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EBRD €8 mln loan helps improve water services in Bulgaria
Bank works with EU, City of Rousse; around 260,000 residents to benefit
The city of Rousse will use an €8 million EBRD loan to bring improved water
supply to around 260,000 residents in eight municipalities across northern
Bulgaria.
The Bank’s loan is being provided directly to the Rousse Regional Water
Company and will help upgrade the City’s water infrastructure, including the
main transmission line. This should reduce water losses, increase water
security and improve the quality of local services.
The loan is part of a €46.8 million programme of water and wastewater
infrastructure investments in the city. The European Union is expected to
provide €35.1 million in ISPA grants, which were set up to finance
infrastructure projects in countries planning to join the EU. The EU funds
will finance the construction of a waste-water treatment plant, with the
remaining finance coming from the national budget. The project is intended to
help the company achieve European environmental standards and consequently
should have a significant impact on the quality of the environment both for
Rousse and for its neighbours along the Danube River.
Henry Russell, EBRD Deputy Director for Municipal Environmental
Infrastructure, said this project is possible because of recent government
reforms in the water sector enabling local water companies to take loans
without sovereign guarantees and to operate on a commercial basis. Also the
recent establishment of an independent water regulator should improve the
creditworthiness of water companies, making it easier to attract funding to
improve standards that will ultimately benefit local residents, said Mr
Russell.
The project was developed in close cooperation with the Ministry of Regional
Development which is the majority owner of the Regional Water Companies in
Bulgaria. Assen Gagauzov, Minister of Regional Development, said the project
represents a good example of how future investments in local infrastructure
can be financed by combining both loans and grants. He said future projects
after Bulgaria’s accession to the EU are under development along similar lines
using Structural and Cohesion Funds.
The EBRD is setting conditions on the loan that should enable the water
company to become more dynamic and commercially oriented, while other
conditions include further improving legislation and regulatory reform that
[may/should] help attract further investment in the sector.
Located on the Danube River in northern Bulgaria, close to the Romania border,
the Rousse Water Company provides water and sewage services to eight
neighbouring municipalities. The project marks the second ISPA (Instrument for
Structural Policies for Pre-Accession) co-financing with the EBRD of a local
water utility following the signing of the Bourgas Water and Wastewater
project last year.
The EBRD is the largest investor in Bulgaria, having invested more than €1.3
billion in 61 projects. In the municipal sector alone, the Bank has invested
more than €1.6 billion in 20 countries.
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