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Project summary document

Project name:Bydgoszcz Water Revenue Bond
Country:Poland
Project number:31203
Business sector:Municipal and environmental infrastructure
Public/Private:Public
Environmental category:C
Board date:20 September 2005
Status:Signed
Date PSD disclosed:
Date PSD updated:
10 March 2005
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Bydgoszcz Water taps a new source of financing [Press Release]

Project description
and objectives:

The proposed project will provide the Client, Bydgoszcz Water Company (MWiK) with long term financing enabling consolidation and improvements of the water and sewerage system in Bydgoszcz. The financing will come from a European Union Cohesion Fund grant and revenue bonds issued by the Client, of which the EBRD will purchase ca. 40%.

The objectives of the project are to improve quality of water services, clean-up pollution caused in the past by inadequate treatment of waste water, and increase efficiency of water services in the City.

Transition impact:

The transition potential of the project comes from introduction to the financial market of a new financial instrument, namely revenue bonds. The target investors are pension funds, a growing group of institutional investors which regularly finance infrastructure in western Europe but not so far in Poland. If this first transaction is successful, it will create ways for other infrastructure projects to be financed by tapping into the local and regional institutional investors’ market. 

The client:

Miejskie Wodociagi i Kanalizacja w Bydgoszczy (MWiK). A Water Company owned by the City of Bydgoszcz, one of the ten largest cities in Poland. The company has been established in 1990 and since 1999 is successfully implementing the EU ISPA/EBRD financed Bydgoszcz Water Services Improvement Project, the first ISPA environmental project in Central Europe.

EBRD finance:

Purchase of Revenue Bonds up to EUR 40 million. Remainder of the bonds, up to EUR 60 million would be purchased by pension funds and other institutional investors, mostly from Poland. The bonds will have maturity of 15 years and strong security package envisaged by Polish Law on Bonds.

The European Union has recently approved an investment grant for this project of EUR 100 million.

Remainder of funds will be provided by the Client from internally generated cash flow.

Total project cost:

Total project cost is EUR 222 million.

Environmental impact:

Screening categories and rationale for classification
The proposed project has been screened B/1 at Concept Review, and subsequently revised to C/1.

Participation in the purchase of revenue bonds is not associated with significant environmental issues. The proposed priority investment programme is not sufficiently defined at this stage to allow for adequate assessment of all environmental impacts associated with the sub-projects under the programme. These will need to be assessed by the Client at a later stage in line with the EBRD’s Environmental Policy.

Information reviewed during the environmental appraisal

  • Environmental Impact Assessment for Bydgoszcz Programme for Rehabilitation and Reclamation of Water and Sewerage System prepared by DSC Consulting in July 2004.
  • Environmental Audit of the Kapusciska Water Company prepared by DHV in September 2003

Environmental impacts and mitigation measures
The proposed investment programme is associated with limited adverse environmental impacts and will result in significant environmental benefits. An environmental audit of the Kapusciska Water Company, including soil sampling, has been carried out in accordance with the Bank requirements. The audit confirmed that there are unlikely to be environmental liabilities associated with the assets. An environmental analysis of the proposed investment programme has also been carried out as part of the feasibility study. Environmental impacts during construction and operation phases have been assessed for each project component, with mitigation measures proposed for inclusion in the designs. 

The main negative environmental impacts are potentially associated with the planned extension of the Fordon waste water treatment plant. More detailed task-specific environmental investigations will take place for the Fordon expansion and the sludge incinerator. The Company will be required to carry out these environmental investigations in compliance with EBRD’s Environmental Policy, and provisions will be made in the Framework Agreement between the Bank and the Company to the effect that the Bank would not contribute to an issue of bonds designated for payments towards the relevant construction contracts unless the Bank’s environmental requirements will have been met.

Environmental opportunities
The proposed project is expected to bring significant environmental benefits, including improved drinking water quality, protection of surface water and groundwater sources, improved treatment of municipal waste water and storm water, connection of 15,000 people to the sewerage system, and improved treatment and disposal of sewage sludge. As a result of the Project implementation, the Company will achieve full compliance with Polish and EU environmental standards and regulations. 

Monitoring
The Bank will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports (AERs) prepared for the project covering:

(i) ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programmes

(ii) the status of implementation of environmental mitigation and improvement measures. The Bank’s representatives will also conduct periodic site supervision visits when deemed appropriate

Technical
cooperation:

One commitment for €130,919 against OPID 31203.

Commitment Name: Bydgoszcz Water Consolidation - Kapusciska Due Diligence

Commitment Number: ECP2000-2002-12-08/04

Fund Approved Date: 28/07/03

Commitment Amount: €130,919

Disbursement Amount: €119,578

Fund Name: EU-EBRD Cooperation Agreement, Bangkok Facility (PHARE programme)

For consultant opportunities for projects financed by technical cooperation funds, visit procurement of consultants.

EBRD contact:

Agnieszka Szymczyk, Operation Leader: szymczya@ebrd.com

Procurement or tendering
opportunities:

Visit EBRD Procurement
Enquiries: Tel: +44 20 7338 6794; Fax: +44 20 7338 7472, Email: procurement@ebrd.com

General enquiries:

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com


Project Summary Documents are created before consideration by the EBRD Board of Directors. Details of a project may change following disclosure of a Project Summary Document. Project Summary Documents cannot be considered to represent official EBRD policy.
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