The EBRD is considering providing a loan of up to €30 million to the company that will win an open international tender to rehabilitate urban roads and related infrastructure in the City of Buzau.
The investment will be used for the rehabilitation of 46 km of roads and pavements in the City under a long-term (approximately 12 years) performance-based Design-Build-Finance-Operate (DBFO) type contract.
The Project will improve journey times, road and pavement conditions for commuters, road and pedestrian safety, and reduce overall costs of maintaining the road network. It will also extend the City experience with long-term availability based contracts and will allow for more efficient use of public finances. This will be the City’s second availability based contract, the first being a 10 year ESCO contract covering street lighting signed in 2006.
The intention is to develop the proposed transaction under the Urban Road Management and Rehabilitation Framework (OPID 41761) as it is a part of the Bank's systematic approach to rolling out performance-based management and maintenance of roads (PMMR) contracting in Romania.
More widespread private sector participation: The project will result in private sector involvement in road management. A competitively selected company will be responsible for rehabilitating the roads and pavements and keeping the roads and pavements in good condition for the entire contract period (minimum 10 years) in exchange for regular availability payments to be paid by the City.
Benefits will also be derived from experience with the best international practice DBFO contracting to be shared by experts in the field of outsourced road rehabilitation and maintenance.
Opportunity to demonstrate performance-based contract at the urban level, to be financed directly with the private sector – this project would be the first of its kind anywhere in the region. Its preparation would provide an example for many other municipalities seeking to transform the way urban roads are financed, managed and maintained. Such contracting may be replicated in other areas of municipal services to the benefit of the City and to increase efficiency of public funds usage.
The Company will be determined through tendering procedures acceptable to the Bank. That is likely to be an SPV formed by either a larger construction company experienced in road PPPs, or a consortium made up of a road contractor and a road management company experienced in output-based contracts.
Senior loan up to €30 million.
Total project cost is currently estimated at €45 million.
Categorised B. This project is expected to result in improved journey times and better road and pedestrian safety. The main environmental and social risks are likely to relate to safety during construction and short-term disruption to residents and businesses. There may be scope to address gender opportunities through the project, and ESD will discuss this with the client.
- Environmental and Social Due Diligence. €20,000, MEI funded, non-reimbursable.
- Tender Strategy Definition for Performance-Based Urban Road PPP for Rehabilitation and Maintenance. €20,000, MEI-funded, non-reimbursable.
- Tender Design and Support for Performance-Based Urban Road PPP for Rehabilitation and Maintenance (Note: This TC will continue into the post-signing period) €350,000. TC Funds, non-reimbursable.
- A Lender Technical Monitor will be paid for by the private road contractor under the terms of the loan.
For business opportunities or procurement, contact the client company.
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