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EBRD, EU to improve Wroclaw's water supply
Innovative revenue-backed finance to water company alongside Dexia
The European Bank for Reconstruction and Development is lending Miejskie Przedsiebiorstwo Wodociagow i Kanalizacji (Wroclaw Water Supply and Sewerage Company) €18 million to help it improve the water supply in Poland’s fourth largest city. The loan will replace an equivalent portion of an existing €30.2 million EBRD loan to the city of Wroclaw, which owns the water company. The loan will help the city to allocate more of its debt capacity to other sectors like roads which do not generate revenue, and will enable the water company to establish a credit history of its own. At the same time, €8 million of the €18 million loan will be syndicated to Dexia, a leading commercial bank specialising in local government and utility financing.
The loan will be used to finance the upgrade of a water-treatment plant and the extension of the sewage network. The agreement also foresees improvements in transparency and efficiency of the company’s operations. The project is complemented with funds for sewerage from the EU’s ISPA Programme, under which the City of Wroclaw was granted €36.5 million in 2000. EBRD is also arranging €150,000 of bilateral funding to help develop and implement an outsourcing programme for specialised water services.
“The loan will fund critical improvements”, said Thomas Maier, EBRD Director for Municipal and Environmental Infrastructure. He recalled that the EBRD’s first loan in Poland’s municipal sector was to Wroclaw, and said the Bank is pleased to deepen its cooperation with the city. The EBRD is committed to continue working with Polish cities after EU accession, and is already working with several cities to prepare projects for co-financing with EU structural and cohesion funds after membership in 2004.
Wroclaw Water, a limited liability company established in 1993, serves the city and surrounding municipalities. While most of the wastewater is treated according to Polish and EU standards, drinking water does not yet fully comply with EU standards. Wroclaw, with a population of 635,000, is the capital of Lower Silesia and located on the Odra River. Witold Sumislawski, managing director of Wroclaw Water, said “this loan, which does not carry a financial guarantee of the city, confirms MPWiK’s credit quality and the good organisation of water services in the city of Wroclaw, as well as our capacity to implement investments co-financed with the EU”.
The EBRD has already signed three operations with water companies in Poland, in the cities of Bydgoszcz, Krakow and Rybnik, and a fourth water loan with the city of Gliwice. The Bank also lent Wroclaw €16 million for road and tramway refurbishment in August 1998 following severe flood damage in the city, and is currently co-financing with ISPA the reclamation of a solid waste landfill in the city. The EBRD is also working with the regional government of the surrounding Lower Silesia region on preparation of environmental investments in smaller municipalities, and regional rail improvements.
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