The proposed project provides finance to rehabilitate the water supply infrastructure in the City of Stara Zagora, which is intended to remove the rationing of water in the City. The proposed project will also improve the Company’s financial and operational performance by providing technical cooperation funds for the development of financial and operational performance improvement plan for the Company.
The sources of transition Impact are threefold:
(i) successful utility company restructuring
(ii) testing of the regulatory environment and
(iii) energy efficiency.
Demonstration of successful utility company restructuring
Technical co-operation to be mobilised by the Bank will promote the commercialisation of the Company and improve its financial and operational performance. Milestones and targets agreed with the Company will be included as covenants in the Loan Agreement. The capacity building which will take place during the project implementation will allow the Stara Zagora RWC to access EU structural funds to further support its major rehabilitation programme. In addition, the elimination of the water rationing in the city of Stara Zagora will have a strong demonstration effect to other cities which face similar problems due to years of underinvestment in their water networks.
Testing of the regulatory environment
The proposed project will play an important role in successful testing and improvement of the newly established regulatory framework in the water sector. The Company will be able to achieve a cost recovery tariff, which will allow it to finance its investments on a commercial basis.
The energy savings to be achieved through the project, would have a demonstration effect on the energy efficiency potential of water network rehabilitation. During the project preparation, the Bank will estimate the levels of CO2 savings and determine whether emission sales could be included as part of the project.
Stara Zagora Water Company is a regional water supply and sewage company, 100 per cent owned by the State through the Ministry of Regional Development and Public Works.
EBRD loan to the Company: EUR 9.0 million
Other sources; EUR 1.3 million
EBRD TC Donor grant; EUR 0.3 million
Total project cost is estimated to EUR 11.6 million.
The project has been screened as B/1, requiring an environmental audit and an environmental analysis of the proposed investments. Following the completion of the audit, any resulting recommendations will be formulated into a time-bound, costed environmental action plan ("EAP") which, once agreed with the Company, will be included in the legal agreements.
Associated TC programme is Development of Financial and Operational Performance Improvement Plan: EUR 250,000 to be identified.
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