|
EBRD renews commitment to Riga Water in Latvia
The European Bank for Reconstruction and Development (EBRD) is lending €39 million to the Riga Water Company to improve the municipal water and waste-water system. It will be the first local service utility in Latvia to receive a direct corporate loan from an international financial institution. Under a creative structure that could be a benchmark for other municipal borrowers, the loan is backed by an undertaking municipal of support, but not a financial guarantee, by the city of Riga. In addition, it is an example of the effective approach the EBRD is taking to help improve the environment in its countries of operations.
"The transaction shows that self-financing municipal services in Latvia can be financed without recourse to sovereign guarantees," said Thomas Maier, the EBRD’s Director of Municipal and Environmental Infrastructure. "The structure is innovative, as the loan is backed by limited undertakings from the city of Riga. It also allows Riga Water to make additional investments suited to its cash flow. The EBRD’s unique capacity to provide a full range of financing products to public sector borrowers becomes increasingly important as progress is made by municipalities and in legal and regulatory practices in the region."
The new EBRD loan will provide funding for the construction of sludge deposits for Riga’s waste- water treatment plant, installation of water meters in the city and extension of sewerage and water networks in two neighbourhoods. In addition, funds will be used for the re-financing of the existing sovereign-guaranteed commitments of the company, which have been used for the upgrade of Riga’s waste-water treatment plant and sewerage network rehabilitation. The city of Riga will provide the EBRD with an undertaking of municipal support, including the city’s adherence to agreed tariff schedules and other key obligations of the municipality towards the utility.
Uldis Bambe, Managing Director of Riga Water, noted that the waste-water element of the project will have a significant environmental benefit for the Baltic Sea. "Therefore the project represents a major milestone in our efforts to comply fully with EU environmental standards," he said.
|
