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Residents in Timisoara benefit from EUR11.5 mln EBRD loan
Bank helps upgrade sewage network in local municipality
More than 350,000 residents in Timisoara, in Western Romania, are to benefit from an €11.5 million loan from the EBRD to Regia Autonoma Aquatim, the local water utility.
The 15-year loan, guaranteed by the municipality of Timisoara, will help rehabilitate and upgrade the local wastewater treatment plant and sewage network, enabling the city to meet European Union directives for wastewater treatment. The EU, through its ISPA programme, is providing €32.2 million in grant funds to support the project. ISPA is also financing a study to explore opportunities for the city to work with private investors on future Aquatim projects.
A portion of the loan is being syndicated to Bank Austria Creditanstalt, making the project the first long-term financing for a municipal utility in Romania with commercial bank participation. Susan Goeransson, a senior banker in the Municipal and Environmental Infrastructure team at the EBRD, said the willingness of Bank Austria Creditanstalt to extend its loan to 10 years demonstrates a growing confidence in the strength of local authorities and their utilities.
The loan is being provided under the Municipal Environmental Loan Facility, set up in 2000 to provide co-financing with the ISPA programme for wastewater-related projects in Romania. More than €59 million of EBRD loans have been extended in concert with ISPA grants, which help improve living standards and prevent environmental pollution through compliance with EU environmental standards. The Dutch Government also provided €2.2 million in technical cooperation funds to help prepare the overall facility.
The benefits of reforming municipal finance in Romania are beginning to show, said Ms Goeransson, and well-managed utilities and local governments that are willing to implement necessary reforms to upgrade and maintain local utilities are now in a position to obtain capital directly.
The loan is the EBRD’s sixth to Romania under the municipal loan facility. Overall, the Bank has invested €1.8 billion in the country, including about €200 million in municipal and environmental infrastructure.
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