ESIF/EBRD Water Sector Financing FW

Location:

Bulgaria

Project number:

49252

Business sector:

Municipal and environmental infrastructure

Notice type:

Public

Environmental category:

FW

Target board date:

18 Jul 2018

Status:

Concept Reviewed

PSD disclosed:

20 Jun 2018

Translated version of this PSD: Bulgarian

Project Description

The Fund Manager of Financial Instruments in Bulgaria (FMFIB) and the EBRD are considering to structure and implement a framework for financing Regional Water Operators (RWOs) in Bulgaria, which will combine financial resources from the European Structural and Investment Funds (ESIF) with the EBRD's own capital resources as well as funds mobilised from other commercial sources (the framework).

Under the proposed framework, the EBRD will provide loans to RWOs and guarantees (unfunded risk-sharing) to commercial banks in relation to loans extended by the commercial banks to the RWOs.

Each loan and guarantee will be funded with equal portions of ESIF resources and the EBRD's own resources. The ESIF resource will have concessionary terms and conditions, thus lowering the overall costs of funds and making it possible for RWOs to raise long-term investment financing for key infrastructure investments.

The EBRD is negotiating with the Fund Manager of Financial Instruments in Bulgaria an operational agreement which will governs the financing framework. The agreement is expected to sign in 2018.

Project Objectives

The objective of the framework is to address the existing funding gap in the water and wastewater sector in Bulgaria and thus support the country in achieving compliance with the EU's urban waste water and drinking water directives.  The investments are expected result in improved service quality and  provide access to sewage and waste water treatment service to an increased number of Bulgarian households.

In addition, the framework will demonstrate and validate the use of commercial-based practices for financial investments in the sector as opposed to 100 per cent EU grants as has been the practice to date.

Transition Impact

Moderate Good
Good

The key transition qualities of the programme are: (a) green - sub-projects will lead to strong environmental benefits; and, (b) resilient - by demonstrating and validating the use of commercial-based practices for financial investments in the sector as opposed to 100 per cent EU grants as has been the practice to date.

Client Information

The counterpart of the EBRD in such framework is FMFIB, a Bulgarian state-owned entity, which is responsible for channelling the ESI Funds from the Managing Authority to the EBRD.

The borrowers with respect to the proposed loan products will be RWOs, providing water supply, sewage and wastewater treatment services within distinct administrative regions on the basis of signed Public Service Contracts with a Regional Water Association.

The beneficiaries of the guarantee product will be co-financing financial institutions that will be selected by the EBRD following a competitive process conducted in line with EBRD's policies and rules.

EBRD Finance Summary

EUR  115,305,148

Up to EUR 115 million of EBRD finance with an indicative split between loans and guarantee of EUR 92 million and EUR 23 million, respectively.

Total Project Cost

EUR  230,610,296

The total estimated cost of the investment projects to be financed under the framework is up to EUR 1.2 billion. The majority of the financing will be provided in the form of direct investment grants to the RWOS provided by the Managing Authority of Operational Programme Environment 2014-2020. The EBRD will co-finance the project costs thought the framework.

Environmental and Social Summary

Categorized Initial Environmental & Social Examination ("IESE") (Environmental and Social Policy ("ESP") 2014). The sub-projects to be financed under the Framework are not defined yet. Therefore, all sub projects under this Framework will be presented individually and categorised appropriately.

Each sub-project will also include project specific Environmental and Social Due Diligence ("ESDD") based on its category. Sub-projects may co-finance large-scale infrastructure projects and support achieving compliance with EU directives regarding wastewater treatment. Should the sub-projects involve significant adverse impacts on sensitive areas, land acquisition, physical or economic displacement of people, they may be categorised 'A' and would need to be submitted to Board for approval.

This PSD will be updated when the results of due diligence are known.

Technical Cooperation

Technical cooperation for due diligence, including: analysis of the environmental and social impacts, issues, risks and gap analysis, financial due diligence and technical due diligence.

The individual sub-projects will benefit from the following technical cooperation:

  • Financial and operational improvement programme which will be extended to all RWOs eligible to receive financing under the framework.
  • EU state aid expertise to ensure that the EU state aid rules are complied with during the implementation of the framework.
  • Lenders' monitor for the benefit of the Bank will monitor the programme's implementation.

In addition, the framework will benefit from an update of the ex-ante assessment for the use of financial instruments in the water and wastewater sector in Bulgaria.

For consultant opportunities under projects financed by technical cooperation funds, visit procurement of consultants.

Company Contact Information

Fund Manager for Financial Instruments in Bulgaria
office@fmfib.bg
+35928014050
+35928014050
www.fmfib.bg
30-32 Totleben Boulevard, 1606 Sofia, Bulgaria

Business opportunities

For business opportunities or procurement, contact the client company.

For state-sector projects, visit EBRD Procurement: Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

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Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

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Text of the PIP

Project Complaint Mechanism (PCM)

The Project Complaint Mechanism (PCM) is the EBRD's accountability mechanism. It provides an opportunity for an independent review of complaints from individuals and organisations concerning EBRD-financed projects which are alleged to have caused, or are likely to cause, environmental and/or social harm.

Please visit the Project Complaint Mechanism page to find information about how to submit a complaint. The PCM Officer (pcm@ebrd.com) is available to answer any questions you may have regarding the submission of a complaint and criteria for registration and eligibility, in accordance with the PCM Rules of Procedure.