EBRD and EU making Lviv a better place to live

By Anton Usov, a Senior Adviser in the EBRD’s Kiev office

I have been visiting the ancient city of Lviv in western Ukraine for over 15 years now and every time I have gone back to Kiev with very mixed emotions. Lviv’s priceless historical and architectural heritage, bequeathed to us by its Polish and Austrian rulers and recognised by UNESCO, make this place a very desirable destination for a weekend break. On the other hand, the city’s decaying infrastructure, which was severely underfinanced for decades, was a depressing spectacle.

Very little has been done in the city since independence in 1991, but a lot changed in 2009 when the EBRD provided a loan of €38 million to help fund the modernisation of Lviv’s road and transportation systems.

The Bank’s initial financing programme for the largest western Ukrainian municipality was supported by the EU’s Neighbourhood Investment Facility and the governments of Austria and Canada. It focussed on the rehabilitation of tram tracks, streets and relevant infrastructure along the two most heavily-used traffic routes in Lviv, as well as on the modernisation of tram infrastructure (e.g. power substations) and depots.

The programme also facilitated the implementation of a traffic management system. A restructuring of the route network paved the way for on-going efforts to introduce an electronic ticketing system, as well as helping the city develop a parking strategy.

The EBRD’s Municipal and Environmental Infrastructure team (MEI) knows all too well that successful municipal projects in Ukraine are greatly needed but very tough to implement. This one was no exception: the reluctance of city council deputies, hostile advances by various controlling authorities and even negative media campaigns were among the obstacles they had to face. Much credit should be given to a committed (and sometimes simply stubborn) project team for making things happen.

The first results are impressive, as witnessed by a delegation of EBRD Board advisers who visited in early June. Lviv now boasts a brand new traffic control system, something which even Kiev lacks. New tram tracks were reconstructed to preserve its beautiful cobblestone streets, one of the city’s hallmarks.

This is arguably one of the most dynamic Ukrainian municipalities, so it is hardly surprising that Lviv and the MEI team have continued working energetically on new projects.

The latest one was signed in the middle of June by Jean-Patrick Marquet, the EBRD Director for Municipal and Environmental Infrastructure, and will help Lviv modernise and rehabilitate its district heating infrastructure.

This programme, organised by the Bank, will consist of an EBRD loan of up to €20 million, supplemented by grant funding of up to €10 million from the Eastern Europe Energy Efficiency and Environment Partnership (E5P) – the largest ever grant provided by the E5P to a Ukrainian municipality. TC funds are provided by the government of Sweden.

It is expected that, upon completion of the project, almost half of Lviv’s population of 760,000 people will benefit from better quality and more environmentally friendly heating and hot water services.

The EBRD loan will finance not only the rehabilitation and modernisation of heating networks but also the installation of natural gas-fired mini-combined heat and power plants and the installation of a company-wide dispatching and monitoring system. The E5P grant will be allocated for demand-side measures, such as the introduction of individual heating substations that would directly benefit consumers.

Lviv is changing and the Bank is very happy to be a part of this. There is a long way to go, but we have started a process that now looks irreversible.