Sofia Water Infrastructure PPP



Project number:


Business sector:

Municipal and environmental infrastructure

Notice type:


Environmental category:


Approval date:

28 May 2008



PSD disclosed:

26 May 2005

Project Description

The proposed project consists of a syndicated senior loan of up to EUR 51.54 million to the Company. Portion of the loan, amounting to EUR 25.6 million, will be used to co-finance the Company’s six year capital expenditure programme estimated at EUR 146.4 million. The remaining amount will be used to refinance the existing EUR 25.9 million EBRD syndicated loan. Up to 60 percent of the transaction will be syndicated under an A/B Loan structure.

The investments will focus on bringing the City of Sofia into compliance with EU directives and to accelerate the achievement of performance targets under the Business Plan of the Company for the period 2009-2013 and the amended Concession Agreement.

The Client is Sofiyska Voda AD (SV), a joint stock company incorporated in Bulgaria, concessionaire for Sofia’s water and waste water systems. The project will finance the rehabilitation and upgrading of Sofia’s water supply and sewerage networks.

Alongside the Company’s investments, the City of Sofia will invest EUR 58.5 million into upgrading the Sofia waste water treatment plant (WWTP) financed by a grant from the EU ISPA programme and an additional loan to the City from EIB to cover the City’s commitment to co-finance the grant. The Financing Memorandum for the project between the Government of Bulgaria and EC was signed in January 2006.

Transition Impact

Regulatory environment

The project will play an important role in successfully engaging with the recently established regulatory framework in the water sector. The Project is based on a recent ruling by the Regulator which approved a Business Plan for SV with investment requirements linked to associated tariff increases. The Bank’s involvement to date has been instrumental in encouraging the Regulator to demonstrate 'best practice' in fulfilling its regulatory role. A signed loan will be perceived as validation of effective regulation in Bulgaria in the water sector.

Demonstration effect

The original Concession Agreement and the performance of SV has been closely scrutinised by the Regulator, the City, the public and, most importantly, other market participants in the sector in Bulgaria and in the region. Through the Project, the Concession Agreement will be reviewed and the proposed changes under the planned revised Concession Agreement assessed for their creditworthiness. The opportunity to support the parties in concluding a formal review of the Concession Agreement and to improve both the actual and perceived performance of a high profile PPP will be highly positive for transition. In addition, SV is one of the only examples where a private operator will be managing assets financed under the ISPA programme providing further demonstration effect of effective and mechanisms to combine publicly funded assets with private operation.

Promotion of Private Sector Participation

The Government is preparing a programme to offer selected regional water companies on concession type structures. The example of SV, once it is perceived to have successfully completed the negotiations on the amended CA, will have a strongly positive impact on the willingness of government to pursue this strategy. Equally, resolution of SV contractual relations combined with demonstrated effective regulation of the sector (see above) will encourage private parties to engage with the Government as potential bidders for the operation of such assets. Success of the Sofia concession will be of paramount importance on the perception of private sector participation in municipal service provision by decision-makers in the cities across the region.

The Client

Sofiyska Voda AD, a joint stock company incorporated in Bulgaria, responsible, as concessionaire, for water and wastewater systems in the City of Sofia. The Company is 77% owned by United Utilities (Sofia) BV (a holding owned in turn by UU Europe BV, of which 50:50 shareholders are UU plc and EBRD) and 23% by Water-Supply and Canalization EAD, wholly owned by the City.

EBRD Finance

Senior loan of up to EUR 51.54 million to the Company, of which, in line with the existing loan issued to SV by the Bank in 2000, up to 60% would be syndicated as a B loan.

EU ISPA grant for EUR 58.5 million co-financed with a loan from EIB will finance the upgrading of a WWTP.


Project Cost

EUR 96.9 million.

Environmental Impact

The project was screened B/1 by the Bank and an environmental due diligence was undertaken of the Project by an independent environmental consultants.

The due diligence has confirmed that the current 2009-13 Investment Plan has been developed to work to-wards compliance with EU and Bulgarian legislation and standards. Once the programme is implemented in full then Sofiyska Voda AD will fully comply with EU accession agreement requirements on the quality of wastewater effluent discharges by 2013, but it is unlikely that the sewerage network will achieve 100% City coverage. Overall, the Company demonstrates good awareness of its environmental responsibilities and has sound basic systems in place to ensure that any issues or breakdowns are reported internally and to the responsible authorities. The new initiative to become ISO 14001 accredited by early 2009, will further serve to mitigate environmental risk from their internal systems.
The Bank has developed an environmental and social action plan (ESAP), which is aimed at institutional strengthening at the Company.

Technical Cooperation


Company Contact

David Ordman, Chief Financial Officer
tel. +359 2/ 812 25 78
fax: +359 2/ 812 24 98


Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168

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