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Romanian towns to benefit from restructured EBRD loan
Bank helps municipal water network in Timisoara transform into regional commercial company
The EBRD is restructuring an earlier €11.52 million loan to Regia Autonoma
Aquatim to support the consolidation of the Timisoara-based municipal water
utility and its transformation into a commercial regional company.
As a result, the company will also extend its provision of water services to
provide water services to smaller towns in the county of Timis, commencing
with the towns of Deta and Jimbolia.
The restructured credit will be the first long-term loan to a Romanian
regional water utility without a sovereign or local authority guarantee.
Funds from the original loan, signed in December 2003, are being used by the
water utility to give the more than 350,000 residents of the western Romanian
town access to wastewater treatment plant and to the sewage network. That
number of people being served with water services will rise by 24 percent
following the expansion into the new towns.
The transformation of the company is in line with Romania’s national strategy
for the water sector, which highlights regionalisation of water operators as
being crucial to improving services to smaller towns. This change will also
help smaller towns get greater access to capital from EU sources which so far
have had no benefit from any news investment funds or restructuring.
The loan is being provided under the Municipal Environmental Loan Facility,
set up in 2000 to provide co-financing with the European Union ISPA
(Instrument for Structural Policies for Pre-Accession Facility) programme for
wastewater-related projects in Romania. To date, EBRD has provided
co-financing for 12 EU – ISPA projects providing more than €120 million to
co-finance project valued at over €500 million. The Dutch Government also
provided in technical cooperation funds for both project preparation and
implementation of this facility. Bank Austria is a co-financier.
The benefits of reforming municipal finance in Romania are beginning to show,
said Susan Goeransson, a senior banker in the EBRD’s Municipal and
Environmental Infrastructure team. Well-managed utilities that are willing to
implement necessary reforms to upgrade and maintain local utilities are now in
a position to obtain capital directly, Ms Goeransson said.
The loan is the EBRD’s 32 loan in the municipal sector in Romania. Overall,
the Bank has invested more than €3.47 billion in the country, including about
€430 million in municipal and environmental infrastructure.
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