EBRD and EU guarantee up to €40 million to Raiffeisenbank Bulgaria to help with water and sanitation project loans
- August 5, 2020
- Category: Environmental, Investment and Finance, Water Treatment, Europe
The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) are increasing aid to the water utility sector in Bulgaria to help improve water services and to encourage compliance with EU directives and foster higher levels of hygiene.
Up to €40 million of unfunded guarantees are to be offered to Raiffeisenbank (Bulgaria) to reinforce loans to regional water and wastewater operators.
The facility includes up to €20 million from the EBRD and €20 million from the European Structural and Investment Funds (ESIF) of the EU, provided through the Fund Manager of Financial Instruments in Bulgaria (FMFIB or the Fund of Funds).
FMFIB chose the EBRD to manage up to €115 million from ESIF and the national budget allocated under Operational Programme Environment 2014-2020 to develop the water sector through direct lending and guarantee financial instruments.
In addition, the EBRD will contribute its own finance resources and mobilize funding by Raiffeisenbank, unlocking a total of about €200 million for water operators.
Through loans generated by Raiffeisenbank, water utility providers will be able to address the existing funding gap in the water and wastewater sector, invest in better services and comply with EU directives on urban wastewater and drinking water.
Loans extended by Raiffeisenbank (Bulgaria) and benefitting from the EBRD and FMFIB guarantee will finance the following:
- The reconstruction of existing infrastructure
- The construction of new water supply and sewage networks
- The upgrade of potable water and wastewater treatment facilities across the country
The guarantee facility will help to mitigate the consequences of the Covid-19 pandemic in Bulgaria, where infrastructure providers are under enormous pressure to deliver vital services while facing financial constraints. Support for infrastructure providers is a central pillar of the EBRD’s response to the crisis.
Lucyna Stańczak-Wuczyńska, EBRD Director, EU banks, said:
“I am very pleased that we are signing this risk sharing agreement with Raiffeisenbank today. Raiffeisen is our long-term strategic partner in Bulgaria and together we have supported numerous sustainable investments in the country. With the new risk-sharing facility we will jointly facilitate ESIF and market funds to reach the water sector and finance essential infrastructure investments in Bulgaria.”
The EBRD is a major investor in Bulgaria. A recently approved five-year strategy identifies as one of the Bank’s priorities supporting sustainable infrastructure development through regional connectivity, green municipal solutions, decarbonization and resource efficiency. To date, the EBRD has invested almost €4 billion in the Bulgarian economy through 261 projects.
The Fund of Funds has been structuring and managing financial instruments, co-financed by ESIF for the 2014-2020 programming period. The Fund has been managing more than EUR 660 million worth of public resources and offers a wide range of products for the financial sector, including guarantees, equity funds, etc.
Dobromir Dobrev, Deputy CEO of Raiffeisenbank (Bulgaria) commented: “Thanks to our long-term partnership with European financial institutions, we have supported hundreds of projects of Bulgarian business and institutions. The current EBRD guarantee line is another instrument through which we will finance the country’s economy, especially at a time when it is even more in need of support. “