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EBRD issues first multi-sector loan in Romania
€51.5 mln to improve transport, heating services and undergo city renovations
The EBRD is lending €51.5 million to the General Council of the City of Bucharest to finance a multi-sector project to improve transport, district heating services and renovate infrastructure in the city's historic zone.
The loan, which does not require a guarantee from the national government, will be used to finance a traffic-management system to improve traffic flow in Bucharest and to support the regeneration of the city's historic zone, including pedestrianisation of some streets. Part of the loan will also go to Radet, the district heating company, to renovate thermal substations to improve heating services for 1.2 million residential customers and reduce energy losses.
The loan is being syndicated to two Austrian banks, Raiffeisen Zentralbank Oesterreich AG and Oesterreichische Volksbanken, making the project the first municipal long-term financing (eight years) in Romania with commercial bank participation.
Hildegard Gacek, head of the EBRD office in Romania, said the project is an example of a new type of transaction combining different areas of municipal infrastructure. By improving transport, infrastructure and heating services, Ms Gacek said the project should help improve living standards for local citizens. The project is also part of the EBRD's strategy to provide municipalities in Romania with long-term loans with commercial bank participation.
The Swiss Government, through the State Secretariat for Economic Affairs, is co-financing the multi-sector project for Bucharest by providing a non-reimbursable grant contribution of up to 11.5 million Swiss francs (€7.1 million) to prepare and provide equipment for the district heating component. The European Union, through its PHARE programme, provided grant funds for due diligence and project preparation.
Traian Basescu, Mayor of Bucharest, said the EBRD loan is important for the city of Bucharest. In addition to helping improve many services in the city that will benefit our many residents, the Bank's loan is helping Bucharest Municipality gain access to the commercial market, and helping us to introduce commercial practices, Mr Basescu added.
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