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Improved water quality for Riga: financing arranged by EBRD
To reduce levels of raw sewage being discharged into the Daugava River from the Latvian capital, Riga, the European Bank for Reconstruction and Development (EBRD) has arranged a US$ 121 million (ECU 97 million) investment package in which it is lending US$ 22.5 million (ECU 18 million) to Riga Water (RW), the municipal enterprise responsible for providing the capital with its water and waste-water services. The investment programme will also improve the quality, reliability and energy efficiency of water supplies.
"With one-third of Riga's waste water untreated, the long-term damage to the local environment has been incalculable," said Johan Bastin, Director of the EBRD's municipal and environmental infrastructure team. "As lead-financier for this project, the EBRD is furthering its commitment to the Baltic Sea Environmental Action Programme and to its own environmental mandate. It is the fourth EBRD environmental project which addresses priority hot spots in the Baltics and it will reduce pollution of the Daugava River, the Gulf of Riga and the Baltic Sea."
"Almost all the waste water generated by Riga, which is around 60 per cent of Latvia's total municipal waste-water load, will be treated before being discharged into the Daugava River, substantially reducing the environmental impact," said Uldis Bambe, General Director of RW. "There will be no further major tariff increases for water or waste-water services to finance this programme, which will resolve the issue of safety and quality of the water supply."
The financing programme will enable RW to meet its priority investment needs on a self-financing basis with the overall goal of full cost recovery, while improving operational efficiency and the quality of water services. Priority investments will be made in drinking water and waste-water treatment, pumping stations, pipeline upgrading, metering and improved leak detection systems.
The US$ 121 million investment package includes a US$ 18.9 million loan from the European Investment Bank and grants totalling US$ 11.8 million from the governments of Finland and Switzerland and the Swedish International Development Cooperation Agency. The loan will be guaranteed by the Republic of Latvia, and the city of Riga will provide additional funds from its own budget as well as the required support the project. The balance of funds will be provided from RW's own cash generation and from state and city budgets.
An important aspect of the project is the strengthening of RW's financial and operational performance by restructuring its operations and by introducing a twinning programme with Stockholm Water Company. A special unit will be established to develop the regulatory functions governing RW and to monitor its performance. RW is wholly owned by the municipality of Riga and employs 1,600 people. It was registered in September 1991 and operates under a formal statute which defines the duties, functions and powers of the utility.
The EBRD signed a similar loan agreement yesterday with the Romanian Government for a US$ 25 million (ECU 20 million) financing package to address the upgrading of municipal water and sewerage services in the Romanian Jiu valley region.
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