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EBRD supports water and waste-water projects in Romania
Absence of state guarantee for investments in Iasi and Arad is signal of EBRD confidence
A combined investment of €17.7 million was made today by the European Bank for Reconstruction and Development in two Romanian municipalities to improve water and wastewater treatment. A €13.2 million loan to the water-company in Iasi, bordering Moldova, will upgrade a facility treating local drinking water. In Arad, close to Hungary, a €4.5 million loan will support the rehabilitation of a waste-water treatment plant. In both regions, the current poor quality or complete absence of treatment plants poses a potential threat to the health of the local population and the environment. In both cases, treatment will be brought to European Union Standards.
The EBRD loans form part of an environmental improvement programme i co-financed with the EU's ISPA grant programme. ISPA provides non-repayable funding towards structural projects in pre-accession countries and has earmarked €52 million for the two projects: €38.5 million to Iasi and €13.5 million to Arad.
The investments by the EBRD will be backed by financial guarantees from the two local authorities, the second time the Bank has provided direct finance to a local service utility in Romania without recourse to a sovereign guarantee. Last year under the same programme, the EBRD agreed a €20 million investment with Constanta to upgrade waste water systems on the Black Sea Coast.
Continued lending to local utilities without sovereign support is a further signal of our growing confidence in Romania's local business climate, said Thomas Maier, Director of the EBRD's Municipal and Environmental Infrastructure Team, at a signing ceremony in Bucharest today. He noted that it further reinforces the benefits brought about from the reform of municipal finance in Romania and demonstrates that service utilities and local governments in Romania that have implemented tariff reform and commercialisation are now in a position to obtain capital directly.
To date the EBRD has provided €1.8 billion to Romania including more than €150 million in the municipal and environmental sector.
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