The purpose of the proposed project would be to address the long-term under-investment in small and medium sized municipalities in the water sector. The proposed project will create the basis for the establishment of Regional Water Operator (ROC) at river basin level. By providing the basis for the creation of regional utilities, the project creates economies of scale and promotes long term sustainability. The project includes 5 regions in the first phase out of which EBRD is financing Cluj Salaj area and co-financed by EU Phare and the Government of Romania.
Corporate and Institutional Development: the objective of the project is to satisfy critical water and wastewater investment needs of small and medium-sized municipalities, which will improve operational efficiency.
The PHARE co-financing together with the government’s support is substantial and will alleviate affordability constraints for investments which otherwise would be difficult to finance. EBRD involvement will play a significant role in leveraging EU grant funding for environmental investments.
The project will promote the application of cost recovery principles at the local level. This will be enhanced as the project entails components for metering which will enable the ROC to accurately assess water usage.
The Clients will be:
a Regional Operating Company (ROC), a newly created limited liability company formed along river basin lines owned by an Association of Municipalities (AoM). The AoM will consist of seven participating municipalities as well as the counties of Cluj and Salaj. The newly create ROC will include the water utility of Cluj, which has experience in managing internationally financed programs such as MUDP II and ISPA.
the Romanian government as guarantor.
Salaj County as initial borrower.
Financing of €7.2 million for a stand-alone project in the Cluj/Salaj area for the creation of a regional operating company (ROC). Co-financiers for this specific project are the European Union, which will provide grant funding, and the Romanian Government. Pipe replacement in the distribution system accounts for approximately 66% of the total cost (€7.59 million). Consumer connections and meters account for approximately 16% of the total cost (€1.93 million) and appurtenances (valves and hydrants) account for approximately 6% of the total cost (€0.70 million). Rehabilitation and/or construction of new abstraction facilities, pumping stations, treatment plants and storage facilities along with monitoring account for approximately 11% of the total cost (€1.33 million).
Total is € 14.3MM, out of which:
Phare investment grant: € 5.4MM
EBRD: € 7.2MM
Govt of Romania: € 1.8MM
The proposed project will contribute to improvement of water supply and its quality to EU standards thus reducing public health hazards.
In addition to MUDP I, MUDP II and MELF this project will assist Romania in fulfilling its obligations under the EU accession process as well as under international environmental programmes targeting protection of the Danube River and the Black Sea.
Individual sub-projects such as ones for Cluj and Salaj will need to be screened individually and may involve environmental issues relating to building of new and/or upgrading of existing water and wastewater management facilities.
The Bank utilised €197,000 from an EU Framework facility to support due diligence for municipal projects. This study, which looked at the feasibility of preparing a ROC, was essential in helping the Bank evaluate a structure for the project. In addition the Romanian Government has received TC funds from EU PHARE to support the development and the implementation of SAMTID programme.
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