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EBRD supports first public-private partnership in Romania's municipal sector
In support of the first private concession in Romania’s municipal sector, the European Bank for Reconstruction and Development (EBRD) is providing a EUR 24.7 million loan to Aquatim, a water and waste-water company owned by the Romanian municipality of Timisoara. Aquatim provides services to a population of 380,000 in Timisoara and in smaller neighbouring communities.
The financing will be used to upgrade Timisoara's water and waste-water infrastructure. Specifically, it will support investments in the modernisation and extension of existing networks as well as in water resources, water treatment plants and sludge treatment. This will result in better services, cleaner water and a healthier environment.
The project will also involve the refinancing of the loan received by Aquatim under the Bank’s Municipal Utilities Development Programme (MUDP) signed with the Romanian Government in 1995. This will help Romania reduce its external sovereign debt.
"Aquatim demonstrates the progress achieved in Romania's municipal utility sector since the EBRD's initial involvement in 1995 despite adverse macroeconomic conditions," said Salvatore Candido, EBRD Country Director for Romania. "Since 1998 there have been considerable reforms in Romania’s municipal sector, which have strengthened the sector’s investment climate. This has allowed the EBRD to provide the first non-sovereign loan to a utility that has previously received only a sovereign-guaranteed loan."
The loan is conditional on the sale of a controlling stake in Aquatim to a water operator of international standing. The sale process, which will be in accordance with Romania’s rules for the privatisation of local utilities, is expected to begin shortly. Besides making an equity investment, this company is expected to provide expertise in public-private partnerships as well as its technical know-how.
Aquatim will be responsible, under a 25-year concession contract, for funding and implementing a long-term investment programme, which will enable it to eventually meet European Union standards, in particular regarding urban waste-water discharges. Grant funding for further investments in waste-water treatment and networks has been requested from the European Commission.
Dr Georghe Ciuhandu, Mayor of Timisoara, said: "The municipality regards the improvement of essential public services as an absolute priority. Without this public-private partnership, the municipality would have been unable to finance the vast investments that are needed. We shall also benefit from the introduction of professional management and the transfer of know-how by the private operator."
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