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EBRD launches municipal and environmental infrastructure initiative in Poland with urban transport loan direct to the City of Wroclaw
To assist the rehabilitation of flood-damaged infrastructure in Poland, and launch a new initiative to support Polish municipalities with non-sovereign loans, the European Bank for Reconstruction and Development (EBRD) signed an ECU 16 million (PLN 60 million) loan with the City of Wroclaw, Poland's fourth-largest city, to upgrade public transportation facilities.
The loan is the EBRD's first direct financing package provided to a Polish city, demonstrating the Bank's confidence in the financial strength of certain Polish municipalities and the Polish system of central-local fiscal relations. To date, other international financial institution loans for flood-damage repair have been provided through Poland's central government.
"The loan from the EBRD to the City of Wroclaw is important as it contributes to restoring the infrastructure damaged by the flood of last year," said Johan Bastin, the EBRD's Director of the Municipal and Environmental Infrastructure (MEI) Team. "It is also important as it is provided to the City without any guarantee from the state. In addition to the loan, the EBRD is assisting the City in strengthening its creditworthiness, financial planning and revenue administration. The loan to Wroclaw marks the first investment of the EBRD's programme to help finance the vast infrastructure investment needs of Poland's cities. Poland has become a key country for the Bank's activities in the municipal and environmental infrastructure sector."
Following the devastating floods throughout the region in July 1997, widespread damage occurred to most vital municipal infrastructure facilities such as roads, railways, buildings and communications networks. Total cost of flood damage in Poland was estimated at US$ 2 billion, with Wroclaw, a city of 640,000 located directly on the Odra river, most severely affected. More than 30 per cent of Wroclaw was flooded for over three weeks, including 355 streets with underground infrastructure.
The EBRD began cooperation with the City of Wroclaw in a number of municipal services sectors before last year's flood. The EBRD also has a large number of municipal and environmental operations under preparation in the urban transport, water, waste-water, solid waste and district heating sectors in the cities of Krakow, Lodz, Poznan, and the Upper Silesia region of Poland.
Bogdan Zdrojewski, the Mayor of Wroclaw, said, "The long-term loan from the EBRD will help the City mainly to modernise essential public transport services. Our partnership with the EBRD illustrates confidence in the City and our long-term creditworthiness. Through further cooperation with the EBRD during project implementation, we aim to maintain the City's finances and strengthen our creditworthiness."
Funds from the EBRD's loan to Wroclaw will be used to finance the purchase of equipment, civil works and related services for the rehabilitation of the city's tram tracks, cabling systems, road repairs, as well as the refurbishment of flooded bus and tram depots.
In central and eastern Europe as a whole, the EBRD has signed commitments in the municipal and environmental infrastructure sector totalling over ECU 500 million, supporting investments of ECU 1.3 billion. The EBRD is currently working in 125 municipalities in 17 countries. Bank financing is already in place in over 60 municipalities.
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