastewater treatment plant will use a bioreactor with a movable bed with three modular systems (2x1500 P.E. and 1x1000 P.E.) for high and intermediate loading. Within the treatment plant, an integrated machine room will be built which will be soundproofed and ventilated and in which two blowers and a pump will be located to remove the sludge from the station.

Through the MSIP 2 project funds, the construction of associated buildings, procurement, transport and installation of equipment for one modular reactor MBBR for 1500 P.E. of the treatment plant will be achieved by performing the following works:

1. Construction of a pumping station with six pumps mounted in six wells with a depth of 10m and with an equalization tank with volume V = 50m3 for one modular reactor;

2. Construction of underground installations for the first MBBR modular reactor; 3. Construction of a floor plate for the first MBBR modular reactor; 4. Construction of a digester for the first MBDR modular reactor; 5. Installation of the first MBBR modular reactor and its connection to the underground installation; 6. Construction of a wastewater microfiltration system; 7. Construction of a mineral filter system for additional tertiary filtration and 8. Connection of the modular reactor with an over ground pipeline network.

Upon completion of the construction activities for construction of a pumping station which includes, in accordance with the projected calculation in the project4:

- excavating 6 wells for lowering the groundwater level - mounting 6 pumps installed in each well, - the construction of the equalization tank, - the underground installations and the floor plate for the first modular reactor

At this stage from the MSIP 2 project the following elements will be procured for the smooth operation of a mobile bioreactor - MBBR (Moving Bed Bio Reactor) from the treatment plant will be procured and installed:

i. Procurement, transport and installation of the MBBR reactor for 1500 P.E. with a capacity of 225m3/day, ii. Procurement, transport and installation of 2 submersible pumps with Q = 3.50l/sec iii. Procurement, transport and installation of a sludge storage unit with Q = 10m3, iv. Procurement and installation of an odors combined emission control system for with Q = 150m3/hour, v. Procurement, transport and installation of a container microfiltration system for purified water with a capacity

of Q = 225m3/day with an integrated chlorine dosing system, vi. Procurement, transport and installation of a filter station with capacity of Q = 225m3/day for additional

tertiary treatment of water.

Accompanying activities for putting into operation a modular reactor using MBBR (Moving Bed Bio Reactor) technology to be performed: construction of access road and working platform to the facility, protective grounding, cabin for protection of components and valves placed on the egalization pool - dry chamber. For protection against atmospheric influences above the modular reactor and the control room will be installed steel roof.

By finishing all phases of the construction of the treatment plant, the maximum daily quantity of sewage of Qmax= 600m³/day in 2045 should be processed. Benefits that will be realized with the construction of the new vacuum network sewage and Moving Bed Bio Reactor technology are the following:

4 Main project for changes in the construction of vacuum sewerage for the settlement of Jurumleri (sewage network, vacuum station and monitoring and treatment plant), Municipality of Gazi Baba, with technical No. 029/2018-K

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- With the construction of the vacuum sewage network and treatment plant in the subject area, all domestic relevant standards and legal provisions will be achieved, as well as the EU Directive 91/271/ΕΕC, which requires secondary treatment of wastewater prior to discharge into the recipient, for agglomerations greater than 2,000 P.E.

- The quality of the discharged purified water in the recipient Vardar River will be below the permissible limit values, ie the parameters will be lower for the biological consumption of oxygen for five days (BPK5) <25 mg/l and the suspended substances <60 mg/l.

- The pollution of wastewater from septic tanks currently used in the Jurumleri settlement will be reduced, where consumers will be included in the vacuum sewage network;

- The operation of the wastewater treatment plant will have a great positive impact on the quality of surface and groundwater. Significant improvement of the quality of surface waters, especially in the river Vardar, in which currently wastewater is released;

- The inhabitants of this settlement, one of the largest in the municipality of Gazi Baba, will not release wastewater in the open channels (in the part where the Roma population lives) in the river Vardar.

- Improving the living standard in the municipality of Gazi Baba and reducing the health risks of the local population.

The choice of placing the treatment station using the Moving Bed Bio Reactor technology will contribute to the realization of the following benefits:

- Automatic operation of the treatment plant. - The installation is above ground. - Easy and simple management of the operation of the treatment plant. - Low maintenance costs for the station. - A permanent presence of the operator and maintainer of the treatment plant is not required. - There is no smell of the site at the treatment plant - Low noise during the operation of the treatment plant - It is not necessary to construct special rooms for placement of the aerial and disinfection equipment, since it

is located in the modular reactors - biological devices - Provides easy modular performance of the plant, which means it can be increased if needed and is easy for

transport. - Easy and economical replacement of parts of the treatment plant in case of a possible defect - Defects appear rarely - Construction of the treatment plant in the short period of time - The built-in equipment is envisaged to comply with European standards and possess appropriate

certificates.

After the implementation of the project, the management of the treatment plant will be undertaken by the Communal Services Enterprise Gazi Baba 2007, managed by the Municipality of Gazi Baba. The municipality will manage and will generate income from the management of the treatment plant and the purification of wastewater, through the collection of a fee from the users of the sewage system. With the implementation of the project it is also expected to increase the value of the property of houses and other residential or commercial buildings in the villages, which increases the growth of the property tax revenues in the municipality. Hence, the fundamental and rapid implementation of this infrastructure project is of utmost importance. Every property owner who wants to be connected to the vacuum sewage system has to bring installations to his vacuum manhole to which he needs to join from his sanitary nodes through his yard. Solving problems in private yards is not an obligation of the Municipality i.e. everyone solves the problem in their yard and the manholes are placed in front of the properties so they can easily make connection.

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2.3.3. Strategic goals

In order to ensure the disposal of wastewater from the Jurumleri settlement in the municipality and its purification, it is necessary to build a network of vacuum sewers and to build a treatment plant using the technology with modular bioreactors MBBR. The project envisages the construction of a separate network of wastewater sewage from the storm water drainage system. Wastewater, which is now collected in septic tanks from this settlement and which are not connected to the system for collecting and drainage of municipal wastewater, will be treated in the newly constructed treatment plant. Development factors such as providing infrastructure, roads, water supply, storm water and wastewater sewage and other available resources, enable achievement of the goals foreseen in the Spatial Plan of the Republic of Macedonia for the dispersion of the industry in the period until 2020. and for the location of industrial facilities in the space around the cities and in general in the wider rural area. In the realization of the commitments foreseen in the Spatial Plan of the Republic of Macedonia, one should take into account the determination in the spatial development of the industry for the application of the principles and standards for environmental protection.

The project is in accordance with the municipal strategic documents, such as the Strategy for Local Economic Development of the Municipality of Gazi Baba for the period 2013-2016 and the Development Program for the vacuum sewage network with the Wastewater Treatment Plant (WWTP) for the Jurumleri settlement for 2017 and 2018. In accordance with the two strategic documents, activities for construction of sewage and WWTP in this settlement in the municipality of Gazi Baba.

A large number of infrastructure projects were realized in the municipality - asphalted roads were built to the villages, all streets were asphalted, water supply was built, the villages fully electrified. Such infrastructure suitability is one of the key reasons that provides conditions for stopping the village-city migration. However, the main priorities of the population from the settlements in the Municipality of Gazi Baba is finding a solution to the problem of building wastewater sewers and wastewater treatment, especially because the groundwater level in the settlement of Jurumleri is high. The implementation of the project, such as the construction of the wastewater sewage and treatment plant in the municipality, will contribute to the development of the site, the local economy and the implementation of planning documents in the Municipality of Gazi Baba. The construction and putting into function of the foreseen contents will enable realization of health, economic, cultural, educational and other kinds of social functions with direct or indirect economic effects.

This will undoubtedly contribute to improving the quality of life and well-being of all citizens of the municipality of Gazi Baba. It is of particular importance to emphasize the protection of the surface waters of the river Vardar and the groundwater from pollution. The use of unpolluted water in agricultural production, as explained earlier, will contribute to the increase of environmental protection and ecological agricultural production of safe and healthy products. Of particular importance is the improvement of the health conditions of the population.

2.3.4. Knowledge and experience of the municipality of Gazi Baba

The following table illustrates the municipal experience in implementation of different types of projects mostly related to the municipal development including infrastructural activities. The knowledge and experience needed for successful implementation of the project are related to project management, technical knowledge and execution of procurement practices. Municipality of Gazi Baba has participated in a wide variety of large construction or other type of development projects with different investors, where the municipality provided the investors with technical services, and gained in return new businesses on its territory or improved schooling facilities, water supply system, sewage network, road infrastructure, implement energy efficiency measures, etc. The municipality has implemented several projects on improving municipal services supported by national donors (such as Agency for rural development and Agency for sport and youths) and international donors (EBRD, World Bank, EIB) and has established Public Private Partnership between the Municipality of Gazi Baba and the football club Vardar. It can be inferred that the municipality is able to contribute with the necessary experience to large construction projects such as construction of

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new streets, water supply system and reconstruction of schools and kindergartens, as well as construction of sewage network and wastewater treatment plant. Some of the infrastructural projects implemented by the Municipality of Gazi Baba, funded by national and international donors, for the period 2011 – 2016, are given in the table below.

Table 11. Implemented infrastructure projects in the period from 2011 to 2016

# Project name Financing source Duration Budget (Denar)

1 Construction of new local roads in the rural part of the municipality of Gazi Baba

EBRD and World Bank 2011-2014 821,000

2 Reconstruction of three kindergartens with implementation of energy efficiency measures

World Bank 2011 265,000

3 Reconstruction of the public street lightning with EE lights in all settlements in the municipality of Gazi Baba

Municipality of Gazi Baba 2012-2013 900,000

4 Construction of a primary sewage network in the settlement of Stajkovci

Government of RM and EIB 2012-2013 250,000

5 Construction of a new school building of the primary school "Gligor Prlichev" in the settlement of Zelezara

World Bank loan 2013-2015 1,350,000

6 Construction of a new kindergarten in the settlement Idrizovo

Municipality of Gazi Baba 2012-2013 370,000

7 Construction of a training centre of the football club Vardar in the settlement of Hipodrom

PPP - Municipality of Gazi Baba and football club Vardar

2013-2015 4,000,000

8 Construction of 4 multifunctional sport halls in 4 settlements Jurumleri, Madzari, Keramidnica and Trianga

Municipality of Gazi Baba and Agency for sport and youths

2013-2015 380,000

9 Construction of a secondary sewage network in the settlement of Stajkovci

Municipality of Gazi Baba with the local residents

2014-2015 160,000

10 Reconstruction of a local road Singelic - Crshevo EBRD and Agency for rural development

2013-2016 630,000

11 Construction of a storm water network in the settlement Triangla

EIB 2016 130,000

12 Construction of a new sport hall in the settlement Cento

Municipality of Gazi Baba and Agency for sport and youths

2015-2016 580,000

13 Construction of a street "Anton Velkovski" in length of 1km in the settlement of Stajkovci

Agency for rural development - Government of RM

2016 170,000

14 Construction of a street "10" in length of 1km in the settlement of Indzikovo


2016 300,000

15 Construction of a street Alija Avdovik in length of 700m in the settlement of Singelic


2016 250,000

Total in Denar 10,556,000

Total in Euro 171,642

Source: Municipality of Gazi Baba

2.4. Conclusions

The project is in line with the strategic dicuments of the Municipality of Gazi Baba (Strategy for Local Economic Development of the Municipality of Gazi Baba for the period 2013-2016 and the Development program for sewage vacuum network and wastewater treatment plant for the settlement of Jurumleri for the period 2017-2018) and will contribute to achieving the vision of the municipal administration to improve the environmental situation of the municipality and to provide more sustainable practices and social benefits and health protection for the residents. Relevance of the project results from the fact that most of the population is affected by the negative implications of no sewage network that provide environmental pollution of the surface and ground waters and soil which mostly affect the agricultural population in the municipality. The agricultural products are sold not only on a local market, but also in

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the shops and markets in the city of Skopje and other municipalities within the country that increases the risk of health of the overall population in the country. The proposed technical solution is in accordance with existing positive standards and regulations for this kind of projects. It is very important that the newly constructed sewage network will be connected to the newly constructed wastewater treatment plant and the wastewater will be treated before discharge in the nearest river Vardar. For successful implementation of projects, knowledge and experience is required, especially on project management and technical knowledge. Municipality of Gazi Baba has implemented a variety of similar projects in the past, some in cooperation with international institutions, which means that the municipality is able to carry out large construction projects such as construction of the sewage network and wastewater treatment plant.

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3. SOCIAL IMPACT

3.1. Sociological study

The project envisages construction of sewage network and wastewater treatment plant in the settlement of Jurumleri in the Municipality of Gazi Baba. Sociological study includes data collection and their analysis to assess the social impact of the project on the local population and the private and public sectors.

The data collection includes desk-top review of the relevant documents, such as: Main project design; the World Bank Guidelines for assessing the social impact of the project; Minutes of public hearing; Local environmental action plan 2013-2019; Strategy for Local Economic Development of the Municipality of Gazi Baba for the period 2013-2016 and the Development program for sewage vacuum network and wastewater treatment plant for the settlement of Jurumleri for the period 2017-2018; Statistical data about the municipality and Law on local self-government.

In addition, face-to-face semi-structured interviews were organized with municipality representatives, such as Mayor of the municipality of Gazi Baba, municipality councillors, Head of the Department for local economic development and representative from the financial department. They all presented their opinions about the role and influence of various stakeholders in the process of decision making relevant to the project, as well as the level of information, capacities and readiness of the citizens to support the project. Taking their delegation and duties into account, the above-mentioned officials proved to be useful interpreters of the opinions of the citizens since being their representatives and having frequent meetings with them, they are very familiar with the needs, attitudes and opinions of the local population and the project. Moreover, interviews were organised with the residents from the municipality of Gazi Baba in order to solicit views of local population while direct observation during the field visit. Municipality of Gazi Baba has already organised a public hearing for loan borrowing for construction of sewage network with wastewater treatment plant with the loan from the World Bank. The public hearing was held with participation of the Mayor, municipal councillors and representatives from the municipal administration and 100 residents from the settlement of Jurumleri on February 12, 2018 in the Church hall in the settlement of Jurumleri, Municipality of Gazi Baba.

The analysis is based on the processed data collected from the above-mentioned instruments. According to the methodology laid out in the Social Impact part of the project document the research highlights five entry points of social analysis that will be analysed separately: Social diversity and gender; Institutions, rules and behaviour; Stakeholders; Participation and Social risk.

3.1.1. Social diversity and gender

In the municipality of Gazi Baba, there is increase in the number of residents through years. According to the last two censuses of the number of populations, in 1994 there were 11,853 residents, while in 2002, their number increases for 60,764 inhabitants and there were 72,617 inhabitants. In 2017, the number of inhabitants in the municipality of Gazi Baba is estimated at 76,947 inhabitants. Population growth is mostly in the part of the Municipality of Gazi Baba, which is a part of the city of Skopje, while most of the suburban settlements have decreased number of populations, such as the settlement of Jurumleri. In the settlement of Jurumleri, the number of inhabitants has decreased, considering the last two censuses of population. In that way, in 2002 there are 2,983 inhabitants or 347 inhabitants less than 1994 when the number of inhabitants is 3,330. Considering gender, in 2002 there were 1,511 male and 1,472 female residents in the settlement of Jurumleri.

There are residents from different social groups (minorities, gender, language, young couples, etc.) By age, there are different groups including children, youths and elderly people, and some of them are people with special needs. Considering age structure, the biggest number of local populations is between 30 and 50 years or 30% from the total number of residents who live in the municipality of Gazi Baba. According to the gender, there are approximately

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equal number of residents and in 2017 there were 38,791 female residents or 50.4% and 38,156 male residents or 49.6%.

The prevailing nationality in the municipality of Gazi Baba is Macedonians with 53,497 residents or 73.7% of the total population according to the last Census of population in 2002. From the other nationalities, there are Albanians with 12,502 residents or 17.2%, Roma with 2,082 residents or 2.9%, Serbs with 2,097 residents or 2.9% and other nationalities with 3.3%.

Municipality tends to improve the infrastructure, through construction of water supply and sewage network and construction of local roads, but also to protect the environment and to ensure better living environment for its residents. Both municipal administration and residents stressed that one of the biggest priority is construction of the sewage network and wastewater treatment plant for increasing the living quality of all residents, but also for protection of the environment.

Presently, the residents collect the sewage water from the houses in the settlement of Jurumleri in traditionally built septic tanks. These kinds of septic tanks provide leakage of the sewer water into the ground and increase the possibility for contamination of the soil, ground water and underground water. These additionally increase the risk of contamination not only of the water, but also of the agricultural products. Considering that the settlement of Jurumleri is wider known for agricultural production and the agricultural products are sold on the green markets in the city of Skopje and other municipalities in the Republic of Macedonia, there is an increased risk of people’s health. Construction of the sewage network and wastewater treatment plant will be made in several phases. Construction of the vacuum pipeline and vacuum station is already started by the municipality own funds while the second phase for construction of the sewage network and wastewater treatment plant will be made by long term borrowing from the World Bank MSIP 2. In the third phase, more residents will be connected to the sewage network and the sewage network will be finalised. In the first phase, approximately 1,500 residents are expected to be connected to the sewage network and in the second phase 1,500 residents more will connect. The number of households that will be connected to the sewage network at this stage is approximately 300. They all represented direct beneficiaries of the project.

3.1.2. Institutions, rules and behaviour

According to the interviewees’ opinions, the selected contractor must provide guarantees for the realization of the project. The municipal Council might request information from the Mayor in reference to the project’s realization at any time. In addition, based on experience with other similar projects, the municipal administration has the capacity to maintain the sewage network after implementation of the project. Moreover, the municipality has an administration, which has experience to monitor the progress of the project.

In line with the Law on Local Self-Government, Municipality of Gazi Baba responsibilities are to provide: 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. The municipality has 120 employed of which approximately 50% are women. Municipality of Gazi Baba has signed a Statement with archive number 08-4083/1 from September 14, 2018 that will be responsible for patching halls and pavement of the local streets and other necessary construction activities for restoring the streets where the sewage network will be constructed into the original state. Additionally, the municipality has signed a Statement with archive number 08-4084/1 from September 14, 2018 that all property legal relations are already solved for construction of the sewage network.

Maintenance of the sewage network and wastewater treatment plant, subject to this appraisal, will be under the responsibility of the Communal State Enterprise (CSE) “Gazi Baba”. Municipality of Gazi Baba has signed a Statement with archive number 08-4082/1 from September 14, 2018, that CSE “Gazi Baba” will be responsible for

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handling with the mil and wastewaters that will appear after construction of the sewage network in the settlement of Jurumleri. There are 18 employees in the CSE, of who only two are women and 16 are men. The CSE has also 75 seasonal workers of who 60 are male and 15 female. For connection of the households to the sewage network residents will have to pay approximately Denar 2,500 and the communal services cost around Denar 30 per m3

water. The CSE is responsible for the following activities: collecting, transporting and disposal of communal sewage waste; cleaning of the public places in all settlements of the municipality; maintenance of the parks and green areas; maintenance of the cemetery; supply the residents with potable water and maintenance of the water supply network; maintenance of the sewage network; cleaning private septic tanks; maintenance of public lightening and green markets; disinfection and pest control; etc.

Local Communities in the past had important role in many municipalities for construction and maintenance of infrastructure. Today, they have no legal status and are not directly involved in the maintenance, but they can contribute by request of the residents and municipality. Now, they are useful as a communication channel for providing relevant information from and to the residents including road infrastructure, water access and sewage as one of the key issues in the community. There are 25 local communities in the settlement of Gazi Baba, of which 10 are urban and 15 are rural. In cooperation with the Council and the Mayor of the municipality of Gazi Baba, they participate in the preparation of decisions related to the development and operation of the municipality. They provide logistical support to the administration of the municipality of Gazi Baba and participate in the preparation and execution of activities in their area.

3.1.3. Stakeholders

There are several important stakeholders of the project, such as the municipal primary school “Njegosh” and the kindergarten “Morkovche”, which will be connected to the newly constructed sewage network. Approximately 50 employees are employed in the municipal primary school “Njegosh” and there are approximately 600 students. There are approximately 80 children enrolled in the kindergarten “Morkovche”. The school and the kindergarten are connected to the sewage network of the penitentiary “Idrizovo”, but this sewage network has frequent problems with clogging. They will be connected to the sewage network as well.

According to the Central Register of RM from 2017, there are 143 registered entities in 2017 in the settlement of Jurumleri, some of them directly involved into production and trade (such as ADONEKS for production of products of plastic masses for packaging that employees disabled persons for production and trade), but also civil associations that work in the field of environmental protection and association of disabled people. Some of the agricultural production and trade companies that operate in the settlement of Jurumleri are: „EVGENI“ Ltd. for wholesale of cereals, raw tobacco, seeds and animal feed; Association of agricultural and Livestock Manufacturers „ZELENA DOLINA“, Company „EVROPRODUKT“ for cereal processing, leguminous plants and oil seeds, Company for growing of vegetables, melons and watermelons, root and bulky vegetables „TKM-MAMP“. They all will be connected to the sewage network.

There are also many agricultural producers that will benefit from the construction of the sewage network since there will be no risk for leakage of the sewer water from the septic tanks and thus contamination of the soil and agricultural products. This is very significant for people’s health, as well as for development of new agricultural businesses and trade.

3.1.4. Participation

The interviewees fully agree that the most influent participant in the process of decisions making at the municipal level are the Mayor and the municipal council. They stated that there are different priorities for municipal development considering improvement of infrastructure and providing quality services for the local population. However, most important for the residents in the settlement of Jurumleri is construction of sewage network and wastewater treatment plant. Construction of the sewage network and wastewater treatment plant is supported by all

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councillors representing different political parties in the municipal council, which means that a political consensus is achieved on this issue and that the councillors are considering the project as one of the top priorities of the municipality of Gazi Baba. According to the Mayor, the issue considering the sewage network and wastewater treatment plant which is subject to this appraisal was already discussed with the Council and all councillors confirm that all of them support or will support the project, because it is in the general interest at the municipal level. Hence, the project was already discussed at the council meetings and the council has bring a Decision for long-term borrowing for construction of the sewage network and wastewater treatment plant funded by the loan from the World Bank MSIP 2 with archive number 09-788/8 from February 28, 2018. The project is voted as a priority and it is included in the Development program for sewage vacuum network with wastewater treatment plant for the settlement of Jurumleri for the period 2017-2018 and in the Strategy for local economic development of the municipality of Gazi Baba for the period 2013-2016.

Municipality Council is composed of 27 members, counsellors from different political parties. 14 councillors are from the leading political party and 13 councillors are from the political parties in opposition. There are 18 male councillors and 9 female councillors of who five are from the political party in position and 4 are from the political parties in opposition. The low number of women in the Council is reflective of the general trend of decrease of women’s participation in political life in the country. Participation of women in local councils is 30% following last local elections in 2017. The councillors come from different settlements in the municipality and considering the goal of the project, all of them support its implementation.

The residents’ opinion can influence the decisions making process, as the Mayor and the Council always consider their needs. According to the law, the residents can participate in municipal council sessions and they can discuss issues with prior announcement. The residents were invited to a public hearing to discuss their priorities and to be informed about construction of the sewage network and wastewater treatment plant. The Public hearing for long-term borrowing of the municipality of Gazi Baba for construction of the sewage network and wastewater treatment plant was organised on February 12, 2018 in the church hall in the settlement of Jurumleri, municipality of Gazi Baba. The municipality has prepared minutes for the public hearing no.31 from February 15, 2018. Mayor of the municipality, Head of the Department for local economic development, representatives from the municipal administration and 23 councillors (representatives from different political parties in the municipal council), as well as 100 inhabitants from the settlement of Jurumleri participated on the public hearing. Considering gender, 30% of the participants were women. The public hearing was organised on February 12, 2018 in the Church hall in the settlement of Jurumleri, Municipality of Jurumleri. Mayor of the municipality of Gazi Baba opened the public hearing and describe the need of long-term on leading borrowing of the municipality for construction of the sewage network and wastewater treatment plant. Then, the Head of the Department for local economic development described the process for loan borrowing from the World Bank MSIP 2 program. Once again, all councillors from different political parties confirm their opinion that there is a real need for construction of the sewage network and wastewater treatment plant and they all agree for the loan. Residents actively participated in the public hearing and they emphasized the biggest challenges that face every day because of no sewage network. They stated that the settlement of Jurumleri is located in the area with high groundwater that provides constant flooding of their homes and septic tanks. Through the groundwater, sewage waters of the septic tanks spill into their gardens and agricultural land providing a serious risk for the people’s health, not only for the local population, but also for the residents of the city of Skopje and wider. Given the above, it seems that all stakeholders support the implementation of the project given its high impact on their daily lives.

3.1.5. Social risks

The biggest risk if no realisation of the project is pollution of the environment. Presently, sewage water from households goes into septic tanks, which are traditionally constructed and allow leakage of the sewage water in the ground. It is very important to notice that sometimes there are illegal discharge of the sewage water from the cisterns directly into the river “Vardar”. This makes unfavourable conditions for living of the local population, and also for work. The risk for environmental pollution, as well as the risk for contamination of the agricultural production and the risk for health of the residents will be minimized with construction of the sewage network subject to this project appraisal.

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Big risk for people health is contamination of the ground water, underground water and soil and thus contamination of agricultural products if not realisation of the project. Considering that agricultural production is one of the most developed branch in the settlement and many agricultural products from the settlement of Jurumleri are sold on the markets in the city of Skopje and other municipalities in the country, than the current situation is a huge risk for contamination of the agricultural products that can provide harmful effect on people’s health and appearance of many deceases. With realization of the project, this risk will be minimized as well.

Another high social risk for carrying out the project cannot be perceived. In the municipality of Gazi Baba, the municipal council organizes meetings with residents and open sessions to discuss the priorities of municipality development and their realization. In spite of their political orientation, councillors cannot endanger realization of the project. As elaborated earlier, all councillors have already expressed their support for the project.

Additionally, it was discussed in detail whether the residents are fully informed about the intended construction of the sewage network and wastewater treatment plant that is subject to this appraisal. Since the project was already discussed on a public hearing between the municipal representatives (Major, municipal councillors and representatives from the municipal administration) and the local residents, there is no risk for resident not to be informed about the project activities. All stakeholders stated that there is not risk or problems that can appear during the implementation of this project because, like they stated, it is for everyone’s benefit and good and the project will contribute to improve the life of all residents in the municipality. Residents are aware of the benefits of the project and they all agree to connect to the newly constructed sewage network.

Since the sewage network subject to this appraisal is set on municipal (state) land, on already existing local streets and the wastewater treatment plant will be constructed on a public land owned by the Republic of Macedonia, no expropriation is needed.

Presently, residents have to pay Denar 350 for each cleaning of a septic tank. For an average 4-member household, the septic tank needs to be emptied one or two times per month. This approach spends a lot of time and money. With realisation of the project, the residents will have to pay approximately Denar 30 for m3 for potable and sewage water to the CSE “Gazi Baba 2007” which will be responsible for connection and maintenance of the sewage network. Thus, there is no risk for the residents not to be willing to pay and to connect to the sewage network.

There will be no risk of residents not to be satisfied by the realization of the project because it will influence on development of new businesses and increased number of visitors and costumers due to the improved working and living environment in the municipality of Gazi Baba. With realisation of the project, residents will have an opportunity to sell healthy agricultural products on the big markets, for instance in the city of Skopje of abroad the country. They will be allowed to develop organic agriculture or to provide labelling of their traditional agricultural products.

3.2. Other issues of considerations

Construction of the sewage network in the settlement of Jurumleri is expected to provide financial benefits for the residents and for the municipality, while construction of the wastewater treatment plant will provide positive impact on saving the environment from pollution. With the project implementation, the residents will save time and money on empting septic tanks one or two times per month. Empting of a septic tank cost Denar 350 for a cistern that collects 2m3 sewage. Moreover, with construction of the sewage network and wastewater treatment plant, agricultural products are expected to have increased quality and higher value, which will increase interest in opening new businesses for agricultural production. On the other side, construction of the sewage network 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. All of these will lead on increasing municipal funds and the municipality can use them to improve some other social services or maintenance of the sewage network and wastewater treatment plant.

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3.3. Resettlement issues

The project is not a subject to resettlement issues because it involves construction of wastewater treatment plant on a public land in ownership of the Republic of Macedonia and construction of the sewage network along the local streets in the settlement of Jurumleri. Construction of the sewage network will allow development of new small businesses, and will open an opportunity for establishment of agricultural factory or purchase centres. Constructed sewage network will bring investments, especially from the migrated population in the foreign countries. The increased number of businesses will open new jobs for the local population and contribute to the employment of young people. An improved social service, such as construction of sewage network in the municipality, additionally is expected to increase the interest to stay of the youths and to raise their children in the municipality of Gazi Baba. Hence, additional and even bigger increase of population is expected for the following years.

3.4. Conclusion on the project potential success and recommendation

The main drivers of the change that will bring about prosperity are the municipal authorities (Mayor and councillors) who have initiated and made the decision for seeking funding from the World Bank funded MSIP 2. Since the problem with no sewage network in the settlement of Jurumleri exists for many years, it has been publicly declared and discussed on many occasions. A Public hearing was also held between the local residents and municipality representatives including the Major and councillors in order to discuss the need for taking loan to invest in the sewage network and wastewater treatment plant. Direct beneficiaries of the project are the residents who live in the settlement of Jurumleri and will be connected to the sewage network subject to this appraisal. Presently, sewer water from the septic tanks is a big risk for contamination of the nearest river “Vardar”, underground water and agricultural soil and thus increase the risk on polluting gardening products and endangering people’s health.

High socials risks for carrying out this project cannot be perceived. There are no issues connected with ethnic distribution of population or inter-local community rivalry: the action will allow benefits for all nationalities, it will cover the majority of residents in the municipality and there are no land ownership concerns that need to be resolved.

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4. ENVIRONMENTAL ANALYSIS

The project for construction of sewage network and waste water treatment plant for the settlement Jurumleri covers several activities which includes:

• Construction of vacuum primary and secondary sewage for catchment area - zone 2 (4 branches);

• Procurement and installation of a monitoring system for vacuum network for zone 2;

• Finalizing the vacuum pump station with the purchase and installation of equipment;

• Construction of the buildings part, procurement and installation of equipment for a waste water treatment plant type Moving Bed Bio Reactor MBR for 1500 P.E.

Currently, sewage water from households goes into septic tanks, which are traditionally constructed and allow leakage / drainage of the sewage water in the ground. In addition, upon emptying of the septic tanks, usually, the sewage water is illegally discharged directly into the nearby river Vardar. In order to improve this current state and practise with main aim to ensure long-term improvement and environmental protection, which will meet the needs of the inhabitants in the municipality of Gazi Baba and will protect the surface and groundwater from pollution according the national regulation for water quality, the Municipality of Gazi Baba is planning the construction of above mentioned elements for sewage network with WWTP for the settlement Jurumleri.

The treated waste water is planned to pass through a closed channel with length of 150m to the recipient river Vardar South-west from the WWTP (as shown on Picture 10). The locations of all planned construction elements for the sewage network with main collector and WWTP for the settlement Jurumleri are presented in Error! Reference source not found..

Main project activities with environmental impact in construction phase The main project activities that may cause adverse environmental impact during implementation of project activities are presented in Table 12. The expected environmental impact as result of the realization of the project activities are given in more details in the next chapter.

Table 122: Main project activities

Name of the project Planned project activities Duration

Construction of sewage network and WWTP in settlement Jurumleri

- Clearing, marking out and securing the route of the construction sites (the entire network and location for WWTP);

- Removal of existing asphalt and excavation of soil, vegetation and humus;

- Making ditches for placement of all needed sewage water pipelines, including the treated water disposal pipe;

- Construction of the vacuum primary and secondary sewage; - Installation of a monitoring system for vacuum network for zone 2

and equipment for vacuum pump station - Construction of all carrier cabins for the WWTP - Construction of concrete reservoirs and elements of the WWTP; - Installation of equipment for the waste water treatment plant type

Moving Bed Bio Reactor MBR for 1500 P.E. - Installation of electricity access, water supply access and road

access to the WWTP location and cabins; - Construction and coverage of the treated water disposal pipe,

connection to the recipient river; - Placement of sewage water pipelines and making connections; - Covering and paving the streets with asphalt where constructions

have been done;

• Short term within the vicinity of settlement Jurumlery (Municipality of Gazi baba)

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- Clearing the construction sites after the implementation of the project activities.

Main environmental impacts and sensitive receptors The expected environmental impact will be local (in the vicinity of the settlement Jurumleri in Municipality of Gazi Baba), short term and will not have adverse significant 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.

Before the start of the construction work 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. Also the Contractor should prepare, receive approval and imply OH&S Plan and Traffic Management Plan along the entire network. The Information Note/Press is important for the local inhabitants; it should be prepared and announced via local TV, radio or municipal web page www.gazibaba.gov.mk prior the start of project activities in order to inform the general public for the duration and type of the project activities. Information Note shall be also posted in few key public areas of the settlement.

During the implementation of construction activities, the operation of construction machinery and equipment can cause air emissions (gas emissions and dust-suspended particulates). In order to reduce air emission impact, the Contractor should implement mitigation measures given in the Tables 13.1 and 13.2 Mitigation Plans.

The usage of the construction machinery and equipment will generate increased level of noise and vibrations. According to the different level of sensitivity in terms of noise protection, the project location belongs in area with IV degree of noise protection (noise limit values are 60dBA for night and 70dBA for day and evening). This noise level categorization is according to national Law on noise sensitive protection (Official Gazette No. 79/07, 124/10, 47/11, 163/13 and 146/15).

Near the project location passes Vardar River (about 150m South-west from WTTP location), characterized as II class - with low degree of organic load and high level of autopurification (according to the Regulation of classification of water streams, lakes, water accumulations and underground water - Official Gazette No. 18/99). The possible risk of water pollution can occur if Contractor doesn’t respect the requirements of proper waste management (temporary or final disposal of generated waste streams near/ in the river basin).

The main generated waste streams that may occur during the implementation of the project activities are derived from the preparatory activities (asphalt creeping, land digging, vegetation, etc.).The Contractor should respect the requirements of the national legislation Law on Waste and List of Waste codes (Official Gazette of RM No. 100/05) in order to provide proper waste management. The responsible legal entity for transportation and final waste disposal in rural areas in Municipality of Gaba is PE “Gazi Baba 2007”. The final waste disposal will be performed at the municipal landfill as assigned with written Notice by the Municipality Gazi baba.

http://www.gazibaba.gov.mk/

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While the location for the WWTP is the only one suitable parcel belonging to a state ownership, the remaining surrounding area is lowland and mainly used for agricultural purposes. The (1) Elaborate for EIA for construction of sewage network in the settlement Jurumleri was prepared during September 2018, and (2) Elaborate for EIA for construction of WWTP for the settlement Jurumleri, was prepared during April 2017 by company “Eko Kontrol” from Ohrid. Both Elaborates have been submitted to the Ministry of Environment and Physical Planning for approval, as requested by the national legislation for waste water pipe network and treatment for settlements above 2000 P.E.

The proposed mitigation measures presented in the Tables 13 and 14 of Mitigation and Monitoring Plan are developed based on the findings of the above mentioned Elaborates and framework recommendations within the environmental guidelines of the POM for the MSIP 2. Proposed measures should be implemented by the Contractor, while Supervisor has main obligation of monitoring of their implementation.

Main project activities with environmental impact in operation phase

Main environmental impacts during the operational phase may be caused in case of (1) improper maintenance and work of the WWTP and (2) improper management of the sludge.

1. It is of outmost importance that the Council of Municipality Gazi Baba introduces appropriate local legal decision for compliance of the local households that will be connected to the new sewage system and automatically to the WWTP, which will regulate the maintenance of the connections and payment of appropriate tariffs by the households. Tariffs shall be defined in compliance with the national methodology for tariffs for water services, thus ensuring that all costs for full operation and maintenance will be covered through the payment fee of the users.

The PCE “Gazi Baba 20078” must ensure that the 3 employees (including at least one with technical/engineer level of knowledge) at the WWTP receive in-depth training for its daily operations and maintenance control measures. The Contractor shall be responsible to provide this training together with the user-friendly Manual for operational use and maintenance.

2. Municipality of Gazi Baba has drafted contract with its PCE “Gazi Baba 2007” for treatment and use of the sewage sludge which comes out from the treatment process within the WWTP. This contract shall further clarify the amounts of sewage sludge on monthly/annual basis, the exact locations for its drying / stabilisation and the exact monitoring of the quality of the final sludge product (according the Rulebook on the manner and procedure for using the sewage sludge, the maximum values of heavy metal concentrations in the soil in which the sludge is used, the values of the concentrations of heavy metals in the sludge, according to its purpose and the maximum annual quantities of heavy metals that can be imported in the soil, Official Gazette No. 73/2011) as well as its market price and selling.

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Table 13.1 Environmental Mitigation Plan for construction of sewage network in the settlement Jurumleri

Potential impact Impact scale Proposed mitigation measures Responsibility

Project activity: Marking out the location for sewerage network for settlement Jurumleri (Municipality Gazi Baba)

Possible adverse social and health impacts to the citizens and traffic as well as for the workers due to:

• Unsafely start of construction

works

• Injury due to passing near by

the open trench and manholes

• Not compliance with health

and safety at work procedure

• Inappropriate public access

Local

Short term/minor

Application of good practice for marking out the construction site including:

• Ensure the marking out the construction site;

• Forbidden of entrance of unemployed persons within the fence;

• Adequate warning tapes and signage need to be provided;

• Elaborate for OH&S should be prepared, approved and 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 roads should be kept clean

• Contractor

• Supervisor

Project activity: Construction of sewerage network for settlement Jurumleri

Possible impacts on landscape and visual aspects

Local

Short term/minor

• Good construction practices have to be implemented – including fencing and protection of construction site according to national legislation;

• Minimization of the construction area as much as possible (carefully planning and design of the project activity according the Traffic Management Plan for a certain period of time);

• Fully clean-up of the construction site immediately after accomplishment of reconstruction activities section by section;

• Collection of the generated waste on daily basis, selection of waste, transportation and final disposal on appropriate places (according the type of waste – more details under Waste management issue).

• Contractor

• Supervisor

Possible emissions by

transportation vehicles and impact

on air quality due to:

- gases emissions of dust-

suspended particulates

- emissions from the mobile

sources (vehicles and

Local

Short term/minor

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

• 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;

• Conduction of regular maintenance of the vehicles and construction machinery in order to reduce the leakages of motor oils, emissions and dispersion of pollution;

• Contractor

• Supervisor

40


construction machinery) of

CO2, NOx, PAH, SO2

• Vehicle loads likely to emit dust need to be covered;

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

• Restriction of the vehicle speed within the construction location;

• Burning of debris from ground clearance not permitted

Possible noise disturbance as a

result of outdoor equipment usage

and transportation vehicles driving

around the sites

Local

Short term /major

• The level of noise should be not exceeded more that national limited level (according to national legislation and EU requirement);

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

• The workers should be provided with ear protective devices (ear muffs and/or ear plugs)

• Contractor

• Supervisor

Possible adverse environmental

impact and health effects could be

occurred as a result of generation

of the different waste streams

The inappropriate waste

management and not in time

collection and transportation of

waste streams

Local

Short term/major

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

• Classification of waste according the national List of Waste (Official Gazette no.100/05)

• The main waste would be classified under the Waste Chapter 17 “Construction and demolition wastes (including excavated soil)” with the waste code 17 01 – Waste from concrete, bricks, 17 05 04 – Excavated soil, 17 09 04 – Mixed waste from construction site, 17 03 - bituminous mixtures;

• Small amount of solid municipal waste could be found (food, beverages), as well as packaging waste (paper, bottles, glass, etc.)

• Contractor

• Supervisor

• Transportation and final disposal of the inert and communal waste by the Public Utility Enterprise;

• The contract with the company for waste collection and transportation should be signed for collection and transport of waste to the Landfill;

• The construction waste should be promptly removed from the site, should be re-used if it is possible;

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

• Burning of construction waste should be prohibited;

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

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

• Municipality staff

(Communal Inspector/

Environmental Inspector)

Soil pollution Local The possible mitigation measures for minimization of the soil pollution could be:

• Transportation vehicles should be enclosed to avoid potential leakage; • Contractor

• Supervisor

41


The negligible impacts on soil arising from construction activities are expected. The compaction of soil can be expected due to vehicle movement, ground contamination from the spillage of materials such as vehicle fuel, motor oils, asphalt, inert waste, construction waste.

Possible impact on soil and water and cause the erosion of the land as a result of loss of upper soil layer due to erosion as a result of construction activities

Short term /minor • Promptly clean-up spills of transported material on public roads and construction sites;

• Proper positioning of the water drainage system on the construction site

• All roads and asphalt surfaces should be maintained clean in order to prevent runoffs from them into the ground water and other water flows;

• Not to keep fuel, oil or lubricants along the alignment, especially not in the vicinity of draining structures

Table 13.2 Environmental Mitigation Plan for construction of small-scale Waste Water Treatment Plant in the settlement Jurumleri


Project activity: Marking out the location for construction of Waste Water Treatment Plant (WWTP) for settlement Jurumleri (Municipality Gazi Baba)

Possible adverse social and health impacts for all stakeholders in the construction and operational phase of WWTP due to:

• Unsafe start of construction

works

• Not compliance with health

and safety at work procedure

Local/Regional

Long term

term/major

Issues to be considered in plant and process design:

• All feasible alternative project designs should be explored to avoid or at least minimise physical and/or economic displacement;

• All conditions issued by national permitting bodies need to be taken into consideration;

• The environmental, OH&S and community safety measures proposed need to be incorporated in the project design;

• The design of infrastructure objects (WWTP, pumping station, etc…) should be made in most environment friendly way and by implementing BAT for these types of structures;

• Design of the technological process should provide as much use of gravity flow as possible;

• Investor and Project Main Design Developer

• Main Design Supervisor

42



or traffic disturbance

• Not compliance with working

conditions prescribed in

obtained construction/

operational permits - refer to

the technology used

• Equipment & machines and technology selection should also include ‘energy efficiency ‘as selection criterion;

• Selection of mechanical and electrical equipment with low noise level characteristics. The equipment and machinery installed at the proposed WWTP should meet all national noise regulation for max. allowed noise levels at day and night time;

• The sufficiency of dimensioning the plant (main and auxiliary equipment);

• Examination of the sub-processes in term of necessity for their duplication and spare parts. There must be at least one spare pump available for incoming water;

• Primary treatment must be located indoors for easy maintenance and control of the odour nuisance;

• Possibility to by-pass the different units during the maintenance;

• Application of BAT for sludge treatment, transport and deposition at landfill. Spare equipment and double lines, enough storage place and backup plan for transporting the sludge are needed;

• The efficient mixing of chemicals must be ensured and optimization of energy and chemicals consumption need to be considered;

• Planning & organization of construction works should ensure minimization of leakages of polluted wastewater to groundwater.

Project activity: Construction of Waste Water Treatment Plant

Possible impacts on landscape and visual aspects

Local

Long term/minor

• Site Management Plan need to be developed before star up activities;

• Good construction practices have to be implemented – including fencing and protection of construction site according to national legislation;

• Minimization of the construction area as much as possible;

• Fully clean-up of the construction site immediately after accomplishment of activities phase by phase;

• Collection of the generated waste on daily basis, selection of waste, transportation and final disposal on appropriate places (according the type of waste – more details under Waste management issue).

• Contractor

• Supervisor

Possible adverse social and

health impacts to the

community, drivers and workers

due to:

• Lack of ensured safety

measures at the start of

Local

Short term /major

Application of good practice for marking out the construction site including:

• Preparation of the Traffic Management Plan together with the municipal staff;

• Preparation of the Site Management Plan and OH&S Plan;

• Provide the information via local radio/TV station/local newspaper/website about the construction activities - duration of work and possible traffic access;

• Notice boards about the construction activities need to be posted;

• Light over the evenings and nights on the construction site need to be provided;

• Contractor

• Supervisor

• Municipality staff (Communal

Inspector/Environmental

Inspector/Traffic

Engineer/OH&S Inspector)

43


construction works;

• Injury due to passing near by

the construction WWTP site;

• Non-compliance with strict

OH& S standards and work

procedure;


• Safeguard service (24 hours) need to be organized;

• Ensure the appropriate marking out the construction site;

• Forbidden of entrance of unemployed persons within the warning tapes;

• Community and Worker’s OH&S measures should be applied (first aid, protective personal equipment and tools for the workers, appropriate ergonomic machines and tools);

• The portable toilet should be placed on the construction site

Possible emissions by

transportation vehicles and

impact on air quality due to:

- gases emissions of dust-

suspended particulates

- emissions from the

mobile sources (vehicles

and construction

machinery) of CO2, NOx,

PAH, SO2;

Local

Short term/minor

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

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

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

• Regular maintenance of the vehicles and construction machinery is needed and keep records on site;

• Vehicle loads likely to emit dust need to be covered;

• Restriction of the vehicle speed within the construction location;

• Burning of debris from ground clearance not permitted;

• The measures for avoidance and minimization of impact from the corrosive and toxic gases need to be applied (inspection of potential sources, implementation of the emergency response plans if the accident occurs, the hydrogen sulphide could be reduced by local ventilation system, etc.);

• Contractor

• Supervisor



Inspector/Traffic Engineer/

Possible noise disturbance as

a result of outdoor equipment

usage and transportation

vehicles driving around the sites

Local

Short term /major

• The level of noise at the site should be not exceed more that national limited level (according to national legislation and EU requirement);

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

• The workers should be provided with ear protective devices (ear muffs and/or ear plugs);

• If necessary, the modification of the design specifications need to be performed - low noise ventilation fans, pumps and electromotor drives;

• Installation of noise enclosures or buffers;

• Contractor

• Supervisor

44


Possible adverse environmental

impact and health effects could

be occurred as a result of

generation of the different waste

streams

The inappropriate waste

management and not in time

collection and transportation of

waste streams

Local

Short term/major

• Identification of the different waste types at the construction WWTP site (soil, sand, inert waste, bottles, food, parts of pipes, paper, concrete etc…) and waste stream classification according the national List of Waste (Official Gazette no.100/05);

• The main waste would be classified under the Waste Chapter 17 “Construction and demolition wastes (including excavated soil)” with the waste code 17 01 – Waste from concrete, bricks, 17 05 04 – Excavated soil, 17 09 04 – Mixed waste from construction site, 17 03 - bituminous mixtures;

• Other possible hazardous waste (motor oils, vehicle fuels) should be collected separately as well and authorized collector and transporter should be sub-contracted to transport and finally dispose the hazardous waste;

• Transportation and final disposal of the inert and communal waste by the Public Utility Enterprise within the municipality;

• The contract with the company for waste collection and transportation should be signed for collection and transport of waste to the Landfill;

• The construction waste should be promptly removed from the site, should be re-used if it is possible;

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

• Burning of construction waste should be prohibited;

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

• Contractor

• Supervisor


Inspector/

Environmental Inspector)

The negligible impacts on soil arising from construction activities are expected as a result of:

- Vehicle movement, ground contamination from the spillage of materials such as vehicle fuel, motor oils, asphalt, construction waste.

Local

Short term /minor

The possible mitigation measures for minimization of the soil pollution could be:

• Transportation vehicles should be enclosed to avoid potential leakage;

• Promptly clean-up spills of transported material on public roads and construction sites;

• Proper positioning of the water drainage system on the construction site

• All roads and asphalt surfaces should be maintained clean in order to prevent runoffs from them into the ground water and other water flows;

• Not to keep fuel, oil or lubricants along the alignment, especially not in the vicinity of draining structures

• Contractor –Bidder

• Supervisor

Project activity: Operation of Waste Water Treatment Plant

Possible accidents and injuries to the workers and community

Local • Operations Manual for commissioning of the WWTP must set out essential operating and maintenance procedures to ensure optimum environmental management of the activity that will be performed,

• Operator of the WWTP


(Communal

45


due to:

- handling and disposal of grit particles, handling and disposal of sludge and other everyday activities

- Failures into the process

Long term/major • Preparation of Emergency Plan that will address, but not be limited to the following potential events: treatment plant failures, effluent quality noncompliance, operator errors, natural event emergencies and spills or overflow;

• Comprehensive Training (Operation, maintenance and Environmental Management of WWTP) need to be organized for operators. Special attention has to be paid to occupational health and training of workers, to avoid direct contact with wastewater and sludge;

• The WWTP site must be fenced, notice boards need to be posted informing that entrance for unemployed persons is forbidden; Safeguard service must be ensured (24/7);

• Protection personal clothes and equipment need to be provided for all operators and they need to wear them;

• Adequate worker’s facilities must be built to promote appropriate occupational health and safety (OH&S) – toilets, rooms for changing the clothes, resting room for lunch breaks, etc.

• Fresh water must be supplied for sanitary purposes;

• The WWTP need to be maintained by qualified staff or sub-contracted authorised company;

• Monitoring of process performances to be installed & used for adjustments and improvements;

• Preventive and Maintenance Plans for the proper handling and working of the equipment and process units need to be developed and duly implemented;

• Enough spare parts need to be ordered in advance to avoid failures and long out of orders;

• Modern instrumentation and automation need to be utilized to increase the reliability and to decrease risks;

• The measuring devices’ calibration must be ensured and records for calibration need to be kept;

• Energy consumption should be monitored separately in each part of the process.


Inspector)

Pollution of river if incoming waste water is not efficiently treated

Regional

Long term/major

• The quality of the treated water, prior discharging to the recipient, shall comply with the quality prescribed in the obtained permission for discharging into the surface watercourses, issued by the Ministry of the environment and physical planning, regarding the Law on Waters (“Official Gazette of the Republic of Macedonia” No. 87/08, 6 / 09, 161/09, 83/10, 51/11, 44/12, 163/13, 180/14, 146/15), Decree on Water Classification ("Official Gazette of RM" no. 18/99), Decree on categorization of the watercourses, lakes, reservoirs and groundwater ("Official Gazette of RM" no. 18/99),



(Communal


Inspector)

46


Rulebook on detailed conditions for collection and treatment, the manner and terms of design, construction and exploitation systems and purification stations urban wastewater, as well as technical standards, parameters and emission standards and quality norms pre-treatment, wastewater removal and treatment

Improper sludge (generated during the treatment of waste water) and waste management could cause odour nuisance and also pollution of the water, soil etc.)

Regional

Long term/major

• Preparing the Sludge Disposal Management Plan for removal of the sludge and grit particles (monitoring sludge quality, heavy-metals concentrations in sludge; identifying land for disposal taking care on the concentrations of heavy metals in soil where the sludge is planned to be used; restrictions on amounts of metals which may be added annually to the land).

• The frequency for sludge analysis with sampling and analysis methods (soil sampling, sludge sampling and methods for analysis) should also be defined into the Sludge Disposal Management Plan.

• Handling of the sludge has to be in compliance with the national standards, stipulated in the Law on Waters (“Official Gazette of the Republic of Macedonia” No. 87/08, 6 / 09, 161/09, 83/10, 51/11, 44/12, 163/13, 180/14, 146/15) and Rulebook on the manner and procedure for use of the sludge, the maximum values of the concentrations of heavy metals in the soil that is used sludge, values of concentrations of heavy metals in sludge, in accordance with its purpose and the maximum annual quantities of heavy metals that may be entered in the soil ("Official Gazette of RM" No. 73/11)



(Communal


Inspector)

Odour may create some level of nuisance, during operation from ponds and the sludge removal (if WWTP does not function well, the sludge can emit strong odour). Odour from a WWTP is caused by the presence of one or more compounds in sewage (sulphides, mercaptans, disulphate and volatile fatty acids are responsible for the odour).

• Transportation of the sludge has to be done in closed tankers for avoiding of the odor nuisance. Spillages have to be avoided during loading, transportation and unloading of the sludge;

• The control the odour sources and to avoid storing dewatering sludge in the plant;

• To plant greenbelt around the plant;

• Possible hazardous waste from the WWTP laboratory should be collected separately and packaging, labelling and transportation should be organized as for “hazardous waste” by authorized company;

• The measures for avoidance and minimization of impact from the corrosive and toxic gases need to be applied (inspection of potential sources, implementation of the emergency response plans if the accident occurs, the hydrogen sulphide could be reduced by local ventilation system, etc.);



(Communal


Inspector)

47

Table 14.1 Environmental Monitoring Plan for construction of sewage network in the settlement Jurumleri

What

parameter is to be monitored?

Where

is the parameter to be monitored?

How


When

is the parameter to be monitored (frequency of measurement)?

Why


Cost Responsibility

Construction Operations Construction of sewage water network

Operations of the sewage water network

Project activity: Marking out the location for sewerage network for settlement Jurumleri (Municipality Gazi Baba)

The safety protection measures applied for the local residents where the sewerage network will pass

On the construction site along the route

Visual checks At the beginning of the construction work (first day) focused on the preliminary measures

At the beginning of each working day during the project activities

To prevent health and safety risks – mechanical injuries

Contractor

Supervisor

Environmental Inspector /Inspector for communal work at the Municipality

Project activity: Construction of sewerage network for settlement Jurumleri

Exposure of loud noise from vehicles, machines and electric tools

On the construction site and on the transportation route

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

Before the beginning of the work (first day) 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 outside

Contractor

Supervisor

Environmental Inspector /Inspector for communal work at the Municipality

Noise level On the site

Monitoring of the noise levels

dB (А) with appropriate monitoring

On regularly basis during the work, through site visits, 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 perform noise levels measurements sub-contracted by

48

What


Where


How


When


Why


Cost Responsibility



devices

the Contractor

Supervisor

Environmental Inspector to collect the noise level measurements

Safety traffic flow through the district (redirection of the traffic on streets around the construction site)

On the site Visual monitoring

During the traffic jam period (8 - 9.00/16.30-17.30 h)

To ensure the coordinated traffic flow through the district

Environmental Officer at Municipality together with the Traffic Engineer at the Municipality

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

On the 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). Really it is not expected in high quantities (maybe some batteries, waste from motor oils, etc.)

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 level/In order to be in line with the environmental requirements for the hazardous waste management

Authorized Contractor for collection and transportation of hazardous waste (if any occurs) subcontracted by the Contractor

Environmental

49

What


Where


How


When


Why


Cost Responsibility



Not to dispose the hazardous waste on the municipal landfill.

inspector from Municipality

Collection transportation and final disposal of the solid waste

On the site and around the site

Visual monitoring and reviewing the transportation and disposal lists from the sub-contractor

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

Not to leave the waste on the spot 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 – Bidder who need to sign the contract with licensed company for collection, transportation and disposal of the solid waste

Fulfilled Annual Report for collection, transportation and disposal of waste

Local self-government administration

Review of documentation – Identification waste List

After the accomplishment the task of collection, transportation, temporary disposal and final disposal of waste

To improve the waste management on local and national level

To be in compliance with national legal requirements

Mayor of Municipality of Ministry of Environment and Physical Planning

Level of dust – fine particulate matters

At the spot Visual monitoring and measurement devices

On the sunny, dry days only

To avoid and minimize the dust concentration into the air and to minimize the health risks for the workers and residents of the district

Contractor – Bidder and authorized company for dust measurements

50

Table 14.2 Environmental Monitoring Plan for construction of small-scale Waste Water Treatment Plant in the settlement Jurumleri

What


Where


How

is the parameter to be monitored/ type of monitoring equipment?

When

is the parameter to be monitored -frequency of measurement or continuous?

Why

is the parameter to be monitored (optional)?

Cost Responsibility

install operate install operate

Project Phase: Design of the WWTP for settlement Jurumleri

The Main Design of the Project for Construction of WWTP including the implementation of environmental, OH&S and community measures proposed

Through the documentation

During the revision phase

Before issuing all necessary permitting documents for construction of WWTP

To minimize the negative environmental (pollution of surface waters, high adverse impacts to human health, high energy consumption, high noise level, etc.) OH&S and community safety

Municipality and Project Developers

Project Phase: Construction of the WWTP for settlement Jurumleri

Air pollution

- dust

- pollutant substances due to the combustion of fuel from construction machinery and vehicles

At construction/

site/around site

Visual monitoring

Monitoring by adequate monitoring devices

Regularly during work activities (for preparation on site and construction phase) through site visits, once per month, in accordance with established time schedule

To avoid and minimize the dust concentration into the air and to minimize the health risks for the workers and surrounding community

Covered by construction budget

Contractor

Supervisor

Local municipal environmental authorities

51

What


Where


How


When


Why


Cost Responsibility


Collection and disposal of solid wastes

At construction/

site/around site

Visual monitoring and reviewing the transportation and disposal lists from the sub-contractor

Review the documentation- identification of the waste type according to the List of Waste Types (Official Gazette No. 100/05)

Regularly during work activities through site visits, in accordance with established time schedule

In order to identify if the environment requirements are relevantly maintained

Protection of soil, surface and ground water, visual aspect


Contractor

Supervisor

Authorized Contractor for collection and transportation of waste


Leaks/spills/of fuel, lubricant

At construction/

site/around site and through documentation

Visual monitoring, analysis of documentation

Regularly during work activities, in accordance with established time schedule within the relevant Law Regulation

In order to identify if the environment requirements are relevantly maintained


Contractor

Supervisor


The safety protection measures applied on site

On the construction site, around site

Visual monitoring

Review the documentation

Regularly during work activities through site visits, in accordance with established time schedule within the relevant regulation

To prevent health and safety risks

Protection of the environment, worker, passengers and employee of the terminal, and material wealth


Contractor

Supervisor


Project Phase: Operation / Maintenance

52

What


Where


How


When


Why


Cost Responsibility


Occupational Health and Safety and Community safety

On site, around site Visual monitoring Review the documentation and permits issued by the relevant body

Continuously during operational phase

To prevent health and safety risks.

Protection of the environment, workers and employee as well as to the surrounding community

Covered by operational costs

Operator

Ministry of labour and social aspects State Labour Inspectorate


Quality of waste water and treated wastewater

(BOD5, COD, TSS, nitrogen, phosphorus, and other parameters prescribed in the permits for discharging issued by the MOEPP)

Before inlet in the WWWP and before discharging in the channel for collection of the atmospheric water

Usual sampling and Laboratory for physical-chemical analysis in accordance monitoring manuals and introduced methodologies.

Twice a year (spring, winter) To assess the operation of the device


Operator

Ministry of Environment and Physical Planning

Municipal Environmental Inspection.

53

What


Where


How


When


Why


Cost Responsibility


Water quality – recipient surface waters

(BOD5, COD, TSS, nitrogen, phosphorus, and other parameters proposed in the permits for discharging issued by the MOEPP)

River - recipient, before the place of discharging the treated waste water, on the place of discharging, after the place of discharging (3 sampling points).

Laboratory equipment for physical-chemical analysis in accordance monitoring manuals and introduced methodologies in the permits issued by the MOEPP.

12 samples taken at regular intervals during the first year, 4 samples in the coming years, if it is shown that the water complies with the provisions of the Rulebook on the methodology, reference methods of measurement, method and waste water monitoring parameters, including the sludge from the treatment of urban waste water ("Official Gazette of RM" no.108/11)

Protection of water quality in the river, protection of the downstream sensitive areas and health of people

Operator/

Administration Ministry of Environment and Physical Planning,

Hydro-meteorological Administration

Municipal Environmental Inspection


54

What


Where


How


When


Why


Cost Responsibility


Sludge

For the usage of the sludge for agricultural land the following parameters should be analyzed (according the national legislation and EU Directive on the protection of the environment, and in particular of the soil, when sewage sludge is used in agriculture 86/278/EEC):

Heavy metals: Pb, Cd, Cr, CU, Ni, Zn, Hg

Dry matter, organic matter, pH value; nitrogen and phosphorus

On site Visual inspection

Review the documentation for sludge management (according the Sludge Disposal Management Plan)

Laboratory testing of the sludge quality

Sludge Disposal Management Plan need to be developed prior to the commissioning of the WWTP plant to detail for removal of the sludge.

The monitoring of the sludge should be in compliance with the national regulation

Protection of soil, surface and ground water and health of people


Operator



Accredited Laboratories

Odour On site, around site Sense of smell, At the beginning of work, everyday

Minimization of nuisance of the local people

Operator/



55

5. TECHNICAL DESCRIPTION

The main project for construction of a vacuum sewage network with wastewater treatment plant in the settlement of Jurumleri, the municipality of Gazi Baba, contains a technical solution for the complete construction of a sewage network, a vacuum station with a monitoring system, a pumping station connected with the equalizing reservoirs, and accompanying buildings (steel roof for protection of the treatment plant and command post, access road, platform for operation). In accordance with the Main Project for changes during the construction of the vacuum sewage system for the Jurumleri, the catchment area is divided into 4 parts (Picture 4 in chapter 2.3.1. – Current situation) that gravitate towards a vacuum station. The municipality is implementing this project in stages, depending on the financial possibilities. The financial resources required by the MSIP2 project will be used for the procurement of equipment and construction of:

1. Vacuum primary and secondary sewage for catchment area - zone 2 - branch 4. 2. Procurement and installation of monitoring system for vacuum network for Zone 2. 3. Finalizing the vacuum station with the purchase and installation of equipment. 4. Construction of a pumping station. 5. Construction of accompanying facilities at a treatment plant, supply and installation of equipment for a

modular reactor using Moving Bed Bio Reactor - MBBR technology for a total of 1500 population equivalent (P.E.).

The sewage network in the settlement of Jurumleri is designed as a separation. The construction of the sewage for drainage of wastewater from households and public facilities foresees a vacuum sewage system. The technical documentation is adapted to the configuration of the terrain, spatial limitation and available data for existing infrastructure objects. The technical documentation is in accordance with the laws and regulations in the area of design, urban planning and applicable standards for the construction of this type of facilities. Main project for changes in the construction of vacuum sewage for the village of Jurumleri (sewage network, vacuum station and monitoring and treatment plant), the Municipality of Gazi Baba, with technical No. 029/2018-K was made by "Doming JTD Jovan Kostadinov" Company for construction, trade and engineering import - export from Radovis. The revision of the technical documentation was made by the Institute for Materials Research and Development of New Technologies "Skopje" from Skopje in August 2018. An Environmental elaborate for the local sewage system and the Elaborate for the protection of the environment for the treatment plant in the settlement of Jurumleri were prepared. The elaborates are made by Eko Control Doo Ohrid registered with tech. no. EZS-013/ September. A Decision on long-term domestic borrowing of the municipality was adopted within the framework of the MSIP2 project registered with archival No. 09-788/8 dated 28.02.2018.

During the dimensioning of the sewerage network, the vacuum station and monitoring as well as the treatment plant, previously prepared documents were used:

- Project program from the client (Municipality of Gazi Baba); - Main project for vacuum sewage for settlement of Jurumleri with the. No. 022/2015-K from May 2015; - Data obtained during field visit; - Applicable legal and technical regulations

Appropriate data for the dimensioning of the sewage system have been adopted:

- Number of inhabitants in the settlement of Jurumleri, after the 2002 census N0 = 2,983 inhabitants; - The number of inhabitants in the settlement has a tendency to stagnate in the last 20 years, but the

inhabited place has great potential for development in agriculture, with the possibility of developing primary and secondary processing of agricultural products and development of the food industry, and therefore in the dimensioning of the sewage system an increased coefficient of population growth was used - k0 = 0.6%.

- The project period was adopted n=13+30years=43years (from 2002 - 2015 to 2045). - Total number of inhabitants for which the calculation is performed Nk=N0x(1+k0/100)n=

2,983x(1+0.6/100)43=3,858inhabitants

56

- The water supply norm is adopted Q0 = 188l/day/resident. This value is in accordance with the regulations of the Republic of Macedonia according to which is 400l / day / inhabitant for the cities and 300l/day/resident for the villages, but taking into consideration the climate changes and the world trends for reducing the consumption of water, in order to meet the needs of water to the population can accept the adopted water supply norm.

- Drainage norm for daily water consumption per population equivalent is Qk = 150 l/day/resident - The vacuum sewage network is dimensioned for a settlement of 3.858 population equivalent (P.E.) in

2043.

1. Vacuum sewage for catchment area - zone 2 - branch 4 is with length of 2,558.90m. The catchment area - zone 2 - branch 4 is composed of a primary pipeline branch 21 that starts from the chainage km 0 + 000 to km 0 + 979,37 to which the 9 secondary branches are joined:

1. К22 starts from the chainage km 0+000 to km 0+495,72, 2. К23 starts from the chainage km 0+000 to km 0+148,22, 3. К24 starts from the chainage km 0+000 to km 0+114,38, 4. К25 starts from the chainage km 0+000 to km 0+265,45, 5. К26 starts from the chainage km 0+000 to km 0+168,26, 6. К27 starts from the chainage km 0+000 to km 0+165,92, 7. К28 starts from the chainage km 0+000 to km 0+055,99, 8. К29 starts from the chainage km 0+000 to km 0+028,38 and 9. К30 starts from the chainage km 0+000 to km 0+137,21.

This pipeline passes along the local road, while the branch 22 moves along the railway line in this settlement. The sewage network will be built along the existing roads at a distance of 0.5-1.0m, with a mean depth of 1.40m. For the construction of branch 4 in catchment area Zone 2 there is no need for expropriation of private property. It is possible to cross the sewer pipes with already built infrastructure objects such as phone and electricity power lines. Prior to the start of the construction, the contractor will ensure the position of the installations from the respective institutions.

Main parts of vacuum sewage:

a) gravity connection (from the house connection to the collecting manhole), b) collector manhole with vacuum valve, c) vacuum pipeline, d) vacuum station and e) pressure line.

Picture 12 shows the location of the sewage network of the catchment area 2, branch 4 and the location of the vacuum station.

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Picture 12. Route of sewage catchment area 2 - branch 4, location of vacuum station*

Source: Main project for changes in the construction of vacuum sewage for the village Jurumleri (graphic part), Municipality of Gazi Baba, with technical No. 029/2018-K

*Note: The route of the sewer that is subject to construction is marked in red; the location of the vacuum station is marked with a white arrow

a) Gravity connection (from the house connection to the collecting manhole) - the connection of the households will be done gravitatively with a tertiary sewer line. For each household, it is envisaged to place a revision manhole that will be made by the user on the future network. The slope of the pipe between the main drainage from the building to the connection of the manhole is from 1% -6%. The material of the pipes is PVC sewage material with diameter DN 110mm and DN 160mm.

b) Gathering manholes for the wastewater from the second catchment area, branch 4 will be gravityally placed in total 41 and there will be installed vacuum pressure valves. Vacuum valves should be in accordance with the tests described in EN16932-3: 2018, European standard for vacuum sewage systems outside buildings. Vacuum valves will operate under vacuum pressure without the use of electrical energy, batteries or mechanical means. The production of these valves is made of polypropylene with glass reinforcement (glass - plastic). Vacuum valves will operate with a vacuum between -0.25bar and -0.8bar. On average, 4 households will join a gathering manhole. Along the route, there are a total of 41 gathering manholes, made of a cast waterproof concrete structure. The manholes have a retention chamber of 40l below the middle platform. They have a circular shape with a diameter of 1000 mm in a moist drainage pit. In the upper part of the manhole of the middle platform there will be placed a vacuum valves with sensors for the level of wastewater. The manholes are covered with cast iron round caps of the class of load "D 400" according to DIN EN 124 / DIN 1229. The manholes must be tested according to EN 1917 standard. The vacuum sewage system in each last gathering manhole will have a vacuum of 2.5 m.V.s. The drop in vacuum in the vacuum network nowhere will be below the minimum allowable -2.5 bar, with the level of vacuum pumps of -6 bar. When the capacity of the household wastewater reaches a certain level through a vacuum valve in the collecting manhole, a pressure difference (vacuum and atmospheric pressure) will be created, which will push the wastewater from the gathering manhole in the vacuum sewage pipeline. At 60cm above the ground will be mounted a carrier for an exhausting pipeline, consisting of a concrete foundation with V = 0.02m3 height 0.4m joined by metal galvanized elements with diameter 100mm and height 60cm. The installation of the HDPE 4bar exhausting pipe for 41 pieces of constructed pipeline will be placed between the vacuum valves with slope toward the gathering vacuum manholes. For gathering manholes, 41 sensor suction

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pipes and other accompanying elements will be procured according to the calculation - given in the project documentation.

c) Vacuum Pipeline - consists of pipes, fittings, seals and sealing material which must comply with standard EN 1293, "General requirements for components and drainage pipes for sewage lines and channels used under pneumatic pressure". The construction of the vacuum pipeline will take place in the zone along the regional existing roads of 0.5-1.0m. The sewage pipes for the vacuum sewage will be made of HDPE-RC material, with a working pressure of 10 bars. Minimum slope of pipes is adopted 2 ‰. The slope of sewer pipes may be higher. In order to overcome the larger trenching or counter slope of the level line on the terrain, an "elevator" will be constructed - an element of vacuum sewage that provides the forced transport of wastewater into the pipeline. Table 13 shows the length and type of pipes that will be installed in the vacuum pipeline.

Table 13. Pipes for vacuum pipeline for settlement of Jurumleri Settlement of Jurumleri catchment area 2, branch 4 vacuum sewage

Sewer pipes with at least SDR17 for sewage in accordance with DIN8074 / 88075, DIN EN13244 made of PE 100-PC with highest resistance

Diameter of pipes (mm)

DN90mm DN110mm DN125mm DN160mm

Length (m) L=50.00m L=1,429.76m L=669.01m L=460.13m

Source: Main project for changes in the construction of vacuum sewage for the village Jurumleri (graphic part), Municipality of Gazi Baba, with technical No. 029/2018-K

For placement of the pipeline, it is necessary to perform the cutting of the asphalt on the existing streets in the length of 1,330.00m.

Upon completion of the construction part of the installation of all elements of the pipeline, it will be tested in accordance with EN16932-3: 2018.

2. Monitoring for Zone 2 of the vacuum pipeline - The status of wastewater in the vacuum sewage system will be monitored automatically through monitoring equipment: signal monitoring cable LBP 00 1.5IVS 2 SCR BS 5308 Part 1, Type 2 with length L = 4500m for the pipeline, IP68 certified switch and protected from overvoltage, reverse signal generator, submersion signal transmitter, three-input signal splitters.

3. Vacuum station - is built on cadastral parcel CP 687 with possession certificate1512 CM Jurumleri which is owned by the Republic of Macedonia and it is given with long-term lease of the use of the municipality of Jurumleri. Equipment for functioning of the vacuum station is:

a. The supply of wastewater into the vacuum station is planned to be carried out through 4 branches on a pipeline with a diameter of DN 160 mm. On the supply pipeline, there are vacuum gauges with a three-way valve. Characteristic of the vacuum system from a hydraulic aspect is the transport of a two-phase fluid - wastewater and air that enters the system when opening the vacuum valves.

b. Vacuum collection tank - Through the vacuum pipeline, the wastewater will be taken into a 18m3. closed vacuum collection tank which is located in the existing vacuum station. This vacuum collection tank is already purchased and placed in the vacuum station.

c. Vacuum pumps - The transport of wastewater into the sewage system is carried out under vacuum between the vacuum gathering manholes and the vacuum station. The vacuum energy is provided by vacuum pumps. The vacuum station should be equipped with 3 vacuum pumps with power R=15kW/pump, capacity Q=530m3/hour, pressure p=300-750mbar. If the water level in the vacuum collection tank rises above the present value, then the detector stops and deactivates the vacuum pumps to prevent the supply of wastewater.

d. Pressure pumps - The level regulator monitors the water level in the vacuum collection tank and it puts into operation 2 small pressure pumps with Q=16l/sec and with power P=4kW/pump and H=14m.

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e. Transport of wastewater – The pressure pipeline inside the vacuum building is made of PVC pipes. An electromagnetic inductive flowmeter is located on the pressure pipeline. The wastewater transport from the vacuum station has already been made using a HDPE tube with a diameter of DN 160 mm.

f. Vacuum connection valve – serves to evacuate the generated wastewater inside the vacuum station. The collected wastewater from the gathering manhole is transferred to the vacuum collecting tank.

g. Internal water system – connects to the water supply system. A predetermined connection is made with HDPE pipes with RE100, DN63mm and PN10. A water meter manhole was built in front of the building. The internal pipeline serves to supply technological water to an additional reservoir with V=0.25m3 and one pressure point. The internal water supply is made of polypropylene pipes PP with DN20mm and DN32mm.

h. Internal drainage system collects the used technological water from a vacuum pump, condensed water, water from safety spills, water from biofilter, used water from a washstand. The pipes are made of PP and PVC material.

The vacuum station includes a biological filter that has the function to prevent unpleasant odors that may occur on the exhaust side of the vacuum pumps.

In the vacuum station, there will be a command-line distribution ward with automation, PLC control system and PLC and HMI application software for monitoring and managing the operation of the vacuum station.

Equipment for monitoring the operation of each vacuum valve will also be provided for the monitoring of the vacuum station and give a full overview of the operation of the vacuum station. The system will send the information to a central monitoring station and will have the possibility to store all the information for future use.

- Pressure line (pressure pipeline) - collector an object with length L = 172.41m is already built. This collector discharges wastewater from the vacuum collection tank to the pumping station which is an integral part of the treatment plant.

4. Pumping station - The wastewater from the pressure pipeline - the collector through the pumping station is taken to the equalization tank. 6 wells with a diameter of Ø813mm and a depth of 10m will be performed at this pumping station. In each well, six submersible pumps will be installed, each with 2 pumps for each tank (one active and one active reserve). Submersible pumps are with features: capacity Q=20-50l/sec, Hmin=12m, use of 2 generators, working and power reserve each with a power of 170-200kW. Each pump has a separate pressure pipeline to the first chamber of the equalization tank. The pump station will have the possibility for manual and automatic operation. The pumping station will be protected with an steel structure of 8m2. Protection of the construction pit will be performed with a continuous bar construction with a diameter of the bars Ø800mm and a depth of 10m. For the construction of concrete bars and upper beam will be purchased and built 223.80m3 concrete class MB30 and 13,755.19kg reinforcement with Ø16mm and Ø22mm.

5. Wastewater Treatment Plant (WWTP) - will be intended for the treatment of communal water without loading of industrial waters and will meet the standards laid down in the EU Urban Wastewater Directive (91/271/ EEC, 98/15/EC). During the preparation of the technical documentation, the criterion of purified water has been adopted with the quality prescribed by the Rulebook on wastewater emission from the purification stations published in the Official Gazette of the Republic of Macedonia No. 73 dated 31st May 2011. The required standards for the discharge of purified wastewater (Official Gazette of the Republic of Macedonia No. 73/2011) should fulfil the following conditions:

i. Biochemical oxygen demand (BOD5 at 200С)......... <25 mg О2/l ii. Chemical demand for oxygen (COD)................................ 125 mg О2/l iii. Total suspended solids..................................... <35 mg/l

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The water pollution of Vardar river, in which the wastewater is discharged, in the section from the part of the outlet of the wastewater channel from the city sewer of the city Skopje to the inflow of the Pchinja river, is classified in the third class of watercourses, in accordance with the Decree on categorization of waters in the Republic of Macedonia (Official Gazette of the Republic of Macedonia 18/1999). Therefore, the purified wastewater from the wastewater treatment plant should have the following quality of limit values and concentrations for the surface watercourse of class III5:

i. Biochemical oxygen demand (BOD5 at 200С in range from 4.01 to 7.00 mg О2/l ii. Chemical demand for oxygen (COD) in range from 5.01 to 10.00 mg О2/l and iii. Total suspended solids from 30 to 60 mg/l.

The location of the WWTP was given with the Infrastructure Project in the Jurumleri settlement for a facility - Vacuum sewage, sewage from a pump to a treatment plant, together with a wastewater treatment plant, CM Jurumleri, the Municipality of Gazi Baba, with tech. no. 0801/339 /18, made by DTU "Bild Urban" - Skopje. The WWTP is located about ten kilometres away from the centre of the Gazi Baba municipality on the plot CP 914/1, in the Cadastral Municipality (CM) Jurumleri. This plot has an area of 1,055.69m2.

The wastewater treatment plant will be carried out in stages depending on the financial possibilities of the municipality and the population growth. Municipal wastewater will be purified by setting up a container type of 3 treatment units using Moving Bed Bio Reactor-MBBR technology with a capacity of 600m3/day. Out of the 3 treatment units, 2 units are for 1500P.E. (population equivalent) and one unit for 1000P.E. The wastewater treatment plant consists of one reinforced concrete pump station, three reinforced concrete wastewater collection tanks and three bioreactors with mobile bearing - MBBR (Moving Bed Bio Reactor). Picture 13 shows a scheme of a treatment plant for biological treatment of communal wastewaters.

Picture 13. Scheme of a treatment plant

Source: Main project for changes in the construction of vacuum sewage for the village Jurumleri, Municipality of Gazi Baba, book 4: Wastewater treatment plant, with technical No. 029/2018-K

5 Decree on categorization of waters in the Republic of Macedonia (Official Gazette of the Republic of Macedonia 18/1999)

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An elaborate for geomechanical investigations was prepared in the procedure for preparation of project documentation for the treatment plant. The terrain is healthy, stable, with no visible signs of existing landslides or landslides that could possibly occur. Geodetic bases with tachymetric recording were made, which are complemented by computer processing to the necessary level for preparation of Main project. The structure, size and proposed technical solution of the treatment plant is based on the applicable regulations, regulations and standards that apply to this type of facilities.

Picture 14. Connection between pumping station, equalization tank, MBBR reactor module and drainage of

purified water Source: Main project for changes in the construction of vacuum sewage for the village Jurumleri, Municipality of Gazi Baba,

book 4: Wastewater treatment plant, with technical No. 029/2018-K

The treatment plant covers the construction and installation of:

1. Equalization tank with volume V=3x50m3, made of reinforced concrete. The equalization tank serves to level the inflow of water in the treatment plant and level the biological waste from the wastewater.

2. Central purification facility with included:

a. Wastewater supply submersive pumps installation of two inox pumps with features Q=3.50l/sec, h=5.50m. These pumps are positioned in the 1. Equalization tank and continuously supply the process of wastewater treatment in equal composition.

b. Fine automatic grid with 3mm porosity - this grid is placed before the entrance of the MBBR reactor and removes the large impurities in the wastewater.

c. Biological reactors MBBR for 1500 P.E. with a capacity of 225m3/day for high and medium loads, which include a system for oxygenation. The bio reactor contains a fill which is inhabited by active biomass, and the reactor itself constructively adapts the conditions of the purification process. The bioreactor performs biological treatment of the communal wastewater, through active mil-bacteria. By adding oxygen to the water through the aeration system, the water is enriched with oxygen that allows the living of bacteria.

d. Dosing flocculants (a substance that improves particle collection and is used in the process of treating wastewater) for separating sludge from purified water.

e. Lamella clarifier - provides removal of excess sludge from purified water. The mile is transported by submersible sludge pump.

f. Microfiltration system of purified water with a capacity of Q=225m3/day with an integrated chlorine dosing system

g. Densification pool and additional stabilization of sludge - sludge densification is performed in a cone bottom with a volume of 10m3.

h. Biogas treatment system - is a combined system consisting of 3 modules connected to each reactor specifically for the control of odors by treating the air through a chemical and biological procedure with a capacity of 510 -850 m3 / hour.

i. Automation is made with PLC with touch screen and special program for handling the facility, monitoring and control of the pressure and flow.

3. Integrated machine room - in this room will be placed two blowers and a pump to remove a sludge from the station. The machine room will be audibly insulated and ventilated/

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The wastewater treatment system must ensure that wastewater treatment is more than 90%. The system that will be used for wastewater treatment needs to be quickly started up and to have a possibility to be quickly and easily mounted. From the MSIP 2 project, the funds have been requested for the wastewater treatment plant for construction of a pumping station with an equalization tank for one modular reactor, which includes the following activities: geodetic marking and stamping of the object, earth works, concrete and reinforcement works for preparation of the reservoir, the substrate on which installation of modular reactor will be mounted, locksmith and assembly works, masonry and facade works, plumbing activities, as well as other works involving the preparation of a protective fence, testing a tank before putting into operation, etc..

1. Construction of underground installations for the first MBBR modular reactor; 2. Construction of a floor plate for the first MBBR modular reactor; 3. Construction of a digester for the first MBBR modular reactor; 4. Installation of the first MBBR modular reactor and its connection to the underground installation; 5. Construction of a wastewater microfiltration system; 6. Construction of a mineral filter system for additional tertiary filtration and 7. Connection of the modular reactor with an overhead pipeline network.

Upon completion of the part of the construction activities envisaged by the project6 and included in the preliminary calculation at this stage, the following elements of a mobile bioreactor - MBBR (Moving Bed Bio Reactor) from the treatment plant will be procured and installed:

i. Procurement, transport and installation of the MBBR reactor for 1500P.E. with a capacity of 225m3/day, ii. Procurement, transport and installation of a sludge storage unit with Q=10m3, iii. Supply and installation of a combined emission control system for odors with Q=150m3/hour, iv. Procurement, transport and installation of a container microfiltration system for purified water with a

capacity of Q=225m3/day, v. Procurement, transport and installation of a filter station with capacity of Q=225m3/day for additional

tertiary treatment of water.

The follow-up activities for putting into operation the modular reactor using MBBR (Moving Bed Bio Reactor) technology are:

a. Construction of access road and work platform to the facility b. Electricity c. Installation works d. Locksmith's works

5.1. Alternative solutions

In order to provide the most appropriate technical solution, several alternative approaches have been considered in detail. One of the solutions regarding the construction of a sewage network, is that no sewage from any settlement will be built to the wastewater treatment plant located near the river. The wastewater in this case would be taken by tank from septic tanks and it will be purified into a newly built wastewater treatment plant. The condition in this case is that the septic tanks by the population (users) are prepared in accordance with the best world practices for wastewater management. But this solution has been ruled out as inappropriate because there are not enough information and knowledge about the way of wastewater management in the local population and the possibility of continuing the current practice of discharging wastewater into open channels and nearby rivers.

The second solution was implemented in practice so that the construction of the sewage network in the settlement of Jurumleri was envisaged as a gravity canals with the use of several pumping stations and one main pumping station within the wastewater treatment plant. During the past years, several branches with large depths, 5-6m, were built in the presence of high level of underground water and are not operational because of the high costs for digging and trenching of the canals. Therefore, this solution is rejected.

6 Main project for changes in the construction of fecal vacuum sewerage for the settlement of Jurumleri (sewage network, vacuum station and monitoring and treatment plant), Municipality of Gazi Baba, with technical No. 029/2018-K

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An alternative option has been accepted by building a network of vacuum sewer and constructing a treatment plant in phases, depending on the financial power of the municipality and the increase in the population. The selection of the type of purification units to be installed is made because of the knowledge in the municipality and the designer about the benefits that will be achieved using the MBBR modular bioreactor for wastewater treatment. The construction of the project will allow gradual development in the Municipality of Gazi Baba and proper wastewater management, and thus a great contribution of the municipality to creating a clean environment. This is the main reason why the engineers in the municipality and the project team of the project consider that there is no other alternative solution for the construction of the sewage and purification station in the area. The project has been developed in accordance with the existing standards, norms and regulations.

5.2. Conclusion and recommendations

The project is in line with the existing positive regulations and standards in the country. Geodetic situations in size R 1: 1000 for the Municipality of Gazi Baba were used in the preparation of the documentation, the recognition of the terrain and the determination of the spatial limitations of the site.

The technical solution is in accordance with the positive regulations, that is, all applicable laws, by-laws and construction and urban planning standards in the field of designing infrastructure line systems, for the development of vacuum sewers and construction of wastewater treatment plants. It is of particular importance that the Municipality of Gazi Baba proposed the construction of this infrastructure line system that drains the wastewater from the biggest settlement in the municipality to the wastewater treatment plant, whereby clean water is discharged into the river Vardar as its highest priority based on public hearings and various requests of citizens. The remaining benefits in the implementation of the project are elaborated in the following chapters of the document.

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6. FINANCIAL ANALYSIS

The purpose of this chapter is to confirm that an adequate financing exists to cover expenses during the investment phase of the project, and ensure that the funds will be available as needed during the operational phase of the project to pay for current operating and maintenance costs and debt repayment.

6.1. Project costs

The estimated investment costs amount to Denar 71,445,975 (Euro 1,161,723) including VAT. The basic project design presents division of the costs into the following categories: construction of the sewage primary and secondary network in Zone 2, installation of vacuum station and pumping station, installation of monitoring of vacuum network and construction of wastewater treatment plant – WWTP. Total amount of all costs distributed by the categories is shown in the following table.

Table 14. Investment costs breakdown by categories (Denar)

Source for financing Amount (Denar)

VAT (Denar) Total Amount

(Denar) Share

Construction of sewerage primary and secondary network Zone 2 / 4

15,283,293 2,750,993 18,034,286 25.24

Vacuum station 13,586,100 2,445,498 16,031,598 22.44

Monitoring of vacuum network 1,733,300 311,994 2,045,294 2.86

Pumping station 7,741,263 1,393,427 9,134,691 12.79

Wastewater treatment plant 22,203,480 3,996,626 26,200,106 36.67

Total (Denar) 60,547,436 10,898,539 71,445,975 100.0

Total (Euro) 984,511 177,212 1,161,723

Source: Projects’ technical documentation

The investment costs breakdown by categories shows that the major part of the investment costs is for the construction of the wastewater treatment plant (36.67%), followed by construction of the sewage network (25.24%).

It should be emphasize that project, subject of the appraisal is a part of the bigger investment to build

- Sewage system i.e. network of pipes, manholes, pumps in 4 zones in settlement of Jurumleri and - WWTP for the collection and treatment of wastewater from settlement of Jurumleri.

Project is developed by Municipality of Gazi Baba and will be implemented in 4 phases. The total estimated investment costs amount to Denar 231,585,019 (3,765,610 Euro) including VAT. The MSIP project will support construction of the sewage system and WWTP in amount of Denar 71,445,975 (Euro 1,161,723) including VAT and the rest of the funds will be provided by municipality. The investment costs breakdown by phase are presented in the table below.

Table 15. Total investment costs breakdown by phases (Denar)

Investment per phases Amount (Denar)

VAT (Denar)

Total Amount (Denar)

Share

Phase 1 Construction of vacuum station, installation of electricity

8,869,445 1,596,500 10,465,945 4.52

Phase 2 Construction of sewerage primary and secondary network Zone 3 (without manholes)

15,283,293 2,750,993 18,034,286 7.79

Phase 3 As specified in Table 20, manholes for zone 3, construction of WWTP

71,410,192 12,853,835 84,264,027 36.39

Phase 4 Construction of sewerage primary and secondary network Zone 1 & 4, WWTP

100,695,561 18,125,201 118,820,762 51.31

Total (Denar) 196,258,491 35,326,528 231,585,019 100.0

Total (Euro) 3,191,195 574,415 3,765,610

Source: Projects’ technical documentation

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6.2. Credit capacity

The municipality credit capacity based on 2017 financial data is Denar 221,649,562 or Euro 3,604,058. Operating revenues of Municipality of Gazi Baba are shown in Table 16.

Table 16. Current operating revenues of Municipality of Gazi Baba for 2018 Account Description Amount

71 Tax revenues 228,405,106

713 Property tax revenues (part of the tax revenues) 113,465,935

72 Non-tax revenues 3,526,083

731120 Revenues from sales of capital goods owned by the municipalities

733 Land sales and non-material investments 12,930,682

741115 Earmarked donations from VAT revenues 24,933,132

Total operating revenues (Denar) 269,795,003

Total operation revenues (Euro) 4,386,911

45 Debt Service (Denar) 48,145,441

Total operating revenues – Debt (Denar) 221,649,562

Total operating revenues – Debt (Euro) 3,604,058

Max debt service (30% of total operating revenues - debt) Denar 66,494,869

Max debt service (30% of total operating revenues - debt) Euro 1,081,217 Source: Municipality of Gazi Baba, Finance department

It is important to note that the property tax rate is 0.5%, while the property tax revenues take up around 49% of the total tax revenues. In addition, the loan for the project amounts to Denar 72,000,000 (Euro 1,170,732) including VAT which is below the municipal borrowing capacity as shown in the Table 16 above. It can be inferred that the municipality has the financial capacity to repay the loan.

6.3. Repayment of the loan

The assumptions for the investment plan are that the loan represents 100% of the investment costs, the interest rate will be of 5% p.a. carried out on the 13 years of the loan and that the payments will be equally split up between the 10 years after the 3 years of grace period. The payments are envisaged to be done semi-annually.

Although the investment costs amount Denar 71,445,975 (Euro 1,161,723) the Decision for borrowing was made on the higher amount i.e. Denar 72,000,000 (Euro 1,170,732) in order to have reserve for some unpredicted costs.

The assumed date of disbursement of the loan is 1.02.2019. The annual payment has been calculated to Denar 7,200,000 (Euro 117,073) (see Table 17 and Table 18 below).

Table 17. Calculation of the annual capital repayment Loan repayment Unit Values

Amount of loan (Denar) Denar 72,000,000

Interest rate % 5

Duration of loan Years 13

Grace Period Years 3

Annual Payment Denar 7,200,000

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

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Table 18. Calculation of the loan repayment Denar 72,000,000 VAT included

Euro 1,170,732

Interest rate 5%

Year Value at the beginning

of the year Interests

Capital repayment

Capital at the end of the year

Grace Period

2019 72,000,000 1,923,288 72,000,000 whole year

2020 72,000,000 3,609,863 72,000,000 whole year

2021 72,000,000 3,600,000 72,000,000 whole year

2022 68,400,000 3,510,740 7,200,000 64,800,000

2023 61,200,000 3,150,740 7,200,000 57,600,000

2024 54,000,000 2,798,137 7,200,000 50,400,000

2025 46,800,000 2,430,740 7,200,000 43,200,000

2026 39,600,000 2,070,740 7,200,000 36,000,000

2027 32,400,000 1,710,740 7,200,000 28,800,000

2028 25,200,000 1,354,192 7,200,000 21,600,000

2029 18,000,000 990,740 7,200,000 14,400,000

2030 10,800,000 630,740 7,200,000 7,200,000

2031 3,600,000 270,740 7,200,000 0


6.4. Financial Analysis of Municipal Capacity to Service the Long-term Debt

The assessment of the financial capacity based on 2015-2017 financial data to service the forthcoming debt and at the same time to secure sound financing of its regular costs including operation and maintenance of the existing and potential municipal infrastructure.is presented below.

Table 19. Revenues and expenditures of the Municipality of Gazi Baba Municipality of Gazi Baba 2015 2016 2017

71 TAX REVENUES 136,338,155 182,591,169 228,405,106

72 NON-TAX REVENUES 5,879,801 5,032,601 3,526,083

TOTAL OWN SOURCE REVENUE (Tax + Non-Tax) 142,217,956 187,623,770 231,931,189

74 TRANSFERS AND DONATIONS 77,498,572 119,426,796 135,686,999

TOTAL OPERATING REVENUE 219,716,528 307,050,566 367,618,188

40 SALARIES AND ALLOWANCES 53,388,993 55,598,939 54,904,861

42 GOODS AND SERVICES 77,597,940 100,426,157 128,909,656

46 SUBSIDIES AND TRANSFERS 12,826,764 16,442,901 19,265,972

47 SOCIAL ALLOWANCES 822,605 822,225 690,224

TOTAL OPERATING EXPENDITURE 144,636,302 173,290,222 203,770,713

OPERATING SURPLUS/DEFICIT 75,080,226 133,760,344 163,847,475

NET OPERATING SURPLUS/DEFICIT 75,080,226 133,760,344 163,847,475

73 CAPITAL REVENUES 59,831,019 54,329,490 12,930,682

48 CAPITAL EXPENDITURES 82,125,906 154,791,715 145,647,497

NET CAPITAL SURPLUS/DEFICIT (capital revenue - capital expenditure)

-22,294,887 -100,462,225 -132,716,815

74 TRANSFERS AND DONATIONS (revenue) 77,498,572 119,426,796 135,685,999

46 SUBSIDIES AND TRANSFERS (expenditure) 12,826,764 16,442,901 19,265,972

NET CAPITAL TRANSFERS AND DONATIONS ( 74 - 46) 64,671,808 102,983,895 116,420,027

NET SURPLUS/DEFICIT (net operating surplus + net capital surplus + net capital transfers and donations)

117,457,147 136,282,014 147,550,687

Source: Municipality of Gazi Baba, Finance department

Based on the analysis of the municipal data for the realized revenues and expenditures over the last three years (2015-2017), the operational costs for the municipality as a whole are financed from the operational revenues

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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. Municipality has long-term debt from the MSIP 1 project. Annual Debt Service amounts Denar 4,814,544.

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 20. Accounts payable/receivable

2015 2016 2017 Average

(2015-2017)

Accounts Payable 125,742,072 120,190,457 105,352,976 117,095,168

Accounts Receivable 0 0 0 0

Net Accounts Payable (Payable - Receivable) 125,742,072 120,190,457 105,352,976 117,095,168

Source: Municipality of Gazi Baba, Finance department

Table 21 shows that after a deduction of the average net operating surplus by short-term liabilities and annual debt repayment obligation the Municipality will come to a net operational surplus in the amount Denar 21,482,659.

Table 21. Current Annual Repayment Capacity of the Municipality of Gazi Baba 2015-2017 average operating surplus 133,763,283

Annual Debt Repayment Obligation 4,814,544

2015-2017 average net accounts payable -117,095,168

Net operating surplus after deducting net accounts payable and debt obligation 21,482,659

Source: Own calculation based on municipality data

If we add on a net operating surplus a new potential long-term loan including principal and interest in a yearly amount of Denar 7,200,000 then the surplus will be decreased but balance will be still positive and equal to Denar 14,482,659. Hence, based on the above information as well as registered growth of the operation surplus in the and decreasing of account payable in the period 2015-17 the general conclusion is that the financial performance of the municipality to regular service its long-term debts can be assessed as “without risk”.

Table 22. MSIP loan repayment capacity of the Municipality of Gazi Baba Annual Repayment Capacity (Operating

Surplus – Net Account Payable) Annual Repayment

Obligation (Potential loan) Balance (Repayment

Capacity – Obligation) Assessment

21,482,659 -7,200,000 14,482,659 “No risk”

Source: Own calculation based on municipality data

6.5. Analysis of the financial feasibility of the project

The model for the financial appraisal has been developed based on the information received from Municipality of Gazi Baba about the primary motivation for construction of the WWTP and sewage system.

6.5.1. Time horizon

The main cost of the project is debt servicing (interests and principal repayment). The appraisal uses a time horizon of 30 years, which is in accord with the type of the project and the estimated useful life of the investment.

6.5.2. 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 households, the loan will be repaid by Municipality of Gazi Baba and the currency risk will be taken by the government.

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6.5.3. Initial investment

The amount of the initial investment outlay has been estimated at Denar 71,445,975 (Euro 1,161,723) including VAT. As it was already mentioned above, the Decision for borrowing was made on the higher amount Denar 72,000,000 (Euro 1,170,732) in order to have reserve for some unpredicted costs. According to the technical documentation provided above the construction of the WWTP takes the major part of the investment followed by construction of the sewage system. In this phase of the project only mechanical treatment of wastewater is planned.

The municipality does not make the initial investment, but it borrows this amount and repays the debt in a 10‐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.

6.5.4. 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.

6.5.5. 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 the market. 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 would most likely charge for this kind of project, i.e. 5%.

6.6. Projection of operating cash flows

According to the technical documentation, this project assumes construction of wastewater treatment plant and sewage system in settlement of Jurumleri in the Gazi Baba municipality. The project is in line with the strategic priorities of the Municipality of Gazi Baba and will contribute to achieving the vision of the municipal administration to improve the environmental situation of the municipality. Relevance of the project results from the fact that most of the population is affected by the negative implications of no sewage network that provide environmental pollution of the surface and ground waters and soil which mostly affect the agricultural population in the municipality.

According to the data received by the municipality and technical documentation, municipal residents from the settlement of Jurumleri do not have adequate sewage network and the sewage waters are individually collected in the septic tanks. Underground water in the region of settlement of Jurumleri are very high. The septic tanks are traditionally built and allow leakage of the sewage water into the ground. At the same time, disposal of sewage water from septic tanks spent time and money of the local population. Moreover, agricultural producers irrigate the agricultural crops with the water from the river Vardar or from the underground. From here, contamination of the underground and ground water is obvious under increased risk.

The newly constructed sewage network will be connected to the newly constructed wastewater treatment plant and the wastewater will be treated before discharge in the nearest river Vardar. WWTP has capacity to accept and purify sewage water from approximately 3,500 residents. According to the last Census of Population and households, there are 2,983 residents and 773 households in the settlement of Jurumleri.

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The main monetary benefit generated by the implementation of the project will come from the additional payments from the households. The project revenues will take the form of invoiced payments for the wastewater treatment and connection to the sewage system and will be collected by the Public Communal Enterprise” Gazi Baba 2007”.

Costs

1) Investment cost

The amount of the investment outlay has been estimated at Denar 72,000,000 (Euro 1,161,723) including VAT and MSIP loan will cover total investment costs. Investment costs according to the bill of quantities amount Denar 71,445,975 and Denar 554,025 is reserve for some unpredicted costs.

2) Operation costs7

Operation costs can be differentiated as personnel costs, maintenance costs, energy costs, chemicals and material costs, disposal costs, discharge duty and external services.

There are many factors affecting operation costs as:

• Size and load of the plant;

• Topography and geographical situation of the site (e.g. affecting pumping energy costs);

• Characteristics of wastewater and the discharge norm;

• Technologies and the selected treatment process;

• Type of sludge treatment and way of disposal;

• Energy supply and energy recycling;

• Degree of automation, measurement and process control;

• Organization of the plant and its management.

Accordingly, operation costs may differ widely. Below the costs associated with a small WWTP up to 2,000 p.e. will be analysed.

a) Personnel costs

Public Communal Enterprise “Gazi Baba 2007” has 13 regular employees who already work in the sector of wastewater. CSE “Gazi baba 2007” also engages 5 persons through Agency for temporary employment and 65 seasonal workers. According the information obtained by CSE and consultant company which developed project, employees has appropriate qualification to provide basic service of the sewage system. They will maintain the sewage system and manholes. Current employees are enough to service sewage system in settlement of Jurumleri. According the information obtained by the Public Communal Enterprise “Gazi Baba 2007” it is not necessary to hire new employee who will serve WWTP.

b) Maintenance costs

According the same manual cited above the costs for maintenance of wastewater treatment plants in developed country usually amount up to 15–25% of the total operation costs. Thus, the organization and strategy of maintenance activities should play an important role for the public communal enterprise.

Maintenance costs include the following: repairs on mechanical, electrical, electronic and civil parts and minor or major replacements like small or large parts for pumps. They include internal personnel costs, material expenses and external services. Quantities of spare parts kept in stock and purchasing deals also influence the total maintenance costs.

7Specification of the costs is taken from EMWATER E-LEARNING COURSE - PROJECT FUNDED BY THE EUROPEAN UNION LESSON C2: OPERATION AND MAINTENANCE / OPERATION COSTS Operation Costs of wastewater Treatment Plants Author: Arnd Wendl and Ahrensburg, Germany (Employee of Hamburg Public Sewage Company, HSE)

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For a first calculation maintenance costs can be derived from the investment costs as follows: - Civil constructions 0.5 – 2% of investment costs per year; - Renovations of civil constructions 2–4% of investment costs per year; - Mechanical equipment 2–6% of investment costs per year; - Electrical and electronic equipment 2–6% of investment costs per year.

The above given cost assumptions are rough and they depend mainly on the chosen maintenance strategy of the communal enterprise. Since the low-tech will be used in the operation of WWTP the following calculation is applied to calculate maintenance costs.

Table 23. Calculation of yearly maintenance costs

Investment

% of investment costs for

calculation yearly

maintenance costs

Initial Investment in the first phase

with VAT

Yearly maintenance

costs

Yearly maintenance

costs Zone 2 - 40%

Construction of vacuum station 0.5 6,339,277 31,696 12,679

Reconstruction / renovation of vacuum station 0.5 6,339,277 31,696 12,679

Project electrical energy 2.0 919,951 18,399 7,360

Vacuum station - equipment 2.0 13,585,100 271,702 108,681

Monitoring of vacuum network 2.0 1,733,300 34,666 13,866

Pump station - equipment 2.0 7,741,263 154,825 61,930

Construction of wastewater treatment plant 0.5 3,207,523 16,038 6,415

Reconstruction / renovation of wastewater treatment plant

0.5 3,207,523 16,038 6,415

Wastewater treatment plant - equipment and electrical energy

2.0 22,203,480 444,070 444,070

Total 65,276,694 1,019,130 674,094

*The same investment in civil construction is base for calculation of costs for renovations

The treatment plant will consist of one reinforced concrete pumping station, three reinforced concrete wastewater collection tanks and three bioreactors with movable bed - MBBR (Moving Bed Bio Reactor). After full construction, the purification plant will use a bioreactor with a movable bed with three modular systems (2x1500 P.E. and 1x1000 P.E.) for high and intermediate loading. Within the treatment plant, an integrated machine room will be built which will be soundproofed and ventilated and in which two blowers and a pump will be located to remove the sludge from the station.

In this phase buildings for vacuum station and WWTP will be constructed, equipment for whole system (vacuum station, pump station) will be procured and installed and equipment for one modular reactor MBBR for 1500 P.E. of the treatment plant will be will be procured and installed.

WWTP (i.e. one of three modular systems) constructed and equipped within this project will serve app 300 households from Zone 2. Therefore, in the yearly maintenance costs, WWTP yearly maintenance costs are calculated with 100%. For all other items listed in the table 22 maintenance costs are calculated with 40% (because 300 households are 40% from the total number of households).

Maintenance is an important activity that should be performed in any type of facility, thus it is necessary for proper functioning and prevents damages whose repairing can be very expensive. Even low-tech options demand maintenance activities. Maintenance should be considered in a regular time basis (semi-annual, annual) into the costing and budget of the project.

Wastewater systems often suffer from a history of inadequate investment in maintenance and repair. This stands for both sewage systems as well as treatment facilities. The lack of proper maintenance results in the deterioration of the installed equipment and the construction itself.

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The purpose of maintenance programs is to maintain design functionality (capacity and integrity) and/or to restore the system components to the original condition and thus functionality. The ability to effectively operate and maintain a wastewater treatment system depends mainly on site conditions, proper design (including selection of appropriate materials and equipment), construction and inspection, testing and acceptance, and system start-up.

Operation staff from the pubic communal enterprises should already be involved at the beginning of the project, including planning, design, construction, acceptance and start-up. When the system is designed with future maintenance considerations in mind, the result is a more effective program in terms of maintenance costs and performance.

Maintenance of wastewater systems can either be preventive/predictive or corrective activity. Effective maintenance programs are based on knowledge of components that make up the system, and the condition of the components where they are located.

Corrective Maintenance (those activities are also called reactive)

Maintenance classified as corrective, including emergency maintenance, is reactive. Only when equipment or system fails maintenance is performed. A corrective maintenance is characterized by the inability to plan and schedule work, the inability to budget adequately, the poor use of resources and a high incidence of equipment and system failures.

Preventive / Predictive Maintenance (those activities are also called proactive)

This type of maintenance will always result in improved system performance except in the case where major chronic problems are result of design and/or construction flaws that cannot be corrected by operation and maintenance activities. Major elements of preventive maintenance programs are planning and scheduling, records management, spare parts management, cost and budget control and training program for the involved personnel.

c) Energy costs

Energy consumption is a major contributor to the operation costs of wastewater systems and therefore is an important parameter for choosing a treatment technology. In sewage collection systems electricity is used for transportation by pumping stations in case of a lack of sufficient hydraulic gradients.

In this project electricity is also used for lightening of vacuum station and WWTP and aeration process.

Taking into account the expected amount of wastewater per capita quantity of approximately 225m3 of wastewater will be daily treated in the WWTP (Source: Technical documentation). Consequently, we calculated energy consumption of 5 pumps in vacuum station, 2 pumps in pump station and energy consumption of WWTP.

Lightening will be provided by 12 light bulbs, 10 indoor and 2 outdoor. Assumption is that 2 outdoor light bulbs (70W and 26W) will operate 11 hour per day and 10 indoor light bulbs (58W) 3 hours per day.

Bearing in mind technical characteristics of the pumps energy consummation of pumps was estimated. In the

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Table 24 expected yearly energy consummation is presented.

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Table 24. Calculation of yearly electricity costs

Electricity costs Number Energy

consumption kWh

Daily energy consummation

kWh

Yearly energy consummation

kWh

Price per kWh / MKD

Yearly costs / MKD

Lightening / light bulbs 12 0.676 2.796 1,020.54 5.56 5,674

Vacuum station / pumps 5 0.053 0.265 96.73 5.56 538

Pumping station 180.000 65,700.00 5.56 365,292

WWTP 5.000 1,825.00 5.56 10,147

Total 188.061 68,642.265 381,651 Source: Own calculation based on technical documentation

d) Disposal costs

The costs of disposal consist of the disposal of sewage sludge, screenings, sand and municipal waste. Due to very low part on the total operation costs for screenings, sand and municipal waste, only sludge disposal is further analysed.

Generally, disposal costs depend to a large degree on:

- Size of the treatment plant; - National regulations for the disposal of organic materials like sewage sludge; - Local conditions and market price conditions respectively.

Sludge originates from the process of treatment of wastewater. Due to the physical chemical processes involved in the treatment, the sludge tends to concentrate heavy metals and poorly biodegradable trace organic compounds as well as potentially pathogenic organisms (viruses, bacteria, etc.) present in wastewaters. Sludge is, however, rich in nutrients such as nitrogen and phosphorous and contains valuable organic matter that is useful when soils are depleted or subject to erosion. In particularly the organic matter and nutrients are the two main elements that make the spreading of this kind of waste on land as a fertilizer or an organic soil improver suitable.

Sludge treatment and disposal operations on a local or regional basis need careful planning to ensure that the strategy undertaken is environmentally acceptable, reliable and cost-effective. Sludge quantities and quality have to be permanently assessed. Disposal options for sludge have to be analysed by an environmental assessment approach, which studies the accessibility of all outlets, environmental legislation and attitudes of collaborating entities and the public at large. Other wastes which may compete with sludge for disposal outlets must be considered.

Project documentation, elaborate for environmental protection as well as draft contract between Municipality and Gazi Baba and CSE “Gazi Baba 2007” do not provide enough information about sludge treatment and disposal. In addition, information where solid waste after mechanical treatment will be thrown is missing. Information about expected quantities of sludge is also missing. Thus, revenues from possible commercialization of sludge are not estimated.

e) Discharge duty

The current national legislation does not stipulate a discharge fee for wastewater for public communal enterprises. Fees for discharging wastewater pay only industrial facilities and commercial buildings. In discussion with the representatives of relevant institutions, we understood that discharge duty for wastewater would not be introduced for public communal enterprises.

f) External services

In accordance with current national regulations:

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- Sludge can be used as manure in agriculture but its quality should be checked at least twice per year. Prior approval for the use of sludge is necessary. Procedures how to use sludge and marginal values of sludge parameters are in accordance with EU Directive 86/278/EEC.

- Wastewater can be reused for different purposes mainly as technical water and for irrigation in agriculture. Proscribed standards for the discharge of treated wastewater (Official Gazette no.73/2011) previously mentioned in section General description of the project should be met.

- Minimum quality of wastewater is prescribed and quality of wastewater from WWTP in Jurumleri should be verified.

Regarding the wastewater we will assume that quality of wastewater from WWTP Jurumleri will be checked at least once per year. Yearly costs for the verification of wastewater quality taking into consideration only minimum parameters proscribed with the current regulation should be Denar 1,180.

Costs for the verification of wastewater quality are: - Biochemical oxygen demand (BOD5 at 200oC) - Denar 500 - Chemical oxygen demand (COD) - Denar 400 - Total suspended solid substances - Denar 280 - Total - Denar 1,180

Revenues of the project

In order to assess the financial feasibility of the project, we need to focus on the revenues that are a direct result of the project operations. The main monetary benefit from the project will come from increase in the amount of invoiced bills for communal tax. Revenue will be collected by the single payment for connection of households to the sewage system and on the monthly base from invoiced services for treatment of wastewater.

Since the vacuum and pumping station will service all 4 zones, i.e. all 773 households not only 300 households from Zone 2, we propose in the financial analysis of this project to calculate 40% of maintenance costs. The same approach we will apply in calculation of revenues generate from this project i.e. the revenue analysis will take into account only the revenues of 300 households located in Zone 2. Otherwise, we will not get a correct financial analysis. There is 130 registered legal entities in the settlement of Jurumleri. They are mainly engaged in the trade. There is a few agricultural companies and few processing capacities. In the revenue analysis, we will take into account 40% of the companies i.e. 52.

a) Revenues from connection of households to the sewage system – collection system

Assumption used for projections of future revenues from connection of households to sewage system:

Price for connection of households is planned to Denar 2,500 with 5% VAT. Price for connection of legal entities is planned to Denar 5,000. There is no plan to correct price for connection to sewage system.

Table 25. Price for connection of household to the sewage system – collection system Phase of sewage system and

WWTP construction Period (years)

Households (number)

Price for connection (Denar)

Revenues from connection (Denar)

First / Zone 2 2020 300 2,500 750,000

Second / Zone 3 2021 200 2,500 500,000

Third / Zone 1&4 2022 273 2,500 682,500

Total 773 1,932,500

Source: Own calculation based on technical documentation

Revenues are planned taking into account the proposed tempo of connection of households and companies to the new sewage system given in the technical documentation.

300 x Denar 2,500 + 52 x Denar 5,000 = Denar 1,010,000

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b) Revenues from invoiced amount for wastewater treatment

The starting point for calculating the revenues is currently invoiced quantity of drinking water per household. The same quantity of water will be invoiced for wastewater treatment but with a significantly lower price i.e. Denar 10.5 per 1m3 with 5% VAT. Price for 1m3 drinking water is 19.95 Denar with 5% VAT.

Price for 1m3 of wastewater for business entities is Denar 20.13. Average consummation of drinking water 60m3 per entity, average production of wastewater 60m3.

Taking into account that average yearly consumption of drinking water per household in Macedonia is 100m3, yearly costs for the wastewater treatment per household will be: 100m3 x Denar 10.05 = Denar 1,005, while yearly costs for drinking water 100m3 x Denar 20.1285 = Denar 2012.85. (Source: CSE “Gazi baba 2007”)

Project documentation suggests average yearly consumption in amount of 180 lit/per day i.e. 282 m3 per household. However, this is very optimistic assumption for rural Macedonia. Therefore, conservative approach is applied and expected revenues from invoiced amount for wastewater treatment are planned on the current water consummation.

Local population is mainly engaged in agriculture in production of vegetables, which are sold on the green markets in Skopje. Animal husbandry is rare, number of animals is low and therefore water consummation of animals will be neglected. The same approach is proposed for business entities. There are several mini markets, companies i.e. business entities and their water consummation is minor and it will not be taken into consideration in the financial analysis

According to the State Statistical Office average income per household for the year 2016 is Denar 374,701 (publication “Survey on income and living conditions, 2016”). It means that costs for water supply services are 0.67% of the average yearly household income –AYIH. There is no sewage system in settlement of Jurumleri and local population do not pay tax for wastewater services. According to the information, obtained by CSE “Gazi baba 2007” price policy for water services should be similar with the policy of CSE “Vodovod i kanalizacija” Skopje. It means price for 1m3 drinking water should be Denar 19 and for 1m3 wastewater Denar 10. Prices are without VAT. VAT for water services is 5%.

Table 26. Average yearly household costs for water supply in Jurumleri

Household/m3 Price for 1m3

water Yearly costs for

water % of total costs

for water in AYIH

Average yearly consumption of drinking water – 100m3 25.2 2,520 0.67

Average yearly production of wastewater – n/a -- -- --

Total 25.2 2,520 0.67

Source: Public Communal Enterprise “Gazi Baba 2007”

1st scenario

Current prices for wastewater services in Macedonia are low. As a result proposed price for water services in Jurumleri is also very low. Average yearly production of wastewater in Macedonia is 100m3 and yearly costs for these services amount Denar 1,000 i.e. only 0.27% of the yearly income of household are spend for wastewater services. Under assumption that price for wastewater services will not be correct in the next 30 years this investment is absolutely unsustainable. Additional assumption in this scenario is % of collection of wastewater tax to be increased from current 80% to 92% in 2048 i.e. yearly growth of collection rate 0.5% is planned. This scenario do not provide sustainable management of sewage system and should be rejected. See table 26.

2nd scenario

As it was mentioned above according to the State Statistical Office average income per household for the year 2016 is Denar 374,701. Average income per household for the year 2012 was Denar 300,758. Publication “Survey on income and living conditions, 2012” printed in February 2015. It means that AYIH has growth of 5.5% per year in the period 2012-2016. Therefore, assumption that price for wastewater services can be yearly

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increased by 5% is realistic. Additional assumption that collection of wastewater tax will be increased from current 80% to 92% in 2048 is the same. Results of this scenario is present in table 27. NPV is still negative and we can conclude that this scenario also do not provide unsustainable. Although wastewater tax is planned to be significantly increased because of current very low price of wastewater services this option is not sustainable.

3th scenario

In this scenario price for wastewater services is increased from current Denar 10.25 to Denar 75 per m3. Price for business entities will be corrected from 20.1283 to Denar 100 per m3. Price for wastewater services will be further yearly increased by 5% and collection of wastewater tax will be increased from current 80% to 92% in 2048. Only under these assumptions, NPV of the project is positive. It was mentioned above that AYHI has increased by yearly rate 5.5% in the period 2012-2016. If we assume that AYHI will further increase with the yearly rate 3% in the period 2019-2048, AYHI will amount Denar 964,886 in the year 2048. In the same year costs for wastewater services will be Denar around 30,000 i.e. price for 1m3 wastewater will be Denar 308. Costs for wastewater services will be app 3% of AYHI.

6.7. Other assumptions

In this particular case, 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, 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 Error! Reference source not found.) 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.

6.8. Results of the financial analysis

Given the above assumptions and in order to assess/compare financially the current situation with the situation after the implementation of the project, we have concluded:

- Project should be completed if assumptions under scenario 3 are viable and should be implemented; - Otherwise project will generate financial loses and should be cancelled or Municipality should provide

subsidies to cover losses caused by this project.

In accordance with available documents (Minutes from the meeting with the local population hold on 12.02.2018) and information obtained by Municipality and CSE “Gazi baba 2007” we can conclude that local population is very interested to be connected to sewage system. There is willingness to pay for wastewater services but price proposed in scenario 3 are not discussed and it is questionable if they can be accepted.

The financial appraisal based on the assumptions under scenario 3 gives positive NPV of Denar 67,062 (Euro 1,090) using a 5% discount rate. The results imply that the project is commercially viable. However, it should be taken into consideration if local population is willing to pay water services with proposed price. In contrary environmental conditions arising from inadequate or non-existing wastewater management pose significant threats to human health, well-being and economy activities.

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Table 27. NPV analysis – 1st scenario (Denar)

Nominal year

Interest Capital

Repayment Maintenance

costs Energy costs

External costs

Total costs Revenues from

connections

Revenues from wastewater tax /

households


legal entities

Total revenues

Cash flow

2019 1,923,288 674,094 152,660 1,180 2,751,222 1,010,000 252,000 50,241 1,312,241 -1,438,981

2020 3,609,863 687,576 158,828 1,204 4,457,470 258,325 51,502 309,827 -4,147,643

2021 3,600,000 701,327 165,245 1,228 4,467,799 264,809 52,794 317,604 -4,150,196

2022 3,510,740 7,200,000 715,354 171,920 1,252 11,599,266 271,456 54,120 325,575 -11,273,691

2023 3,150,740 7,200,000 729,661 178,866 1,277 11,260,544 278,269 55,478 333,747 -10,926,796

2024 2,798,137 7,200,000 744,254 186,092 1,303 10,929,786 285,254 56,871 342,124 -10,587,661

2025 2,430,740 7,200,000 759,139 193,610 1,329 10,584,818 292,414 58,298 350,712 -10,234,106

2026 2,070,740 7,200,000 774,322 201,432 1,355 10,247,849 299,753 59,761 359,515 -9,888,334

2027 1,710,740 7,200,000 789,808 209,570 1,383 9,911,501 307,277 61,261 368,539 -9,542,962

2028 1,354,192 7,200,000 805,604 218,037 1,410 9,579,243 314,990 62,799 377,789 -9,201,454

2029 990,740 7,200,000 821,716 226,845 1,438 9,240,740 322,896 64,375 387,271 -8,853,469

2030 630,740 7,200,000 838,151 236,010 1,467 8,906,368 331,001 65,991 396,992 -8,509,376

2031 270,740 7,200,000 854,914 245,545 1,497 8,572,695 339,309 67,647 406,956 -8,165,738

2032 872,012 255,465 1,526 1,129,003 347,826 69,345 417,171 -711,832

2033 889,452 265,785 1,557 1,156,795 356,556 71,086 427,642 -729,153

2034 907,241 276,523 1,588 1,185,353 365,506 72,870 438,376 -746,977

2035 925,386 287,695 1,620 1,214,701 374,680 74,699 449,379 -765,322

2036 943,894 299,318 1,652 1,244,864 384,084 76,574 460,658 -784,205

2037 962,772 311,410 1,685 1,275,867 393,725 78,496 472,221 -803,646

2038 982,027 323,991 1,719 1,307,737 403,607 80,466 484,074 -823,664

2039 1,001,668 337,080 1,753 1,340,501 413,738 82,486 496,224 -844,278

2040 1,021,701 350,698 1,788 1,374,188 424,123 84,556 508,679 -865,509

2041 1,042,135 364,866 1,824 1,408,826 434,768 86,679 521,447 -887,379

2042 1,062,978 379,607 1,861 1,444,446 445,681 88,854 534,535 -909,910

2043 1,084,237 394,943 1,898 1,481,079 456,867 91,085 547,952 -933,126

2044 1,105,922 410,899 1,936 1,518,757 468,335 93,371 561,706 -957,051

2045 1,128,041 427,499 1,975 1,557,514 480,090 95,715 575,805 -981,710

2046 1,150,601 444,770 2,014 1,597,386 492,140 98,117 590,257 -1,007,129

2047 1,173,613 462,739 2,054 1,638,407 504,493 100,580 605,073 -1,033,334

2048 1,197,086 481,434 2,095 1,680,615 517,156 103,104 620,260 -1,060,355

NPV (Denar) using 5% discount rate -79,537,811

NPV (Euro) using 5% discount rate -1,293,298

Benefit cost ratio 0.1

MIRR (%) using 5% discount rate -100.0%


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Table 28. NPV analysis – 2nd scenario (Denar)

Nominal year

Interest Capital


costs Energy costs

External costs


connections


households


legal entities

Total revenues

Cash flow

2019 1,923,288 674,094 152,660 1,180 2,751,222 1,010,000 252,000 50,241 1,312,241 -1,438,981

2020 3,609,863 687,576 158,828 1,204 4,457,470 271,241 54,077 325,318 -4,132,152

2021 3,600,000 701,327 165,245 1,228 4,467,799 291,952 58,206 350,158 -4,117,641

2022 3,510,740 7,200,000 715,354 171,920 1,252 11,599,266 314,244 62,650 376,894 -11,222,372

2023 3,150,740 7,200,000 729,661 178,866 1,277 11,260,544 338,238 67,434 405,672 -10,854,872

2024 2,798,137 7,200,000 744,254 186,092 1,303 10,929,786 364,064 72,583 436,647 -10,493,139

2025 2,430,740 7,200,000 759,139 193,610 1,329 10,584,818 391,863 78,125 469,987 -10,114,831

2026 2,070,740 7,200,000 774,322 201,432 1,355 10,247,849 421,783 84,090 505,873 -9,741,976

2027 1,710,740 7,200,000 789,808 209,570 1,383 9,911,501 453,988 90,511 544,499 -9,367,001

2028 1,354,192 7,200,000 805,604 218,037 1,410 9,579,243 488,653 97,422 586,074 -8,993,169

2029 990,740 7,200,000 821,716 226,845 1,438 9,240,740 525,964 104,860 630,824 -8,609,916

2030 630,740 7,200,000 838,151 236,010 1,467 8,906,368 566,124 112,867 678,991 -8,227,377

2031 270,740 7,200,000 854,914 245,545 1,497 8,572,695 609,350 121,485 730,835 -7,841,860

2032 872,012 255,465 1,526 1,129,003 655,877 130,761 786,638 -342,365

2033 889,452 265,785 1,557 1,156,795 705,957 140,745 846,702 -310,093

2034 907,241 276,523 1,588 1,185,353 759,860 151,492 911,352 -274,001

2035 925,386 287,695 1,620 1,214,701 817,879 163,059 980,938 -233,763

2036 943,894 299,318 1,652 1,244,864 880,328 175,509 1,055,837 -189,026

2037 962,772 311,410 1,685 1,275,867 947,546 188,910 1,136,456 -139,411

2038 982,027 323,991 1,719 1,307,737 1,019,895 203,335 1,223,230 -84,507

2039 1,001,668 337,080 1,753 1,340,501 1,097,770 218,860 1,316,630 -23,872

2040 1,021,701 350,698 1,788 1,374,188 1,181,590 235,571 1,417,161 42,973

2041 1,042,135 364,866 1,824 1,408,826 1,271,810 253,558 1,525,368 116,542

2042 1,062,978 379,607 1,861 1,444,446 1,368,919 272,919 1,641,838 197,392

2043 1,084,237 394,943 1,898 1,481,079 1,473,443 293,757 1,767,200 286,122

2044 1,105,922 410,899 1,936 1,518,757 1,585,948 316,187 1,902,135 383,378

2045 1,128,041 427,499 1,975 1,557,514 1,707,043 340,330 2,047,372 489,858

2046 1,150,601 444,770 2,014 1,597,386 1,837,384 366,316 2,203,700 606,314

2047 1,173,613 462,739 2,054 1,638,407 1,977,677 394,286 2,371,963 733,556

2048 1,197,086 481,434 2,095 1,680,615 2,128,683 424,391 2,553,074 872,459

NPV (Denar) using 5% discount rate -73,110,228

NPV (Euro) using 5% discount rate -1,188,784


MIRR (%) using 5% discount rate -11.2%


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Table 29. NPV analysis – 3th scenario (Denar)

Nominal year

Interest Capital


costs Energy costs

External costs


connections


households


legal entities

Total revenues

Cash flow

2019 1,923,288 674,094 152,660 1,180 2,751,222 1,010,000 1,800,000 249,600 3,059,600 308,378

2020 3,609,863 687,576 158,828 1,204 4,457,470 1,937,439 268,658 2,206,097 -2,251,373

2021 3,600,000 701,327 165,245 1,228 4,467,799 2,085,372 289,172 2,374,544 -2,093,256

2022 3,510,740 7,200,000 715,354 171,920 1,252 11,599,266 2,244,601 311,251 2,555,852 -9,043,414

2023 3,150,740 7,200,000 729,661 178,866 1,277 11,260,544 2,415,987 335,017 2,751,004 -8,509,540

2024 2,798,137 7,200,000 744,254 186,092 1,303 10,929,786 2,600,460 360,597 2,961,057 -7,968,729

2025 2,430,740 7,200,000 759,139 193,610 1,329 10,584,818 2,799,018 388,131 3,187,149 -7,397,669

2026 2,070,740 7,200,000 774,322 201,432 1,355 10,247,849 3,012,737 417,766 3,430,503 -6,817,346

2027 1,710,740 7,200,000 789,808 209,570 1,383 9,911,501 3,242,775 449,665 3,692,439 -6,219,061

2028 1,354,192 7,200,000 805,604 218,037 1,410 9,579,243 3,490,377 483,999 3,974,376 -5,604,867

2029 990,740 7,200,000 821,716 226,845 1,438 9,240,740 3,756,884 520,955 4,277,839 -4,962,901

2030 630,740 7,200,000 838,151 236,010 1,467 8,906,368 4,043,741 560,732 4,604,473 -4,301,894

2031 270,740 7,200,000 854,914 245,545 1,497 8,572,695 4,352,501 603,547 4,956,048 -3,616,647

2032 872,012 255,465 1,526 1,129,003 4,684,836 649,631 5,334,467 4,205,464

2033 889,452 265,785 1,557 1,156,795 5,042,547 699,233 5,741,780 4,584,985

2034 907,241 276,523 1,588 1,185,353 5,427,571 752,623 6,180,194 4,994,841

2035 925,386 287,695 1,620 1,214,701 5,841,993 810,090 6,652,083 5,437,382

2036 943,894 299,318 1,652 1,244,864 6,288,058 871,944 7,160,002 5,915,139

2037 962,772 311,410 1,685 1,275,867 6,768,183 938,521 7,706,704 6,430,837

2038 982,027 323,991 1,719 1,307,737 7,284,968 1,010,182 8,295,150 6,987,412

2039 1,001,668 337,080 1,753 1,340,501 7,841,211 1,087,315 8,928,526 7,588,024

2040 1,021,701 350,698 1,788 1,374,188 8,439,927 1,170,337 9,610,264 8,236,076

2041 1,042,135 364,866 1,824 1,408,826 9,084,358 1,259,698 10,344,055 8,935,229

2042 1,062,978 379,607 1,861 1,444,446 9,777,994 1,355,882 11,133,876 9,689,430

2043 1,084,237 394,943 1,898 1,481,079 10,524,592 1,459,410 11,984,003 10,502,924

2044 1,105,922 410,899 1,936 1,518,757 11,328,198 1,570,843 12,899,041 11,380,284

2045 1,128,041 427,499 1,975 1,557,514 12,193,162 1,690,785 13,883,947 12,326,433

2046 1,150,601 444,770 2,014 1,597,386 13,124,171 1,819,885 14,944,056 13,346,670

2047 1,173,613 462,739 2,054 1,638,407 14,126,267 1,958,842 16,085,110 14,446,703

2048 1,197,086 481,434 2,095 1,680,615 15,204,878 2,108,410 17,313,288 15,632,673

NPV (Denar) using 5% discount rate 67,062

NPV (Euro) using 5% discount rate 1,090


MIRR (%) using 5% discount rate 1.9%


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6.9. Sensitivity analysis

The sensitivity analysis was performed using variations by 10% for both costs and benefits. This does not influence significant change in NPV, but the NPV is more sensitive to change in costs. This implies that the municipality will have to consider options to lower the costs and to increase the benefits. Sensitivity analysis results are presented below.

Table 30. Sensitivity analysis

Benefits Costs

-10% 10% -10% 10%

NPV (Denar) 67,062 -8,612,605 8,746,729 8,740,023 -8,605,899

NPV (Euro) 1,090 -140,042 142,223 142,114 -139,933 Source: Own calculations based on the data received by the municipality

6.10. Conclusions

The total value of the project is Denar 71,445,975 (Euro 1,161,723) including VAT. Assumption is that the project’s costs will be 100% covered with MSIP loan. According to the existing regulation, the project’s cost is lower than the borrowing capacity of the municipality, which adds to the potential of the municipality to repay the loan.

The analysis of the financial feasibility of the project showed that NPV and MIRR are positive (taking into account assumptions under scenario 3) implying that the project is financially feasible.

Decision-makers should take into consideration that the implementation of the project bring substantial immeasurable benefits such as: improvement of public health, safety agriculture and environment protection.

The major reason for safe disposal of sewage is to prevent the spread of disease. Inadequately treated sewage from failing septic systems poses a significant threat to drinking water and human health because diseases and infections may be transferred to people and animals directly and immediately. Dysentery, hepatitis, typhoid fever, and acute gastrointestinal illness are some of the more serious examples. Inadequately treated sewage from failing septic systems is the most frequently reported cause of underground water contamination.

Therefore, implementation of this project will minimize risk for underground water contamination contributing to public health, safety agriculture and protection of Vardar River.

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7. COST BENEFIT ANALYSIS

7.1. General information

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.

7.1.1. Limitations and constraints of the study

The major constraint is related to the non‐existence of consistent cost‐benefit analysis (CBA) experience in the sector of wastewater treatment in the Republic of Macedonia. Normally, if a stock of CBA is available, it provides a useful resource for the analysts since the estimates from the previous studies can be used as inputs in the future, due to the fact that these estimates sometimes obtain a meaning of so‐called “national parameters”. In the absence of prior experience, we are forced to do our own estimates and use some approximations. As mentioned above, it is difficult to identify the standing point for the CBA.

The general objectives of wastewater investments are to increase the coverage or to improve the quality, effectiveness and efficiency of wastewater treatment services. Both logics of intervention can be driven by the need of country, respectively municipalities to comply with the EU environmental acquits, as set out in the relative national legislation.

The EU water policy is largely based on the Water Framework Directive8 that sets up ambitious objectives for the quality and protection of all waters bodies (ecological status, quantitative status, chemical status and protected area objectives) and includes the key element of the River Basin Management Plans. The RBMPs provide the overall context for water management in a certain territory (the River Basin District, RBD) of the European Union, including gaps, measures and objectives.

The construction of the WWTP in Municipality of Gazi Baba will increase number of households connected to wastewater system and increase efficiency in wastewater collection, removal, purification and elimination. In addition with this project quality of the surface water bodies will be improved thus preserving ecosystems and biodiversity dependent on these surface water bodies. Preserving ground water that flows in region of Jurumleri, this project will indirectly contribute to protection of Vardar river.

7.1.2. 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 is WWTP and it is the municipality, which acts as a borrower, we find it most appropriate that the 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 considered.

8 Directive 2000/60/EC (see also: http://ec.europa.eu/environment/water/water-framework/)

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7.2. Identification of the relevant costs and benefits

7.2.1. Project costs

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.

1) Investment cost

The investment cost to the municipality is equal to the discounted value of the future debt payments as explained in more details in the previous chapter. In the cost-benefit analysis, VAT of the investment cost is excluded. Thus, the amount of the initial investment outlay has been estimated at Denar 60,547,436 or (Euro 984,511).

2) Operation costs

In details, the operation costs are explained in the previous chapter. For estimating ENPV, VAT - 18% or VAT - 5% and inflation rate - 2% are excluded from the costs in the cost-benefit analysis.

a) Personnel costs

There is no additional personnel costs.

b) Maintenance costs

The same scheme used in the financial analysis will be applied to calculate maintenance costs i.e.:

- Civil constructions 0.5 – 2% of investment costs per year; - Renovations of civil constructions 2–4% of investment costs per year; - Mechanical equipment 2–6% of investment costs per year; - Electrical and electronic equipment 2–6% of investment costs per year.

Table 31. Calculation of yearly maintenance costs

Investment

% of investment costs for

calculation yearly maintenance costs

Initial Investment in the first phase

without 18% VAT

Yearly maintenance costs

Construction of vacuum station 0.5 5,372,269 26,861

Reconstruction / renovation of vacuum station 0.5 5,372,269 26,861

Project electrical energy 2.0 779,619 15,592

Vacuum station - equipment 2.0 11,512,797 230,256

Monitoring of vacuum network 2.0 1,468,898 29,378

Pumping station - equipment 2.0 6,560,393 131,208

Construction of wastewater treatment plant 0.5 2,718,240 13,591


0.5 2,718,240 13,591


2.0 18,816,508 376,330

Total 55,319,232 863,669

*The same investment in civil construction is base for calculation of costs for renovations

c) Energy costs

Yearly costs for the electricity amounts Denar 381,651 with VAT i.e. Denar 323,433 without VAT.

d) Chemicals and material costs

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Insignificant costs and will be neglected.

e) Disposal costs

No disposal costs.

f) Discharge duty

No discharge duty.

g) External services

Yearly costs for analysis of 3 key parameters for water quality – Denar 1,000 without 18% VAT.

7.2.2. Quantifiable benefits

The main monetary benefit from the project will come from increase in the amount of invoiced bills for communal tax. Revenue will be collected by the single payment for connection of households to the sewage system and on the monthly base from invoiced services for wastewater treatment.

1) Revenues from connection of households to the sewage system – collection system

Assumption used for projections of future revenues from connection of households to sewage system are the same as in financial analysis:

Table 32. Price for connection of household to the sewage system – collection system Phase of sewage system and

WWTP construction Period (years)

Households (number)

Price for connection without VAT (Denar)

Revenues from connection (Denar)

First / Zone 2 2020 300 2,381 714,286

Second / Zone 3 2021 200 2,381 476,190

Third / Zone 1&4 2022 273 2,381 650,000

Total 773 1,840,476

Source: Own calculation based on technical documentation

2) Revenues from invoiced amount for wastewater treatment

The same methodology as used in financial analysis will be applied to calculate revenues from invoiced amount for wastewater treatment. Price per m3 will be Denar 10 without VAT 5%.

3) Savings of costs attributed to users who now no longer need to maintain and operate septic tanks

Current cost for the cleaning of septic tank is Denar 350. This amount is used to estimate savings, which will come from no longer need to maintain and operate septic tanks. Household practice is to clean tanks once per month. Septic tanks has average volume 2m3. Apart from the costs for the cleaning of tanks households currently, have no any other costs related to the septic tanks. (Source: CSE “Gazi baba 2007”

Taking into consideration number of households in the settlement of Jurumleri and frequency of the cleaning, yearly cost savings will be:

300 households x Denar 3,560 = Denar 1,068,000 without VAT.

4) Benefit for improved environmental quality of the water bodies

The implementation of the project will considerably improve the environmental quality of the underground water. More details about environmental effects are given in the next section and in this section attempt is made to quantify improved quality of the water bodies. As this use value is difficult to monetize and no specific study

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exists in the Republic of Macedonia, the benefit is valued using a benefit transfer method suggested in the Guide to Cost-Benefit Analysis of Investment Projects9.

Based on a careful assessment of willingness-to-pay (WTP) studies performed for evaluating environmental externalities linked to wastewater treatment in comparable socio-economic and environmental conditions, authors proposed this benefit to be valued at EUR 25/person/year starting from the first year of operation.

But, there are two constrains using the value of this benefit in the proposed project:

First, wastewater treatment will not be completed in the first phase, the second and the third phase is still missing, thus we are proposing this benefit to be valued at EUR 5/person/year and to be applied for the entire period.

Second, since WTP measures generally depend on income levels, annual values would have to be projected by increasing those following real per capita GDP growth over the project reference period. However, in light of the uncertainties related to the estimation of the benefit value, it is decided to take a conservative assumption, and keep the monetary value of the benefit fixed at its initial level throughout the reference period.

7.2.3. Unquantifiable benefits

Wastewater treatment projects can produce different social benefits and costs, depending on the specific type of project implemented.

The main direct effects and externalities usually associated with the construction, modernization and quality improvement of wastewater systems and treatment plants are summarized below.

1) Increased availability of sewage services

Increased availability is typical direct effect of wastewater projects, which arises when new users are connected to the sewage systems. With this project app. 773 households will be connected to the sewage system.

2) Improved quality of surface water bodies and preservation of ecosystem services

This benefit usually originates from project involving the extension of the wastewater treatment or the construction/ rehabilitation of wastewater treatment plants (WWTPs). Thanks to the proposed project, wastewater will be treated before being discharged into the surface water bodies. The improvement of the surface water bodies’ quality consists of reducing pollutant levels and/or increasing dissolved oxygen levels. In turn, this has the positive effect of preserving ecosystems and biodiversity dependent on these surface water bodies.

Failing septic systems may leak excessive nutrients and bacteria to surface water bodies, destroying aquatic plant and animal habitat. When nutrients such as nitrogen and phosphorus, found in detergents for washing clothes, enter waters, they can cause excessive plant growth.

3) Improved safety and quality of food chain

Chemicals used during the washing clothes as well as chemicals used in agriculture get washed into the river Vardar. These chemicals do not get dissolved and sink at the bottom of the river. Small animals ingest these chemicals and are later eaten by large animals, what then affects the whole food chain.

This usually does not harm the fish, but it does harm the humans who eat them. Animals from impacted food chain are then eaten by humans which affects their health as toxins from these contaminated animals gets deposited in the tissues of people and can lead to cancer, birth defects or long term health problems. Many

9 Guide to Cost-Benefit Analysis of Investment Projects, Economic appraisal tool for Cohesion Policy 2014-2020, EUROPEAN COMMISSION Directorate-General for Regional and Urban policy

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studies issued by World Health Organization (WHO) evidenced correlation between consumption of sea food from polluted water and cancer incidence of the digestive system.

4) Health impacts

Positive impacts on health are mainly generated by improvement of the effectiveness of the sewage system and wastewater treatment. Positive impacts on health should be included in economic analysis by attributing an economic value to the decreased morbidity rate for water-related diseases, taking care of possible benefit double counting with the willingness to pay - WTP.

In absence of this, the cost of illness approach, which combines direct and indirect costs into an overall societal estimate, can be adopted. Direct costs include the medical costs necessary for treating a particular disease (e.g. hospitalization, medical supplies, rehabilitation care, diagnostic tests, drug prescriptions, etc.) Indirect costs measure the value of lost production because of reduced working time due to a particular illness.

Since all settlement of Jurumleri has access to clean drinking water health hazards are significantly reduced. They are mainly associated with the possible contamination of vegetables grown in fields near the houses and inappropriate personal hygiene of people who works on the fields.

Evaluating positive impacts in health, caution must be paid to avoid any benefit double counting with the WTP. For instance, if assumption was the defensive behaviour for connection to sewage system cost of illnesses approach should be applied. But our assumption is not defensive behaviour of users, it means that positive health impacts will be generated i.e. with the connection of households to sewage system the entire benefit will be the avoided cost of illness.

5) Public goodwill of the municipal administration

The implementation of the project is expected to increase the population’s perception and confidence as a result of the improved communal infrastructure. At the same time, the construction of sewage system and WWTP will contribute to safety agriculture thus enhancing economic development of Jurumleri region.

7.3. Economic valuation of costs

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.

7.3.1. Economic valuation of costs

The economic valuation of costs considers the investment outlay of construction of WWTP and sewage system, as well as operational and maintenance costs.

a) Economic valuation of the investment outlay

Constructions activities consist of civil works (digging of channels that will lay the sewage pipes, due to the configuration of the terrain and the route through which passes the sewage system channels will be done mainly manually, as well as construction of pools, etc.), installation of pumps, installation of sewage pipes and their connection with WWTP and households.

The financial costs of the project are used as a basis to estimate its economic costs, by correcting the non-skilled labour component in the investment and operating costs with a shadow wage that takes into account the current unemployment level in the country (with a Conversion Factor equal to 0.7). No other conversions from financial to economic prices are considered (i.e. all remaining CFs are set to 1) as the Mechanical, Electrical and Electronic Equipment will be imported and would be procured through an open, competitive tender.

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Table 33. Economic valuation of the investment outlay from loan (Denar)

Source for financing Amount (Denar) Convergence

factor Economic Value

Construction of sewerage primary and secondary network Zone 2 / 4

15,283,293 0.7 10,698,305

Vacuum station 13,586,100 1.0 13,586,100

Monitoring of vacuum network 1,733,300 1.0 1,733,300

Pumping station 7,741,263 1.0 7,741,263


22,203,480 1.0 22,203,480

Total (Denar) 60,547,436 55,962,448

Source: Own calculations based on the project’s technical documentation

b) Economic valuation of the maintenance costs

Maintenance costs were explained previously in this chapter. Maintenance of the wastewater treatment plant and sewage system includes both skilled and unskilled labour and thus we propose the following conversion factors:

Table 34. Economic valuation of the maintenance costs (Denar)

Investment Initial Investment in the first phase without 18% VAT

Conversion factor

Economic value

Economic value – 40%

Construction of vacuum station 26,861 0.7 18,803 7,521

Reconstruction / renovation of vacuum station 26,861 0.7 18,803 7,521

Project electrical energy 15,592 1.0 15,592 6,237

Vacuum station - equipment 230,256 1.0 230,256 92,102

Monitoring of vacuum network 29,378 1.0 29,378 11,751

Pumping station - equipment 131,208 1.0 131,208 52,483

Construction of wastewater treatment plant 13,591 0.7 9,514 3,806


13,591 0.7 9,514 3,806


376,330 1.0 376,330 376,330

Total 863,669 839,398 561,557

Source: Own calculations based on the project’s technical documentation

c) Economic valuation of the new employment

There is no new employment.

d) Economic valuation of electricity price

Consumption of energy for operational activities in the WWTP was elaborated in the previous chapter. The price of the fuel in the country is delegated by the Energy Regulatory Commission Committee of Republic of Macedonia, which regulates the prices. Taking into account trends in the energy sector, we propose the convergence factor for energy CF 1.1. The economic value of the energy price will be:

Denar 323,433 (without VAT) x CF 1.1 = Denar 355,776

e) Economic valuation of costs of external services

Costs of external services are intended for valuation of the wastewater quality. As elaborated previously annual costs of external services without VAT are estimated at Denar 1,000. Because the analysis of the water quality includes skilled labour we assume the convergence factor CF 1.

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7.4. Other assumptions

Inflation rate is neglected in calculations, as well as loan servicing costs. As in case of financial analysis, the time horizon is 30 years and the discount rate of 5% is used.

7.5. 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.

The cost-benefit analysis of the project is built upon the financial appraisal. Any irrelevant items from the economic point of view are excluded, while the impacts relevant from the society’s point of view are included. To provide economic valuation of the costs and benefits, previously valued at market prices, revaluation of their economic values is made by using conversion factors.

Table 35. Summary of comparisons between the “without” and “with the project” scenarios Without the project With the project Quantification of project benefits

No access to sewage services; Questionable quality of surface water; No preservation of ecosystem services; Agriculture is not safe due to problematic quality of underground water; Health hazards due to irrigation with unsafe underground water; Food chain is not safe; Contamination of soil and waters.

Increased availability of sewage services; Improved quality of surface water; Preservation of ecosystem services; Improved safety of agriculture and provided conditions for organic agriculture; Health hazards due to irrigation with unsafe underground water are eliminated; Improved quality and safety of food chain; Protection of soil and waters from pollution.

Yearly revenues from connection charges according to the population increase; Yearly revenues from invoiced wastewater treatment according to the population increase; Yearly savings of costs for maintenance and operation of septic tanks Denar 1,068,000 (Euro 17,366); Benefits for improved environmental quality of water bodies according to the population increase.

Source: Own analysis based on the information received by the municipality

7.6. Results from the cost - benefit analysis

The economic appraisal based on the above assumptions and procedure gives a positive ENPV of Denar 31,570,599 or Euro 513,343 using 5% discount rate (see table 35 below). The results imply that the project is attractive and desirable for implementation. The calculations showed that the EMIRR is 3.5% (using 5% discount rate) and benefit cost ratio is 2.2 adding to a conclusion that the project can be considered attractive.

If we had access to data on how much the residents on the settlement of Jurumleri have spent on repair and sewage maintenance and subsequently, calculate savings which can be included in the analysis, our assumption is that the NPV and MIRR would show even higher positive values, which will further stress that the project can be considered attractive.

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Table 36. ENPV analysis (Denar)

Nominal year

Capital Repayment

Maintenance costs

Energy costs

External costs

Total costs

Revenues from

connections

Revenues from

wastewater tax -

households

Revenues from

wastewater tax –

businesses

Cost savings - no longer

need to maintain and

operate septic tanks

Benefit for improved

environmental quality of the water bodies

Total benefits

Cash flow

2019 561,557 355,776 1,000 918,333 961,905 1,714,286 237,714 1,068,000 369,000 4,350,905 3,432,572

2020 561,557 355,776 1,000 918,333 1,809,000 250,848 1,068,000 369,000 3,496,848 2,578,515

2021 561,557 355,776 1,000 918,333 1,908,947 264,707 1,068,000 369,000 3,610,655 2,692,322

2022 5,596,245 561,557 355,776 1,000 6,514,578 2,014,417 279,332 1,068,000 369,000 3,730,749 -2,783,829

2023 5,596,245 561,557 355,776 1,000 6,514,578 2,125,713 294,766 1,068,000 369,000 3,857,479 -2,657,099

2024 5,596,245 561,557 355,776 1,000 6,514,578 2,243,159 311,051 1,068,000 369,000 3,991,210 -2,523,368

2025 5,596,245 561,557 355,776 1,000 6,514,578 2,367,093 328,237 1,068,000 369,000 4,132,330 -2,382,248

2026 5,596,245 561,557 355,776 1,000 6,514,578 2,497,875 346,372 1,068,000 369,000 4,281,247 -2,233,331

2027 5,596,245 561,557 355,776 1,000 6,514,578 2,635,883 365,509 1,068,000 369,000 4,438,392 -2,076,186

2028 5,596,245 561,557 355,776 1,000 6,514,578 2,781,515 385,703 1,068,000 369,000 4,604,219 -1,910,359

2029 5,596,245 561,557 355,776 1,000 6,514,578 2,935,194 407,014 1,068,000 369,000 4,779,208 -1,735,370

2030 5,596,245 561,557 355,776 1,000 6,514,578 3,097,363 429,501 1,068,000 369,000 4,963,865 -1,550,713

2031 5,596,245 561,557 355,776 1,000 6,514,578 3,268,493 453,231 1,068,000 369,000 5,158,724 -1,355,854

2032 561,557 355,776 1,000 918,333 3,449,077 478,272 1,068,000 369,000 5,364,349 4,446,016

2033 561,557 355,776 1,000 918,333 3,639,639 504,697 1,068,000 369,000 5,581,335 4,663,002

2034 561,557 355,776 1,000 918,333 3,840,729 532,581 1,068,000 369,000 5,810,310 4,891,977

2035 561,557 355,776 1,000 918,333 4,052,929 562,006 1,068,000 369,000 6,051,935 5,133,602

2036 561,557 355,776 1,000 918,333 4,276,853 593,057 1,068,000 369,000 6,306,910 5,388,577

2037 561,557 355,776 1,000 918,333 4,513,149 625,823 1,068,000 369,000 6,575,973 5,657,640

2038 561,557 355,776 1,000 918,333 4,762,501 660,400 1,068,000 369,000 6,859,901 5,941,568

2039 561,557 355,776 1,000 918,333 5,025,629 696,887 1,068,000 369,000 7,159,516 6,241,183

2040 561,557 355,776 1,000 918,333 5,303,295 735,390 1,068,000 369,000 7,475,685 6,557,352

2041 561,557 355,776 1,000 918,333 5,596,302 776,021 1,068,000 369,000 7,809,323 6,890,990

2042 561,557 355,776 1,000 918,333 5,905,498 818,896 1,068,000 369,000 8,161,393 7,243,060

2043 561,557 355,776 1,000 918,333 6,231,776 864,140 1,068,000 369,000 8,532,916 7,614,583

2044 561,557 355,776 1,000 918,333 6,576,082 911,883 1,068,000 369,000 8,924,965 8,006,632

2045 561,557 355,776 1,000 918,333 6,939,411 962,265 1,068,000 369,000 9,338,676 8,420,343

2046 561,557 355,776 1,000 918,333 7,322,813 1,015,430 1,068,000 369,000 9,775,243 8,856,910

2047 561,557 355,776 1,000 918,333 7,727,398 1,071,533 1,068,000 369,000 10,235,931 9,317,598

2048 561,557 355,776 1,000 918,333 8,154,337 1,130,735 1,068,000 369,000 10,722,072 9,803,739

ENPV (Denar) using 5% discount rate 31,570,599

ENPV (Euro) using 5% discount rate 513,343

BCR 2.2

EMIRR using 5% discount rate 3.5%


7.7. Sensitivity analysis

The sensitivity analysis was performed using variations of 10% for both costs and benefits. ENPV is sensitive on the change of both costs and benefits. In addition, the municipality will have to consider options to lower the costs and to increase the benefits. Here should be mentioned that some benefits cannot be measured. ENPV is sensitive in case where benefits lower by 10% and costs increase by 10% which implies that if the project is being implemented the municipality will have to strengthen the efforts for increasing the revenues which would make the investment even more sustainable in the future. Based on the below calculations, the project which is a subject to this appraisal is attractive and acceptable for investment.

Table 37. Sensitivity analysis

Benefits Costs

-10% 10% -10% 10%

NPV (Denar) 31,570,599 23,268,959 39,872,239 36,715,179 26,426,019

NPV (Euro) 513,343 378,357 648,329 596,995 429,691

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

7.8. Conclusions

At the national level, the sewage system comprises of 1,239.1km of pipelines. From the total number of about 700 thousand dwellings (Census 2002), 65% are connected to a public sewage system, whereas 21% of the dwellings have septic tanks: an additional 12% have a system of uncontrolled wastewater discharge only. However, only 12.5% of collected wastewater is treated. No monitoring of the wastewater discharged to recipients by municipal sewage systems exists, except of several cases where sewage systems are connected to the WWTPs in operation.

In order to improve the environmental conditions and reduce further pollution of nature and the environment, particularly watercourses and water sources, it is necessary to build a wastewater collection and treatment infrastructure meeting the required criteria and parameters specified in the Urban Wastewater Treatment Directive (91/271/EEC).

“Sector Operational Program for Environment and Climate Action 2014-2020” published in November 2014 following the previous analysis identified two main areas of the environmental sector as most important in terms of future development and needs for investment with the greatest impact on the population and on the environment. The Action concentrates on the investments in wastewater collection and treatment and integrated solid waste management aiming to improve environmental protection though investments in environmental infrastructure and to create conditions for environment-friendly development.

The above mentioned document defines the following specific objectives in the sector of wastewater treatment as well as targets and indicators:

• Promotion of sustainable development, especially through minimizing the adverse effects of inappropriate management of wastewater and waste;

• Reduction of untreated wastewater discharged to recipients in larger agglomerations;

• Increase in the number of population served by the wastewater and waste collection, and disposal facilities that are in compliance with environmental acquits.

Table 38. Targets and Indicators Indictor Targets Means of Verification Institution in charge

Number/% of households connected to the sewage system (baseline in 2012 65%)

68% by 2017 and 75 % by 2020

State Statistical Office Ministry of environment and physical planning

Number/% of households connected to the WWTPs for agglomerations above

10 000 p.e. (baseline in 2012 12.5%)

16.8% by 2017 and 21 % by 2020

State Statistical Office Ministry of environment and physical planning

Source: “Sector Operational Program for Environment and Climate Action 2014-2020”

Considering the results of this analysis we conclude that in proposed project should be funded.

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8. RISK ANALYSIS

8.1. Technical and implementation risks factors

8.1.1. Risk factors in the implementation phase of the project

In the implementation phase there might appear some difficulties, such as traffic congestion and pedestrian and vehicle’s access. Construction of the sewage network in all phases will need an experienced construction company. If the contracted company does not have an experience in construction of similar projects, this in turn might reduce foreseen beneficial impacts of the project. The inclusion of all activities that the construction company will have to undertake is really important and thus, must be carefully thought out. These issues will be addressed in preparation of the tender documentation.

At the same time, the construction company has to concern all environmental issues and the construction activities must be provided according to the environmental laws and regulation in the country. This approach will save the environment and prevent the environmental pollution from leakages of oil and lubricants of the machinery and heavy vehicles used for construction. The appropriate construction activities and environmental protection will also save underground and ground water, and agricultural crops from pollution. Rational use of the construction machinery will not allow excessive emissions of CO2 and dust in the air.

Moreover, implementation of safety and protection measures during construction of the sewage network and wastewater treatment plant will prevent injuries of workers and local population that live or work at the place where the construction activities will be provided. Hence, appropriate signalization while performance of the construction activities must be provided.

Since the sewage network will be constructed along the existing streets in the settlement of Jurumleri and the wastewater treatment plant will be constructed on a land in ownership of the Republic of Macedonia, there is no expropriation needed to be made by the municipality and there is no private land ownership. So, there is no risk of the implementation of the project not to be done due to the land ownership issues.

8.1.2. Risk factors from a technical aspect of the project

From a technical aspect, it is of particular importance to audit the quality of materials that will be used for the construction of the sewage network and wastewater treatment plant. Removing the waste after the construction and location of disposal and control is of particular importance.

The proposed technical solution is in-line with the existing standards and positive regulation for this kind of projects, which implies that the implementation of the project is technically feasible and there is no risk the project not to be realized according to the plan and proposed solution.

The current situation increases the risk of environmental pollution and pollution of the underground and surface water, which is used for drinking and irrigation. Additionally, pollution of agricultural products is also at high risk. Especially, the most concerning is the fact that the underground water is very close to the surface. The old tanks used for collecting sewage water in each household are built in a traditional way with stone and they provide leakage of the wastewater in the underground. There are also some cases of illegal disposed directly in the river “Vardar”. With the implementation of the project, sewage water will be collected in sewage pipeline and will be lead into the wastewater treatment plant. The risk of leakage of the sewage water from the septic tanks into the ground will be eliminated.

8.1.3. Environmental risk factors

The biggest risk if no realisation of the project is pollution of the environment. In the settlement of Jurumleri, sewage water is discharged into septic tanks, usually constructed inappropriately. Because of this, there is a danger of infiltrating the wastewater into the underground, through which pollution of groundwater and arable land is carried out. Discharge of the septic tanks is carried out by individuals who own exhaust tanks and

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discharged wastewater into the river “Vardar” or the agricultural land. In case of heavy rainfall, overflowing septic tanks and overflowing of wastewater in the yards may occur, and the problem is the insufficient number of vehicles of communal state enterprise "Gazi Baba" for cleaning the overcrowded septic tanks. Due to this condition, pollution of the surface and groundwater, contamination of arable agricultural land and the occurrence of contagious diseases in the local population and residents of the city of Skopje where agricultural products are sold, can occur. The risk for environmental pollution, as well as the risk for contamination of the agricultural production and the risk for health of the residents will be minimized with construction of the sewage network and wastewater treatment plant subject to this project appraisal.

8.1.4. Health and safety risk

Human exposure to sewage may result in disease outbreaks and severe illnesses. Additionally, there is a risk of death from the bacteria, viruses and parasites contained in the waste. Disposal of not adequately treated wastewater negatively affects underground and surface water by potentially introducing sediment, nutrients, and chemicals that result in contamination. There is also a safety concern, because the tank may collapse resulting in an unsafe environment for people, animals and infrastructure.

Therefore, big risk for people health is contamination of the potable water and arable land if not realisation of the project. Residents from the settlement of Jurumleri use underground septic tanks built in a traditional way, so the sewage water can leak into the underground layers. Hence, there is big risk for mixing of the potable and sewage water and its contamination. Moreover, most of the agricultural products (vegetables and fruits) are sold not only at the local markets, but also at markets in the capital city of Skopje and other municipalities in the country. These additionally endanger peoples’ health in the wider environment. The implementation of the project will safe residents’ health and will allow production of healthy and quality products. Construction of the sewage network and wastewater treatment plant will allow hygiene to remain on high level and at the same time will avoid appearance of diseases between the municipality residents.

8.1.5. Social risk factors

Much of the unpaid family workers in the primary agricultural production are women who also are at the same time mostly responsible for taking care of the home and children. Young girls in this rural patriarchal community are brought up with the picture of their mothers burdened with family and agricultural duties in their minds. Females are responsible for preparing the food and to provide everything clean in their homes. At present, there is an increased risk of potable water contamination, because sewage tanks are built in traditional way providing sewage water leakage in the underground.

Another high social risk for carrying out the project cannot be perceived, because the project is for everyone’s benefit and good and will contribute to improvement of the life of all residents and the economic situation in the municipality. In Municipality of Gazi Baba, the municipal council organizes meetings with residents and open sessions to discuss the priorities of municipality development and their realization. In spite of their political orientation, the councillors cannot endanger the realization of the project. As elaborated earlier, the councillors have already expressed their support for the project.

Moreover, it was discussed in detail whether the residents are fully informed about the intended construction of the sewage network and wastewater treatment plant that are subject to this appraisal. There are no issues connected with ethnic distribution of population or inter-local community rivalry: the action will allow benefits for all nationalities. In that way, there is no risk for resident not to be informed about the project activities since the Mayor and municipal representative organised public hearing to discuss their issues with local residents.

8.2. Financial and cost-benefit analysis risk factors

8.2.1. Financial and cost-benefit risks for the municipality

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

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could be extended, by involving assumptions different from the ones used. This would enable us to predict development of the project under different conditions. The project is economically feasible and brings enormous benefits to the development of municipal economy and substantial social benefits. This is especially important if we consider the additional possible development of agriculture and processing industry, which are the largest economic benefits for the municipality. In addition, cost-benefit analyses showed the project is acceptable and desirable for implementation according to the methods used.

Once the project is implemented, the municipality will receive more revenues from wastewater treatment taxes and reallocate them to other municipal services or will use them for covering the maintenance costs of the sewage network and wastewater treatment plant. Construction of the sewage network expected to increase the property value for houses and other residential or commercial objects on the roads, 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.

The total investment costs in amount Denar 71,445,975 (Euro 1,161,723) including VAT will be provided by loan from the MSIP 2. Hence, there is no risk the municipality not to have assets to implement the project activities.

8.2.2. Financial risk for the residents

Residents agree with the view that each service must be charged and an effort must be taken to remove illegal connections and to connect all households to the sewage network in order to protect the environment and to prevent appearing of diseases to their future generations. The number of households that dispose sewage water directly into the river is not known but it is lower than in the past. With the project implementation, the residents will save time and money on empting septic tanks one or two times per month. Empting of a septic tank cost Denar 350 for a cistern that collects 2m3 sewage.

In that way, the construction of the sewage network is expected to be of everybody interest and will satisfy the needs and requirements of the local population. There is no risk of the residents not to be willing to connect or to pay for such services since they already complain about the present situation and seek for help and solution from the municipality and local communities. The residents are fully informed and aware about the costs that they will have to pay and there is no problem considering this issue. Moreover, all residents want to connect to the sewage network in order to ensure healthier and clean environment for their own and especially for their children.

Construction of the sewage network will increase the interest for opening new small and medium businesses at its location, especially in the field of agricultural production. The new businesses will work in accordance to the national and international environmental regulation and standards and their development will at the same time lead towards increase of the municipality economy.

8.3. Unquantifiable risks

The implementation of the project is expected to increase convenience and safety for the residents, but also to increase the agricultural production and to influence on opening small and medium businesses especially in the agricultural sector.

There is no unquantifiable risk that may appear due to the construction of the sewage network and wastewater treatment plant. In contrast, the project will cause significant unquantifiable benefits such as ensuring safety and comfort of residents, increasing the number of organic agricultural producers, ensuring a feeling of security by residents to produce and buy safety food, enhancing the commercial activities, as well as extending the outdoor social activities for the residents.

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9. RECOMMENDATIONS

The project will definitively improve the quality of live and standard of the residents in the settlement of Jurumleri in the municipality of Gazi Baba. At the same time, the project will protect the environment (soil, underground and ground water) from pollution. The economic analysis of the costs and benefits of the project showed that the project is acceptable and desirable for implementation according to the methods used.

Project implementation means that the residents from settlement of Jurumleri will directly benefit from the project since they will be connected to the newly constructed sewage network that will solve the challenge with leakage of sewer water from the septic tanks into the yards and agricultural parcels. The project is expected to have positive impact on increasing the agricultural production and development of new small and medium businesses that will lead to economic development of the municipality of Gazi Baba.

Additionally, the implementation of the project is expected to lead towards significant reduction of time and costs that residents have to spend for cleaning of the septic tanks. Once the project is implemented, it is also expected to increase the property value for houses and other residential or commercial objects on the roads and thus increasing the growth of municipal revenues from property taxes.

Furthermore, it is very difficult to relate the benefits of projects of this kind with the economic development and poverty levels in a certain municipality in a short-term. However, taking into account that increasing the quality of living environment and increase in productivity is linked with decreasing poverty, the project will definitely have a wide positive impact on the economic growth and the poverty level, not only in a short term but also in the long-term perspective.

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