3 5 Boldracchi PPT3

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Stream 3: Infrastructure for entrepreneurship Coordinator: CEI Hotel Devin Thursday, 24 November 09.00-10.30 Roundtable: Urban infrastructure development in CEI countries – success stories and best practices in municipal projects

Raffaele BOLDRACCHI Central European Initiative - CEI Summit Economic Forum Bratislava 24/11/2005 : 

Raffaele BOLDRACCHI Central European Initiative - CEI Summit Economic Forum Bratislava 24/11/2005 The role of the Donors in supporting the EBRD’s Municipal Infrastructure Investments

Contents of the presentation: 

Contents of the presentation 1. The EBRD and its Official Co-financing Unit 2. Helping Municipalities to meet infrastructures needs 4. Donor’s role in supporting MEI 5. Lessons learned 6. Future developments 7. TC Assignments and Procurements activities under tendering.

The EBRD: 

The EBRD International financial institution, promotes transition to market economies in 27 countries from central Europe to central Asia Owned by 60 countries and two inter-governmental institutions Capital base of €20 billion Cumulative commitments €28.4 bl. Total project cost € 88.5 bl. Unaudited September 2005

The Official Co-financing Unit (OCU): 

The Official Co-financing Unit (OCU) funding of Technical Cooperation (TC) projects to facilitate Bank’s investment projects through the EBRD TC Fund: €1.1 billion. co-financing Bank investment operations through the Official co-financing: € 9.7 billion.

Helping municipalities to meet their infrastructure needs: 

Structuring the financing of municipal infrastructure, equipment and services Promote commercialisation and corporatisation of services Development of regulatory structures Promotion of appropriate private sector involvement Environmental improvement Facilitate EU grant and commercial loan co-financing Helping municipalities to meet their infrastructure needs

EBRD’s objective: Greater efficiency and higher quality in the provision of local authority services.: 

EBRD’s objective: Greater efficiency and higher quality in the provision of local authority services. €1.9 billion committed to €5 billion in investment Projects in over 120 municipalities Over 30 million population served by EBRD-financed municipal projects Trend towards non-sovereign and private financing 37% Sovereign 40% Private 23% Municipal EBRD’s municipal projects have had a successful track record since 1996

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MEI Sectors MEI Regions

Donors’ role in supporting Municipalities investments: 

Donors’ role in supporting Municipalities investments Assists in developing municipal creditworthiness and improving budgetary and fiscal practice Support in project appraisal and transaction structuring Providing co-financing Reduced risk reduces City’s cost of borrowing in the medium term

The Donors technical cooperation: 

The Donors technical cooperation Focus on investment projects (€73.1 million committed): 70% of commitments : project implementation or preparation

The Key Donors: 

The Key Donors 43% 28% 12% 11% 5%

Examples of TC Donor funding: 

Examples of TC Donor funding Netherlands – Croatia Small municipalities Grant Fund - €2.5 m. Austria – Municipal Infrastructure Fund - €0.5 m. Italy – Private Sector Development in W. Balkans - €4.0 m. EC – Municipal Investment Support Programme - €1.5 m. EC – Municipal Finance Facility (TC) - €21 m. EC – Municipal Finance Facility (CF) - €9.0 m.

The EU/EBRD Municipal Finance facility: 

The EU/EBRD Municipal Finance facility To develop and stimulate commercial bank lending to small and medium-sized municipalities in the new EU State Members and Romania and Bulgaria. The EBRD approved the Municipal Finance Facility for a total amount of EUR 100 million with EU PHARE Grant support of EUR 15 million. The Facility works through Partner Banks (commercial banks) and provides finance in the form of credit lines and risk sharing. The main objectives are to encourage expansion of financing to municipalities with less than 100,000 inhabitants (or 150,000 in case of Romania and Bulgaria) for infrastructure investments. In 2004, the EBRD signed 3 projects for a total amount of EUR 38 million of which 2 projects were risk sharing facilities in Poland and Slovakia and one was a credit line in Romania.

The Donors Official co-financing in support of MEI investments (€1,588 million): 

The Donors Official co-financing in support of MEI investments (€1,588 million)

EBRD helps mobilise EU – ISPA (Instrument for Structural policies for Pre-Accession) co-financing: 

EBRD helps mobilise EU – ISPA (Instrument for Structural policies for Pre-Accession) co-financing Memorandum of Understanding between EBRD and ISPA signed in April 2000 EBRD project appraisal consistent with ISPA evaluation process Co-operation in organising technical assistance Assistance to municipalities in preparation of applications to ISPA for co-financed projects Agreement on procurement requirements Approximately €400 million in EBRD-ISPA co-financing Total project value of almost €1.3 billion Over €650 million of projects in pipeline Projects in Czech Republic, Estonia, Lithuania, Poland, Romania, etc. Co-operation with ISPA EBRD-ISPA Track Record

Municipal Environmental Loan Facility (MELF) in Romania with the EU-ISPA Programme: 

Municipal Environmental Loan Facility (MELF) in Romania with the EU-ISPA Programme To provide co-financing to EU-ISPA funded investments in the water, waste-water and solid waste management sectors, in several municipalities. Individual sub-projects to receive 50-75% grant funding from EU-ISPA and EBRD co-financing will range between 25-50% from the total cost of the sub-projects. By the end of 2004, the MELF has approved nine projects in Constanta, Iaisi, Arad,Brasov, Targu Mures, Bacau, Timisoara, Sibiu and Oradea. The total projects cost is € 393.9 million, and the EU-ISPA Programme has contributed with €298.7 million.

Key Lessons learned : 

Key Lessons learned Strong stakeholder support is crucial Utilise financing structure appropriate to a particular market Focus on co-financing early in the project cycle TC support critical for both preparation and timely implementation Transition

Future developments: 

Future developments Replication of water sectors approach into other MEI sector (e.g.: urban transport, solid waste, district heating). Expansion of local authorities access to capital: Sub-sovereign guarantee is the key tool) Continued presence in ATC and extensive co-financing with commercial banks and EU Funds Continued presence in ITC of W. Balkans and Russia Focus on ETC Countries – Grant co-financing required

TC assignments in preparation: 

TC assignments in preparation St. Petersburg District Heating Reform – EU Funded Zagreb Solid Waste Management Project – Transaction Adviser – EBRD funded Burgas Water and Wastewater project: Burgas Water Company – FOPIP – Austria funded Karlovac Wastewater Management - FOPIP – Italy funded Harkiv Wastewater Treatment Commercial due diligence andamp; IFRS Audit – EBRD TC Fund Subotica wastewater Treatment Plant PME Italy funded

Procurement of goods, works: 

Procurement of goods, works Gdansk Water infrastructure Company project – EBRD/EU Cohesion fund – Works – Open procurement Tajikistan Kudjan Water Supply Improvement Project – EBRD – Works andamp; goods – open procurement Karlovac Wastewater management – EBRD/EU ISPA – Services, Goods, Works – Open procurement FYR of Macedonia - Municipal and Environmental Programme – EBRD - Works – Open procurement Syktyvkar Municipal Water Services development – Installation, Works and Goods – EBRD/NDEP – Open procurement

Thanks for your attention: 

Thanks for your attention boldracr@ebrd.com www.ebrd.com

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Stream 3: Infrastructure for entrepreneurship Coordinator: CEI Hotel Devin Thursday, 24 November 09.00-10.30 Roundtable: Urban infrastructure development in CEI countries – success stories and best practices in municipal projects