Working with Municipal, Environment & Infrastructure Team - PowerPoint PPT Presentation

Working with Municipal, Environment & Infrastructure Team Helsinki, April 2018 OFFICIAL USE

EBRD’s role in the municipal sector • Structuring the financing of municipal infrastructure, equipment and services to improve service levels • Promote commercialisation and corporatisation of services • Support environmental, social, health and safety improvement, for energy efficient, low-carbon solutions • leveraging in climate investment funds (CIFs) and Green Energy Special Fund (GESF), including LED street lighting, waste to energy systems, and biomass projects • Development of regulatory structures Promotion of private sector involvement, where appropriate • • Facilitate donor grant and commercial loan co-financing • Manage 100+ technical cooperation assignments for 40 municipal projects annually, for a total of € 30 million per year • Active work with JASPERS across EU countries (particularly Bulgaria and Romania), with major efforts for new Public Sector Contract (PSC) for municipal utilities (public transport) now established • Provides comprehensive support for project preparation, using new Infrastructure Project Preparation Facility (IPPF) – a dedicated € 40 million Facility to improve efficiency, focus and quality of project readiness for both public sector and PPPs EBRD RD help lps s local cal autho horiti rities es meet et thei eir r infr fras astru tructur ture e needs 2 OFFICIAL USE

Municipal & Environmental Infrastructure EBRD helps local authorities, including private sector operators, in the delivery of essential infrastructure services • Total investments: € 7.329 billion / 426 projects / • In 2017: € 1,138 million / 42 projects • Portfolio: € 4.302 billion Portfolio by sub-sector Portfolio by region 12% 4% 6% 34% 3% Municipal Services SEMED Eastern Europe & Caucasus District Heating and Cooling 21% 16% Turkey Urban Transport South-eastern Europe 5% 30% Central Asia Solid Waste Management Russia Water and Wastewater 15% Cyprus and Greece 17% Facilities management Central Europe 25% 14% Note: as at 31 December 2017 3 OFFICIAL USE

EBRD PROJ EB OJEC ECTS TS Nature ure of Operat ation ion Water Urban Transport Solid Waste District Heating Municipal Services As of July 2015 OFFICIAL USE

MEI sector Water supply and wastewater treatment sector • 30% of MEI’s cumulative portfolio: 192 projects for € 2.7 billion across 32 countries • Investments to both maintenance and asset renewal to impr prove se service le levels els and to improve qual uality and deliver ery of drinking and reduction of non-revenue water • For wastewater, focus on coll collec ection on and trea eatment ent of of se sewag wage and ways to mon monet etise sludge ge and wa wastewater • Technical cooperation and support to operational and financial performance of municipal water and to introduce regulatory and tariff regimes • Focus on cost cost re reco cover ery tar ariffs within affordability levels • A financial sustainable operator provides the highest service levels resulting in satisfied customers 9 April, 2018 5 OFFICIAL USE

MEI sector Urban transport sector • 34% of MEI cumulative portfolio: over 99 projects for € 2.3 billion across 22 countries • Key factor in promoting economic growth • Strong contributor to sustainable investment goals • Reha ehabil bilitation on of of pu publi lic transp anspor ort in urban areas and need to replace ageing and operating equipment • Improve fin inanc ancial al pe perfor ormanc ance of of tra ranspor nsport operat ator ors to allow access financing • Need to introduce pu publi blic ser ervic vice cont contract cts between transport authority and operator • Investment in public transport, key to sustainable urban development, needed to counter the negative effects of rapid motorisation 9 April, 2018 6 OFFICIAL USE

MEI sector District heating/cooling, parking and ESCOs • 20% of cumulative portfolio: investments in 99 projects for over 1.6 billion across 20 countries • Meeting environmental and public health standards • Need to increase investment in modernization of heat generation facilities, rehabilitation of distribution networks and installation of control equipment • Improve ene nerg rgy effici icienc ency and optimize wa water usage • Improve heati ating ng an and hot water er st stand andar ards for the consumers • Improve operational and financial performance of municipal district hea eating ng companies 9 April, 2018 7 OFFICIAL USE

MEI sector Waste management sector • Cumulative investments in 26 projects to date for € 120 million across 12 countries • Projects have focused on rehabilitation and construction of sites as well as implementing efficient nt wa waste systems ms • Focus on meeting EU EU wa waste standards • Efficiency and frequency of collection of waste Improve adequacy of waste disposal • Need to organise wast waste mana anage gement ment • systems ms on a regional level 9 April, 2018 8 OFFICIAL USE

MEI sector Facilities management sector • Investments in 8 projects to date for € 607 million • Projects have focused on new build hospitals under availability payment-based PPP model PPP • Focus to date on meeting in interna rnational ional qu quali lity standards • Efficiency of asset management • Major focus on Turkey’s hospital PPP programme, using Framework approach 9 April, 2018 9 OFFICIAL USE

Financing Municipal Infrastructure by EBRD: Matching Client Capacity to Project Needs Loan ans s to priv ivat ate/ e/ Sover ereig eign- Munic icipal ipal loan ans s Quasi si corpor orat ate e PPP PPP com ompan anie ies bac acked d loans ans or utilit ity loan ans utilit ity loans ans guarantee eed d by Private sector munic icipalit ipality Off-balance sheet indebtedness borrowing for city (1) Cheap but can Independence for become politicised self-financing city, but higher cost and Need backing of Need robust legal, burden on public Public Service regulatory and debt book Contract + Support contractual framework Agreement Borrower: Central ral Munic icip ipalit ality Municipality Municipality Gover ernm nmen ent Public Service Contract PPP Contract Utilit ility Compan any + Support Agreement Privat ate e Compan any Utilit ility Compan any (1) Loan within the balance sheet of the utility company EBRD structures projects across the whole spectrum, e.g., from sovereign loans when legally necessary, municipal loans, public utility loans backed by municipal guarantee, operational concessions (DBOM), PPPs based on DBFO to full privatizations. 10 OFFICIAL USE

Our major lesson learned from 25 years in the municipal finance business Based on a track-record of 300+ separate transactions for nearly EUR 7 billion in direct financing: • 1. Necessary to strengthen the technical and administrative capacities of municipalities 2. Public sector needs distinct roles with clear responsibilities 3. Municipalities need to be stable and prepared for long term commitment, and have solid policies, legislation and regulation 4. Public institutions (from central to local districts) must be coordinated to eliminate conflicts of interest and overlapping functions 5. Must have appropriate and realistic feasibility studies, but also implementation and regulatory policy support 6. For PPPs, public sector must show willingness to provide support (e.g., min. volumes/revenues guaranteed; forex risk mitigation; compensation on contract termination) 7. Clear up-front agreements (MOUs or similar) with EU have helped to focus efforts: Romanian and Bulgarian examples for urban transport and water 11 OFFICIAL USE

Contacts For all further enquiries, please contact: Pavel Linnik Pa nnik Associate Director, Head of Infrastructure Procurement Unit Tel: + 44 20 7338 7861 Email: linnikp@ebrd.com EBRD, One Exchange Square London, EC2A 2JN UK www.ebrd.com 9 April 2018 OFFICIAL USE 21