Rousse Water Investment Project

complete

The proposed project provides finance to upgrade and expand water and wastewater infrastructure of the Rousse Regional Water Company and improves its financial and operational performance. The project is designed to complement significant ISPA grant investment finance. The Bank will focus on renovation of the water transmission main, while ISPA grant funds will be used for water and wastewater infrastructure investments, including a construction of a new wastewater treatment plant. The proposed project would be the second ISPA co-financing of a local water utility following the financial close of the Bourgas Water and Wastewater project in June 2005. This transaction has a significant transition impact set in the context of the overall Bulgaria Water and Waster Facility (BWWF) for EUR 60 million. The sources of Transition Impact are threefold: (i) establishing an effective legal and regulatory framework for municipal finance; (ii) commercialisation of the operating company as a model for future cities under the BWWF and (iii) tariff reform. Support for the commercialisation of the Company and for institutional improvements Technical co-operation 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. Additional technical cooperation is planned to establish and support a Project Implementation Unit Demonstration effect The Operation would be the second transaction in Bulgaria where the Bank would lend directly to a state owned regional water company without a sovereign or municipal guarantee Improved financial planning and management for the City of Rousse. In order to help the City to improve its creditworthiness a Creditworthiness Enhancement Programme is planned to assist the City in defining and managing its budget, including its capital investment plans. Rousse Water Company is a regional water supply and wastewater treatment company, 51 per cent owned by the State through the Ministry of Regional Development and Public Works, 32 per cent by the Municipality of Rousse and the remaining 17 per cent are shared among other smaller municipalities. EBRD loan to the Company: EUR 8.0 million Co-finance: EUR 35.1 million ISPA Grant Other sources; EUR 3.7 million EBRD TC Donor grant; EUR 0.7 million Total project cost is estimated to EUR 47.5 million. The project was screened B/1. The renovation of water transmission main (the part of the project which will be financed by EBRD) is associated with limited environmental impacts and will result in significant environmental benefits. Potential environmental impacts of this operation will be mitigated applying internationally recognised good management practices. Associated TC programmes are: