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EBRD finances Europe's largest landfill rehabilitation in Zagreb
A DM 168 million (ECU 81 million) loan from the European Bank for Reconstruction and Development (EBRD) will help preserve critically important sources of clean drinking water for Zagreb, Croatia. The EBRD, which has a unique and proactive mandate to improve the environment in central and eastern Europe and the CIS, is providing the loan to the city of Zagreb to support the improvement of the city’s waste management services. The loan will be extended to ZGOS, a special purpose company that has been established by the city of Zagreb for this project. The loan is guaranteed by the city and consists of a DM 96 million (ECU 45 million) A-Loan for the EBRD’s account and a DM 72 million (ECU 36 million) B-loan syndicated to participant banks, led by Dexia Project and Public Finance International Bank (Dexia). This is the first international loan extended to the municipal sector in Croatia without a sovereign guarantee.
"The EBRD has been involved in Croatia’s municipal sector since 1994. In providing investment financing to this important environmental project without a government guarantee and solely on the basis of the city’s financial strength, the EBRD is setting a precedent for future municipal infrastructure investment in Croatia," said Johan Bastin, Director of the Bank’s Municipal and Environmental Infrastructure Team. "The structure of this operation represents a milestone in Croatia’s economic transition by strengthening the process of decentralisation. We expect this to be the first in a series of syndicated loans in the municipal infrastructure and services sector."
The proceeds of the loan will finance the rehabilitation of the Jakusevac landfill, located within the built-up area of Zagreb, a city of one million inhabitants, and will support the commercialisation and privatisation of its waste management services. The Jakusevac site is the largest uncontrolled landfill in Europe. Rehabilitation of the landfill, to be carried out according to European Union environmental standards, is essential to protect the city’s water resources. For decades waste collected in Zagreb has been disposed of at the site without any form of environmental protection, posing a threat not only to public health but also to the groundwater from which Zagreb extracts its drinking water. In addition to the rehabilitation of the landfill, the project will establish a framework for effective regulation of and private sector involvement in waste collection services in Zagreb.
"The city of Zagreb has given the highest priority to the project in order to improve the city’s environment and to safeguard an affordable and high-quality water supply to Zagreb," said Marina Matulovic-Dropulic, the Mayor of Zagreb.
Hanskarl Schmidt, Associate Director of Dexia, said: "We are pleased to co-arrange the EBRD’s syndication of this important municipal project. This project fits well within our strategy of financing local authorities in central Europe. The city of Zagreb's strong creditworthiness and the EBRD’s preparatory work, financial due diligence and involvement have been critical factors in making the financing structure bankable."
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