Romania EBRD Financing for the Municipal Infrastructure Sector Bucharest Bucharest 26 June 2008

EBRD in Romania First bank to finance municipal sector – active since 1995 in financing water and wastewater sector Other sectors –active in financing projects in solid waste, urban transport and district heating Focus on local utilities - to date, nearly €500 million in financing for 31 investment programs mobilising financing of over €1.3 billion in Romania Expand support to municipal and regionalization projects in conjunction with dedicated EU programmes

EBRD has provided co-financing of nearly €220 million for EU funds of €470 million Oradea Arad Timisoara Craiova Tirgoviste Cluj Bistrita Botosani Bacau Iasi Focsani Tg Mures Braila Brasov Constanta Sibiu = Phare = ISPA = Other Sector Bucharest Pitesti Ploesti

EBRD Finance evolves with the market A : Sovereign structures – On- lending for 16 water operators. Introduced FOPIP (Financial, Operational Performance Improvement Program) which was key in improving commercialisation and long term sustainability of water utilities. B Non-sovereign loans to water operators with local authority guarantees for ISPA co-finance. Strong emphasis on implementation. In addition, municipal loans for street rehabilitation, regional roads C. Public Private Partnerships D. Today – Lending to utility operators without any kind of guarantee, in water/wastewater sector, district heating, solid waste.

A. Sovereign Structures Three loans: Municipal Utilities Development Programs (MUDP) 1 and 2, including 15 large and medium sized municipalities and Regional water Program for Jiu Valley. MUDP 2 and Regional Water Program co-financed EU Phare Created the basis for institutional development at utility level which enabled timely preparation for EU ISPA program

B. Non-sovereign financing Started in 2000, following the new law for municipal finance allowing local authorities and municipal guaranteed loans for public utilities. The Bank initiated a framework financing structure to co-finance EU-ISPA grants for water sector The loans were granted to publicly owned utilities based on the financial guarantee of the local authority The non-sovereign municipal financing was expanded to other sectors besides water such as district heating, solid waste, street rehabilitation

C. PPP Structures for Water Sector The Bank financed the only PPP for water sector in Romania in Bucharest Financing granted to APA NOVA Bucharest to finance the Crivina Water Treatment Plant. Very successful implementation. Completion of 80 M EURO Investment Program in 2 years

D. Non-recourse Financing Structures Started in 2005 with loans to public transport Companies, without municipal guarantees, based on Public Service Contracts In 2006/2007, expanded for the water sector, granting loans to public water utilities, without local guarantees, based on the Concession Contract between the local authorities and water utilities. Strategy of the Bank to support the regionalization of the water/wastewater and solid waste services, with benefits for the small and medium sized municipalities

Lending to utility operators Structural reforms have resulted in improvement in the municipal infrastructure sector Companies that have been willing to implement reforms have the ability to borrow based on their own cash flow without any guarantee. Most recent loans to Aquatim Timisoara and SC Apa Canal Oradea. Structure supports regionalisation of the water and waste water services in the County of Timisoara and Bihor. The Bank is also financing UT operators and DH companies based on Service Contracts

How EBRD supports municipal infrastructure sector 1. Water and wastewater sector EBRD supports regionalisation and is working actively to support its clients in these ventures Compania Somes – only regional operator organised along a water basin for Cluj and Salaj Counties EBRD remains active in project implementation, with dedicated staff based in Romania to support projects in the municipal sector. 2. Urban Transport- loans to operators to finance rolling stock, to local authorities to finance regional roads or street rehabilitation( Brasov, Sibiu, Iasi) 3. District Heating- loans to DH companies( Timisoara, Iasi) EBRD maintains a dialogue with the government EBRD, alongside EU and EIB, is active in JASPERS

What EBRD can finance EBRD lends directly to the utility company, provided cash flows are sufficient to support debt Client assumes responsibility for implementation, resulting in efficient project implementation and less delays in project completion EBRD will review service agreements to ensure they are structured to balance the needs of the operator and its client base

Attributes of EBRD Finance Strong understanding of market and clients due to long history of working in the sector Long term flexible structures with suitable grace periods Pricing is competitive and in line with the market Active in all phases of project, ranging from project preparation to project implementation Direct access to EBRD bankers who provide on- going client support

Contact Details Dana Craciunescu – Senior Banker, EBRD Bucharest