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EBRD supports Suez-Lyonnaise des Eaux's investments in municipal services in central and eastern Europe
The European Bank for Reconstruction and Development (EBRD) has extended for a further three years the multi-project facility (MPF) signed with Suez Lyonnaise des Eaux (SLDE) in 1995. The US$ 90 million (EUR 88 million) facility will encourage private sector involvement in the provision and financing of municipal services and infrastructure.
"This agreement combines the EBRD's special emphasis on promotion of the private sector with its commitment to support decentralised and efficient municipal services as a key ingredient of the transition process," said Charles Frank, First Vice President of the EBRD. "Building on its expertise in the municipal sector, the EBRD can assume specific regulatory and municipal risks. This is one of the reasons for the appeal of the MPF to private companies."
"The potential for concession financing in the municipal services sector in these countries is considerable. The market has only really taken off in the last two years, and we expect a growing stream of projects. The MPF is an instrument ideally suited to our strategy and to the specific nature of this business," said Francois Jaclot, member of the Executive Board of SLDE. "The EBRD's participation will provide comfort in respect of the political and municipal risks associated with concession financing."
The MPF instrument combines two features that are well suited to the financing of a series of small to medium-sized projects developed by a strong and experienced private sponsor:
A set of standardised terms and conditions, which allows the processing of projects on a "fast-track" basis as the EBRD relies quite extensively on the sponsors' own due diligence and expertise in project development.
A unique risk-sharing mechanism: the private company assumes all commercial risks, while the Bank assumes certain political risks.
The EBRD financing will go to existing or new special-purpose companies, in which SLDE or its subsidiaries hold management control. These project companies will operate and invest in municipal service and infrastructure systems under build-operate-transfer (BOT), lease or concession contracts. The MPF will support projects that address urgent investment needs, improve efficiency in municipal services and which would otherwise be too small for EBRD financing.
Suez Lyonnaise des Eaux is world leader in delegated management of municipal services. Starting its expansion into international markets in the 1970s, SLDE now operates in more than 120 countries and employs over 201,000 staff. In 1998, the SLDE group had a consolidated turnover of EUR 31.4 billion, 37 per cent of which was generated outside France.
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