A stand-by liquidity facility of up to EUR 5 million to help RAJA SA ("RAJA" or "Company"), the largest regional water and wastewater company in Romania, withstand the adverse impacts caused by the Covid-19 pandemic on its product demand and operations. The funds will be used for working capital needs, to alleviate receivables collection problems RAJA expects to encounter over the next year.
RAJA serves many tourist areas, including the two largest in the country: the seaside resorts in Constanta and the mountain resorts in Brasov. The company relies on groundwater for 93% of its water supply, thereby incurring large energy costs for extraction. Of all water supply in the system, 59% is non-revenue water (i.e. lost due to spillages along the distribution network, and not invoiced). Thus, the Company incurs large fixed costs, while part of the demand is tourism-dependent (45% of revenues come from non-residential consumers).
The Covid-19 crisis is set to affect tourism and other economic sectors that the company relies on. The EBRD facility is intended to help RAJA withstand this impact.
This project was approved in the context of the Bank's response to the Covid-19 pandemic. To avoid delays to the delivery of this project, the Bank's President granted a deviation from the ordinary timelines for PSD disclosure, as contemplated by Section V of the Directive on Access to Information. Details of the Bank's response to Covid-19, and this deviation, can be found on our website.
The objective of this project is to help RAJA mitigate the risks posed by the Covid-19 pandemic on its operations. It does so by providing a stand-by liquidity facility that the Company can use for working capital needs, to compensate for the reduced demand brought by the pandemic, while sustaining large fixed operating costs.
ETI score: 60
The transition impact goal of this operation is to preserve the gains achieved under the two ongoing projects with RAJA.
RAJA is the largest regional water and wastewater company in Romania. It serves over three million domestic, industrial and public sector clients in seven counties: Constanta, Ialomita, Calarasi, Ilfov, Dambovita, Brasov, Bacau. The Company is owned 99.9% owned by the County of Constanta.
EBRD Finance Summary
Total Project Cost
Covid-19 crisis response: EBRD financing effectively bridges a liquidity gap due to adverse market conditions in the Covid-19 crisis.
Environmental and Social Summary
Categorised C (2019 ESP). The provision of short-term working capital is not associated with any new environmental or social risks or impacts. Due diligence for this transaction has comprised a review of the company's annual reports and progress with implementation of the environmental and social action plan (ESAP) for the Bank's first projects with RAJA Constanta. An update on progress with the ESAP for the Bank's second project with RAJA has been requested and will be reviewed by ESD prior to the signing of this loan.
The Company has established a Covid-19 crisis unit and developed plans to ensure continuity of service. Employees have been given information and training and there are no plans to introduce temporary or permanent redundancies.
RAJA is a public utility company operating in Constanta and neighbouring counties in southeastern Romania. It currently supplies potable water for 595 thousand people and wastewater treatment services for 450 thousand people. It operates an integrated management system and is certified to ISO14001, OHSAS18001 and SA8000. Previous due diligence has confirmed that RAJA's HR systems are in line with the requirements of PR2. EBRD has financed projects to expand and upgrade water supply and wastewater treatment. Environmental and social reporting for these projects has been comprehensive and implementation of the first ESAP has been good.
This solidarity loan does not require additional monitoring or reporting. EBRD will continue to monitor RAJA's environmental and social performance via reporting for the previous transactions.
Company Contact Information
+40 754 073 217
+40 754 073 217
Strada Rascoalei 1907 5, Constanta 900178, Romania
PSD last updated
15 Jun 2020
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