EBRD, EU and Bulgaria join forces to finance development of Bulgaria’s water sector

By Olga Rosca
@olgarosca


The cooperation was signed today by Svetoslava Georgieva, FMFIB Executive Director and Member of the Management Board, and Susan Goeransson, EBRD Director for Municipal and Environmental Infrastructure.

  • Up to €230 million for improvements in water supply, sewage and wastewater treatment in Bulgaria
  • Bulgaria’s Fund of Funds chose EBRD to manage up to €115 million from European Structural and Investment Funds and national budget
  • EBRD commits another €115 million from own resources

Hundreds of thousands of Bulgarians will benefit from better access to water supply and wastewater services thanks to closer cooperation between the Fund Manager of Financial Instruments in Bulgaria (FMFIB) and the EBRD.

FMFIB or Fund of Funds has been set up by the Bulgarian state to structure and manage financial instruments co-financed by the European Structural and Investment Funds and the national budget. It currently manages over €600 million under four operational programmes.

Under a new agreement, the EBRD is awarded by the Fund of Funds to manage up to €115 million provided for Bulgaria’s water sector development. In addition the EBRD will contribute up to another €115 million of its own funds, unlocking a total of €230 million financing for regional water operators.

The cooperation was signed today by Svetoslava Georgieva, FMFIB Executive Director and Member of the Management Board, and Susan Goeransson, EBRD Director for Municipal and Environmental Infrastructure.

Svetoslava Georgieva said: “This is an important milestone in leveraging public resources with additional private financing to improve infrastructure in the water sector and the quality of life in Bulgaria. FMFIB’s expertise in structuring and managing financial instruments combined with EBRD’s experience in financing infrastructure in the region, is a prerequisite for the successful cooperation and implementation of projects.”

Susan Goeransson added: “This cooperation is a great example of how EU member states can use resources from the European Structural and Investment Funds in a smart and efficient way. By managing EU funds and mobilising own resources, the EBRD will support investments that bring long-term, sustainable benefits to the water sector and the people of Bulgaria.”

The funds will be extended in the form of long-term loans to water and sewerage operators and guarantees to commercial banks providing loans to these companies. The maximum loan term is 15 years, with up to three years grace period.

Investments will support consolidated regional water operators to increase their efficiency and financial sustainability, rehabilitate obsolete infrastructure and reduce water losses. They will also help bring the Bulgarian water sector in line with EU environmental legislation.

The €230 million managed by the EBRD are expected to complement, in the amount of up to 20 per cent, investment grants from the EU’s Cohesion Fund. In the 2014-2020 period, over €1 billion from the Operational Programme Environment, co-financed by the Cohesion Fund will be invested in better water supply and water treatment in Bulgaria.

The EU’s Cohesion Fund aims to reduce economic and social disparities and promote sustainable development. Operational Programme Environment is a multiannual programme that funds projects which help preserve the environment, promote climate change adaption and risk prevention and management. 

Corina Crețu, EU Commissioner for Regional Policy said: “This agreement shows that financial instruments have the power to multiply the benefits of Cohesion Policy investments, also in public services. Thanks to this agreement, 220,000 Bulgarian citizens will have access to better water supply and 1.5 million to improved waste water treatment.”

Narrowing the infrastructure gap through commercialisation, reform and efficiency is among the EBRD’s priorities in Bulgaria. To date, the EBRD has invested nearly €3.9 billion into various sectors of Bulgaria’s economy in about 250 projects.