Provision of a EUR 4.1 million loan to the Smolyan Water Supply and Sanitation Company (the "Company"), a state-owned water utility based in the town of Smolyan, Bulgaria. The loan will be funded with EBRD capital resources, the European Structural and Investment Funds ("ESIF") and the national budget of the Republic of Bulgaria (the latter two are jointly referred to as "ESIF contributions"). The ESIF contributions will be used in the form of repayable financial instruments.
The proceeds of the loan will co-finance the construction of new and the rehabilitation of existing water and wastewater infrastructure, jointly with investment grants from the EU Operational Programme Environment 2014-2020 (the "Project").
The main objectives of the Project are: (a) to help the Company achieve full compliance with the EU Urban Waste Water Treatment Directive in all agglomerations of more than 10,000 people serviced by the Company and (b) improve the efficiency of water supply services, reduce the share of non-revenue water and fulfil the requirements of the EU Drinking Water Directive.
ETI score: 60
The Transition Impact stems from the strong environmental benefits of the Project (reducing water losses, connecting more people to centralised sewage and waste water treatment, and introduction of wastewater treatment in compliance with EU Directives), the reduced dependence on full grant-based financing of investments as well as the strengthening of the Company's financial and operational performance through technical cooperation (TC).
WATER SUPPLY AND SANITATION COMPANY OF THE CITY OF SMOLYAN
Smolyan Water Supply and Sanitation Company is a regional state-owned utility that provides waste supply and wastewater services to 10 municipalities (Banite, Devin, Borino, Dospat, Zlatograd, Madan, Nedelino, Rudozem, Smolyan and Chepelare) on the territory of the Smolyan region in Bulgaria.
EBRD Finance Summary
The loan will amount to up to EUR 4.1 million, of which EUR 1.5 million will be funded with EBRD's ordinary capital resources (the "EBRD Tranche") and EUR 2.6 million in ESIF contributions from the EBRD-EU Special Fund (the "ESIF Tranche"). The ESIF financial resources are being managed by the EBRD pursuant to an operational agreement between the Bank and the Fund Manager of Financial Instruments in Bulgaria ("FMFIB") signed in October 2018.
The two tranches will have the same tenor but different repayment profiles and pricing. Specifically, the EBRD Tranche will be extended at market terms, whereas the ESIF Tranche will be provided at concessional terms, which will make it possible for the Company to service the loan. This may not have been possible in the absence of concessional lending.
Total Project Cost
The total project costs will be majority-financed with EU investment grants and co-financed with the proceeds of the loan.
Environmental and Social Summary
The Project is categorised B in accordance with the 2014 Environmental and Social Policy. The key environmental and social risks and impacts are mainly construction related i particularly health and safety of workers and public during excavation activities; temporary restrictions of access; increased noise, dust and vibration levels; and contractor management. Permanent resettlement is not anticipated. The environmental and social due diligence will be undertaken by TC funded consultants and the identified risks will be mitigated via an Environmental and Social Action Plan for the Project. This section will be revised with the results of the environmental and social due diligence.
Technical Cooperation and Grant Financing
EBRD has envisaged the following donor-financed technical cooperation (TC) for the Project and the Company:
- TC that covers the following activities: (1) technical and operational review of the Project; (2) analysis of the key contractual arrangements; (3) financial modelling and analysis; (4) environmental and social due diligence and gap analysis; (5) procurement review and (6) and confirmation regarding the Project's compliance with EBRD's Green Economy Transition (GET) framework. This TC will be funded by EBRD's Sustainable Infrastructure Advisory.
- TC for preparation of a diagnostic analysis of the Company and development of a financial and operational performance improvement programme aimed to strengthen the Company's operations and improved its long-term credit worthiness. This TC will be potentially financed with funding from Operational Programme Environment 2014-2020.
Company Contact Information
+359 301 625 98
+359 301 626 29
2 P.R. Slaveykov Street 4700 Smolyan, Bulgaria
PSD last updated
20 Feb 2020
Further information regarding the EBRD’s approach to measuring transition impact is available here.
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Independent Project Accountability Mechanism (IPAM)
If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).
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