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EBRD finances cleaner water and a cleaner environment in second-largest Czech city
The European Bank for Reconstruction and Development (EBRD) is providing a EUR 42.5 million loan to finance the extension and upgrading of the Brno-Modrice waste-water treatment plant in Brno, the second-largest city in the Czech Republic. With a population of 390,000, Brno is the largest point of pollution on the Morava River Basin, the main tributary of the Danube. This project will greatly improve environmental standards.
"The Czech Republic, like other countries in the region, faces a major challenge in raising adequate levels of investment funds to improve municipal infrastructure and services," said Johan Bastin, Infrastructure Business Group Director at the EBRD. "The Brno-Modrice waste-water treatment plant project provides an important model for structuring private sector involvement in the financing and provision of such infrastructure. This builds on the EBRD’s unique capacity to structure municipal utility lending and to extend a loan directly to a municipal utility without a sovereign or municipal guarantee."
The Mayor of Brno, Petr Duchon, added: "The project will help the Czech Republic meet European Union environmental accession requirements. Involving the private sector in the upgrading and operation of the Brno-Modrice waste-water treatment plant helps the city to finance such investment without burdening the municipal budget."
The EBRD’s financing will be extended to Brnenske Vodarny a Kanalizace (BVK), the partly privatised municipal water utility owned by the city of Brno, France’s Suez-Lyonnaise des Eaux (SLDE) and private Czech investors.
Mr Ivan Popel, Director for the Czech Republic of Suez-Lyonnaise des Eaux, said: "The investment in BVK is of critical importance for the strategy of Suez-Lyonnaise des Eaux in the municipal services sector in central and eastern Europe. Through this operation, we confirm our commitment to this region, where we also have a presence in Hungary and Slovenia. It underscores our firm belief in the viability of concession-type municipal infrastructure investment projects."
BVK, which has been operating and maintaining the city’s water and sewerage system for the past six years, has taken on the responsibility for financing, construction and operation of the Brno-Modrice waste-water treatment plant under a 25-year extension of the lease and operating contract with the city.
The extension of the waste-water treatment plant will be complemented by the upgrading of part of the city's sewerage system. This will be financed through a capital grant of EUR 14.2 million provided by the European Commission under its EU Phare Large Scale Infrastructure Programme.
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