Project description
and objectives:
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The proposed project will support the Government in establishing a funding vehicle to facilitate the identification, development and implementation of local infrastructure projects. The types of project to be supported include local water utilities, waste management, municipal building and local road rehabilitation. The project will focus on developing environmental and revenue generating projects.
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Transition
impact:
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The source of transition impact are:
Setting infrastructure quality standards
The project will contribute to the upgrade of the country's infrastructure capital stock, improve transport and municipal infrastructure services, and facilitate the achievement of EU environmental standards (in water and wastewater, solid waste, regional and local roads, public transport, etc.).
Demonstration effects from new forms of infrastructure finance
The FLAG funding vehicle is expected to have demonstration effects in terms of its governance mechanisms and project eligibility criteria for other new EU member states, but also for other future initiatives or programs involving the management of infrastructure public expenditure programmes. By creating a structured financing vehicle in the municipal sector, the project will encourage banks and other institutions to analyse the potential for similar pooled financings from their existing and future portfolios or to enter the municipal finance market directly.
Private sector participation and commercialisation of infrastructure service delivery
The project will facilitate the participation of the private sector in the finance, building and provision of infrastructure services: (i) by involving private commercial banks in both the management of the Fund and in co-financing infrastructure projects; (ii) through the involvement of private companies in the construction of infrastructure or in the provision of services, which, depending on the service, might involve private sector operators; and (iii) by providing finance for revenue-generating projects with associated programmes for cost-recovery and commercialisation at the level of each municipality and public utility.
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The client:
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The client is the Bulgarian Fund for Local Authorities and Governments (“FLAG”). It is registered as a joint stock company fully-owned by the Government which provided EUR 15 million for its initial share capital. A capital increase of a further EUR 15 million is envisaged in 2008.
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EBRD
finance:
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The Bank will provide an initial EUR 35 million senior loan to FLAG. The loan will be syndicated with commercial banks.
In the event of FLAG's planned capital increase in 2008/09, the EBRD could provide an additional EUR 35 million loan.
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Total project cost:
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EUR 50 million direct financing which can be increased to EUR 100 million in 2008/2009. Sub-projects will also receive substantial grants from the European Commission. Total estimated funding supported by FLAG could reach:
15% FLAG
85% EU
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Environmental impact:
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Screened FI.
There are no environmental issues directly associated with the proposed special purpose vehicle. However, it would be instrumental for selected municipalities to meet national and EU environmental standards.
An Environmental Checklist has been developed for environmental appraisal of sub-projects by participating municipalities/companies. All the sub-projects to be financed will need to be designed to comply with the national and EU environmental standards. The preparatory work including environmental due diligence undertaken by the Borrower should be reviewed by EBRD prior to approving the loan to ensure screening and environmental due diligence compliance with EU EIA Directive.
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Technical
cooperation:
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TC is expected to be provided by Technical Cooperation funds available from the European Commission to the Bulgarian Government for project development and implementation.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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EBRD contact:
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Arthur Schankler, Operation Leader: schankla@ebrd.com
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Procurement or tendering
opportunities:
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Visit EBRD Procurement
Enquiries: Tel: +44 20 7338 6794; Fax: +44 20 7338 7472, Email: procurement@ebrd.com
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General
enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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