Translated version of this PSD: Romanian
The EBRD is considering a sovereign loan of up to €10 million to the Government of Moldova. The investment will enable the development of a regional water supply system in Northern Moldova on the back of the existing Soroca-Balti pipeline (SBP) and will improve the quality and efficiency of water and wastewater services in the area of operations. The loan will be on-lent to the regional operating company (ROC) to be established by seven local authorities (Balti, Floresti, Soroca, Singerei, Telenesti, Riscani and Drochia) and the ministry of environment. The proceeds will fund priority investments to rehabilitate the SBP and existing water networks, increase new connections to the SBP and within the localities, reduce water losses and finance energy efficiency components. The project also aims to attract a private operator to operate the water and wastewater services across the project region.
The project will contribute to transition in the following ways:
(i) Water utilities will reorganise into a unified management and operation, i.e. the ROC, to be able to provide services on a regional basis.
(ii) Regionalisation synergies are expected to facilitate decreasing electricity consumption, reduced commercial losses, increased collection rates and increasing staff efficiency;
(iii) Introduction of service agreements (SA) defining the rights and obligations (and performance indicators) of the operator/ROC and relevant local authorities;
(iv) Private sector participation. The creation of the ROC as a unified platform will facilitate the attraction of an experienced private operator for the operation and management of the water and wastewater services in the single operation area;
(v) Signing of a contract (i.e. lease/affermage, operation and management) with a private operator. Implementation of commercial measures leading to further reduction in commercial losses and increases of invoiced quantities and further expected increases in staff efficiency.
The borrower will be the Government of Moldova represented by the Ministry of Finance.
The end beneficiaries will be the local public authorities of seven rayons – Balti, Floresti, Soroca, Singerei, Telenesti, Riscani and Drochia as well as the SBP owned by the ministry of rnvironment, which expressed the intention to associate the water and wastewater infrastructure into a ROC (the beneficiary), to act as a single operating area and to jointly coordinate the water supply and wastewater services on a regional basis.
EBRD expects to provide a sovereign loan of up to €10 million in two equal or nearly equal tranches.
The project is expected to be co-financed to an equal amount (€10 million) by the European Investment Bank (EIB) and to be supported by a grant of equal amount (€10 million) from the EU’s Neighbourhood Investment Facility (NIF).
The project will rehabilitate and extend the water supply network in northern Moldova and will also introduce up to date management practices. This investment has the potential to result in significant environmental and public health benefits. The project has been categorised B under EBRD’s Environmental and Social Policy. Phase I of the due diligence included scoping the structure of the project and reviewing applicable legislation. Phase II will involve a more detailed audit of the current environmental and social performance of the water utilities, and an appraisal of the potential impacts of the planned investment. This appraisal will include developing an Environmental and Social Action Plan and a Stakeholder Engagement Plan for project implementation.
€1.20 million was approved for pre-signing project structuring and development:
- Phase 1 (€500,000) – Due diligence and PPP feasibility analysis. Experts evaluated priority investment needs and recommended a feasible PPP option. Funded by the EBRD Shareholders Special Fund (SSF). Completed in November 2013.
- Phase 2 (€700,000) – Expected to be launched in 2Q 2014, to address final DD aspects, support the set-up of the required framework which will enable project implementation, advise the beneficiaries in setting up the required structure (ROC, Association, etc.), the preparation of a tender for private sector involvement, support during evaluation and appointment of a private operator, etc. Funding to be sought from an international donor.
EBRD will further seek TC funds estimated at €1.25 million for the post-signing project delivery (Phase 3): for project design, PIU support and support during procurement and implementation. Funding to be sought from an international donor.
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