Neva Tunnel St. Petersburg. Photo: Tommi Tuomi

1 Jun 2008

Lights in the tunnel

Seen as a major step forward in improving the health of the Baltic Sea, the new Neva sewer investment programme will cut down the direct discharge of untreated wastewater from St. Petersburg to the Gulf of Finland. NIB is acting as lead bank for this recently established environmental project.

“The quality of St. Pete tap water? It’s alright, I drink it,” Felix Karmazinov says, smiling proudly.

Mr Karmazinov is the head of Russia’s largest municipal water utility Vodokanal of St. Petersburg. He may well be proud of his company’s achievements today: modern wastewater treatment plants, drinking water cleaned with ultraviolet rays, efficient sludge utilisation, and many awards, national and foreign.

20 years ago, when he was appointed the head of the company with tens of kilometres of corroding water and sewage pipes, no one in the city would dare drink the tap water. Both then and now, tap water is taken from the river Neva, to which the city used to discharge at least half of its sewage.

Sewage poured into the river and, after several kilometres’ journey, ended up in the Gulf of Finland. This simple scheme made St. Petersburg the largest single point source polluter in the Baltic Sea area.

In 1987, the first 12-kilometre leg of the city’s badly needed underground sewage collector was nearly completed, and the construction of the second 12 kilometres was about to begin.

Thanks for moral suport

“The financing was rapidly shrinking for upgrading the city’s water supply and sewage network. We at the company were nearly desperate, the situation seemed incurable, the authorities preferred not to be reminded of the ongoing projects,” Mr Karmazinov says, recalling the crisis-hit years from the late 1980s to the early 1990s.

Tunnelling works on the second leg of the sewage collector came to a halt in 1990 and were not renewed until 2003. The attitude towards the Vodokanal projects has changed in the city and at the federal level. Now Russia is keen to allocate major financial resources from the federal and municipal budgets for St. Petersburg wastewater treatment projects.

“Russia is changing as we speak,” says Mr Karmazinov. “What helped us see the light at the end of the tunnel in the 1990s was cooperation with our closest neighbour, Finland. We are grateful to the Finns for their moral support. They also helped us discover modern water treatment technologies and learn how to raise loans with international financial institutions.”

IFI financing essential

The availability of long-term financing from IFIs, including NIB, in the framework of the Northern Dimension Environmental Partnership (NDEP) has been critical for accomplishing a number of projects aimed at reducing direct sewage effluents from St. Petersburg to the Baltic Sea.

The construction of the Southwest Wastewater Treatment Plant completed in September 2005, with NIB as a lead bank in structuring foreign financing, allowed the closure of two major direct discharge points. Since then, the city has treated 85% of its wastewater.

The plan is to increase treatment to 95% by 2012. This level of wastewater treatment will be in line with EU directives. To achieve it, Vodokanal plans to increase the reliability of the sewer systems and upgrade wastewater treatment (more on the project). The total cost of the investment stands at EUR 890 million.

The tunnel

More than half of this amount is being provided for the project Neva Closure of Direct Discharges of Untreated Wastewater in St. Petersburg. The project provides for building the second leg of the sewage collector along the Neva and a network of smaller sewers that will allow the closure of almost 400 municipal and industrial direct discharge points.

Vodokanal is working at full speed to build the collector 80 metres underground. The 12-kilometre leg will extend the existing underground collector in the southern part of the city to the network and a wastewater treatment plant in its northern part. The leg consists of two identical parallel tunnels, both concrete-coated and four metres wide.

“We will be doing maintenance every second year of course, once the collector is launched, but this coating is ageless, very solid. The tunnelling method is the same as for building metro lines,” explains Yuri Popov, head of Vodokanal’s tunnelling division. He is hosting the excursion in the tunnel for NIB Bulletin.

One of the parallel tunnels will be set in operation as early as in September 2008. The second one is expected in 2010. Any risks the completion will be delayed?

“There are no major risks. We have not yet, however, received a specific tunnelling shield from a local manufacturer. The delay has lasted two months, but it’s on its way now,” says Mr Popov.

Otherwise, all strategic and financing decisions as well as the cash flow are in place, and, according to Mr Popov, the salary of the tunnel building workers is higher than the average in the city, so the project will not stop because of a labour shortage. Yuri himself started his career as a tunnel building worker in the midseventies.

NIB a lead bank

The Neva direct discharge closure planned for the period until 2012 is expected to become a new NDEP flagship project, in which NIB acts as a lead bank and coordinator of the financing structure. The environmental load reduction resulting from the project is estimated to be the equivalent of discharge from 1.1 million persons (see the chart).

“The project serves NIB’s environmental mandate and enjoys the strong support of our member countries, particularly Finland and Sweden, as its implementation will have significant positive cross-border environmental effects,” says Johnny Åkerholm, NIB’s President and CEO.

The Bank’s cooperation with Vodokanal dates back to 1997. NIB has had three loan agreements with the company. The Bank’s total exposure of loans outstanding to Vodokanal, as of 30 April 2008, amounted to EUR 52 million, or half of all the Bank’s environmental loans outstanding in Russia.

What’s after 2012?

After the tunnel is built, some direct discharges to the Neva will still continue in St. Petersburg. This volume is now estimated to be 110,000 cubic metres per day of mostly industrial sewage. Closing the remaining discharge points is expected to last until 2015. Vodokanal’s strategic goal is to treat no less than 98% of the city’s wastewater by then.

“And that will not be all. The city is growing, and so is the sewage. We are constantly mulling new investments. There will be a large-scale programme that will include new drinking water plants, new under- and aboveground sewer sections, as well as tens of kilometres of new tunnels,” says Mr Karmazinov, adding that Vodokanal’s work calendar is booked well into the future.

 

 

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