Dana Craciunescu Principal Banker EBRD Municipal and Environmental Infrastructure Team Bucharest 29...
Transcript of Dana Craciunescu Principal Banker EBRD Municipal and Environmental Infrastructure Team Bucharest 29...
Dana CraciunescuDana CraciunescuPrincipal BankerPrincipal Banker
EBRD Municipal and EBRD Municipal and Environmental Infrastructure Environmental Infrastructure
TeamTeamBucharestBucharest
29 September 200429 September 2004
EBRD Lending to the Water Sector in Romania
2
EBRD: Financing Water ProjectsEBRD: Financing Water Projects
Introduction to EBRD
Water infrastructure needs and challenges
EBRD investments in Romania
Outlook
3
EBRD Water and Municipal Environmental Financing:
0
150
300
450
600
750
900
1050
1200
1350
1500
1650
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
€mln
Introduction to EBRD Introduction to EBRD
International financial institution founded in 1991, owned by 62 national and supranational shareholders, including EU
Promotes market-based economies in 27 countries in Central & Eastern Europe and the former Soviet Union
Provides finance to public and private sectors
Total commitments of €21.3 Bln Commenced lending in water
sector in 1995 with commitments of over €1.2 bln.
Key facts about EBRD
4
EBRD ApproachEBRD Approach Commercial Structure
- loan size/structure linked to capacity to repay.
- tariff increases assessed to keep within affordability
- covenants to improve financial/operational performance
Financial Discipline
- increased local level financial and managerial autonomy and control
- access to political EU/ISPA and other grant financing
Political Commitment
- municipal guarantee/support agreement
- project support agreement with central government
Objective is an independent and sustainable water business
5
Water Sector: Challenges and NeedsWater Sector: Challenges and Needs
Lack of investment in water supply and wastewater treatment threatens:
- poor quality of service (leaking pipes, inefficient equipment, groundwater pollution undrinkable water)
-decline in environmental and health standards
Water Companies have a weak financial position:
- insufficient due to low tariffs
- collection is weak impacting cash flow
- inadequate metering and IT systems impact financial and operational management
- affordability issues
Commercial banks reluctant to make long term loans available for investment
6
EBRD's Experience in RomaniaEBRD's Experience in Romania (Portfolio of € 256.2million) (Portfolio of € 256.2million)
One of first countries in which EBRD lent money to restructure water sector
Strong commitment from central government to decentralise finances to provide greater fiscal autonomy at the local level
Water services are in the jurisdiction of counties and municipalities
Services characterised by poor quality drinking water, high ground water pollution, large water losses
Approximately 60% of households connected to water in cities versus 10% in rural areas
ISPA and EU are key players in the water sector
Tariffs set at local level, but approved by national regulator
Trend away from sovereign loans toward non-sovereign and private sector
7
EBRD's Experience in RomaniaEBRD's Experience in Romania
Municipal Utilities Development Programme (MUDP) 1 (1995) and MUDP 2 (1997)
two sovereign-guaranteed loans totalling USD 28 mln and USD 75 mln, providing funds for critical investments in 15 cities
investment in priority areas coupled by strong TC component to improve financial and operational performance of the utilities
metering and tariff increases have resulted in lower water volumes
in more successful projects, political will to support tariff increases, cost reductions and improved collections, resulting in improved finances of the water companies
9
EBRD Experience in RomaniaEBRD Experience in Romania
Municipal Enrivonmental Loan Facility (MELF) €110 million
MELF loans provide co-financing for ISPA projects on a non-sovereign basis
EBRD willingness to lend is based on cash flow of water company coupled with municipal guarantees
Most loans are to existing MUDP clients, with a demonstrated track record coupled with the political will to reform
MELF clients include water utilities in Constanta, Brasov, Iasi, Arad, Timisoara,Tg Mures,Oradea, Sibiu, with loan under preparation for Bacau
Apa Nova
€55.4 million loan to finance the water treatment plan for a water concession with Veolia (formerly Vivendi Environment) as operator for the city of Bucharest
DEG as a co-financier
10
OUTLOOK - RomaniaOUTLOOK - Romania
Significant investment needs
Metering and tariff increases are resulting in rationalisation of water to EU levels
Optimistic for water investment, due to EU Accession and availability of ISPA grant funding
Growing interest in privatisations and public private partnerships
Growing interest of commercial banks to lend under EBRD's umbrella
SAMTID - Government initiative to consolidate and regionalise services of water operators to create financial strong water operators, sovereign financing involving EU, EBRD and EIB
Institutional capacity to implement projects is growing
11
OpportunitiesOpportunities Technical cooperation assignments
Investment opportunities
Equipment sales
→ As water projects are categorised as public sector, EBRD’s public procurement rules apply – open tender
→ To be eligible for EBRD and ISPA financing, tender to award concession needs to be competitive
12
MEI team ContactsMEI team ContactsRomania
Susan GoeranssonTel: +44 20 7338 7940Fax: +44 20 7338 6964e-mail:
Dana CraciunescuTel: +40 1 202 71 00Fax: +40 1 202 71 10e-mail:[email protected]
www.ebrd.com