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EBRD financing to reduce pollution of Ukraine's Dnieper river
A US$ 28 million (EUR 26.5 million) loan from the European Bank for Reconstruction and Development (EBRD) will help to reduce the level of pollution in the Dnieper river. The financing will also improve the efficiency and quality of water and waste-water services in Zaporizhzhia, in southern Ukraine, bringing cleaner and safer water to the citizens of the region.
The loan will be extended to the municipal water and waste-water enterprise of Zaporizhzhia, Vodokanal. The company provides water supply and sewerage collection and treatment services for Zaporizhzhia, Ukraine's sixth-largest city with a population of 900,000 inhabitants and one of the country’s most important industrial centres. The municipality of Zaporizhzhia and Ukraine will guarantee the loan.
"This is the EBRD's first loan to a municipal entity in Ukraine, and the country’s first international loan in the water sector," said Charles Frank, First Vice President EBRD, at the signing in Ukraine. "With this project, the EBRD demonstrates that it will actively seek out investments in Ukraine that are financially viable and that support the Bank's mandate to advance the transition. It is also in keeping with the EBRD’s solid commitment to improve the environment in the region."
Olexandr Golovko, mayor of Zaporizhzhia, said: "We are proud to be the first Ukrainian recipient of an international loan for the municipal water sector. We now have the basis for a self-financing and customer-oriented service, and Zaporizhzhia can play an important part in the clean-up of the Dnieper."
The Zaporizhzhia project promotes the decentralisation of municipal infrastructure financing and services, and helps to build systems and institutions that are essential in an efficient market economy, such as setting tariffs at cost recovery levels.
"This project will provide a model for other municipal utilities in Ukraine. In particular, the Zaporizhzhia project will enable the city to develop and establish a new tariff-setting system, which could be extended to the rest of the country," said Igor Mityukov, Ukraine’s Minister of Finance.
It also sends a signal to other reform-minded municipalities that the EBRD is willing to support sound municipal investment projects. The city of Zaporizhzhia was selected by the EBRD from a number of municipalities on the basis of its openness to reforms and its constructive approach to the financing and provision of municipal infrastructure and services.
The project will help to improve daily life for much of the population by providing better quality water. The proceeds of the loan will finance a significant investment programme to upgrade the operation and services of Vodokanal and to reduce pollution levels in the Dnieper river.
The project also includes a Corporate Partnership Programme involving western operators to enhance the financial and operational performance of Vodokanal. In addition, it reforms, on a pilot basis, the tariff-setting practices for municipal services in Ukraine. Finally, the project introduces private sector participation in the municipal sector through a turnkey contract, involving the extension and operation of the company's largest waste-water treatment plant.
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