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

16% 17% 25% 21% 12% 4% 6% SEMED Eastern Europe & Caucasus Turkey South-eastern Europe Central Asia Russia Cyprus and Greece Central Europe 15% 5% 34% 3% 30% 14% Municipal Services District Heating and Cooling Urban Transport Solid Waste Management Water and Wastewater Facilities management

Municipal & Environmental Infrastructure

3

• Total investments: € 7.329 billion / 426 projects /
• In 2017: € 1,138 million / 42 projects
• Portfolio: € 4.302 billion

EBRD helps local authorities, including private sector operators, in the delivery

• f essential infrastructure services

Portfolio by region Portfolio by sub-sector

Note: as at 31 December 2017

OFFICIAL USE

OFFICIAL USE

As of July 2015

Water Urban Transport Solid Waste District Heating Municipal Services Nature ure of Operat ation ion

EB EBRD PROJ OJEC ECTS TS

MEI sector Water supply and wastewater treatment sector

9 April, 2018

OFFICIAL USE

5

• 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

• n and

trea eatment ent of

• f se

sewag wage and ways to mon monet etise sludge ge and wa wastewater

• Technical cooperation and support to
• perational 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

MEI sector Urban transport sector

9 April, 2018

OFFICIAL USE

6

• 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

• n of
• f pu

publi lic transp anspor

• rt in urban

areas and need to replace ageing and

• perating equipment
• Improve fin

inanc ancial al pe perfor

• rmanc

ance of

• f tra

ranspor nsport

• perat

ator

• rs 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

MEI sector District heating/cooling, parking and ESCOs

9 April, 2018 7

• 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
• perational

and financial performance of municipal district hea eating ng companies

OFFICIAL USE

MEI sector Waste management sector

9 April, 2018 8

• Cumulative investments in 26 projects to

date for €120 million across 12 countries

• Projects have focused on rehabilitation and

construction

• f

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

OFFICIAL USE

MEI sector Facilities management sector

9 April, 2018 9

• Investments in 8 projects to date for €607

million

• Projects have focused on new build

hospitals under availability payment-based PPP PPP model

• 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

OFFICIAL USE

Quasi si corpor

• rat

ate e utilit ity loans ans

Off-balance sheet borrowing for city(1) Need backing of Public Service Contract + Support Agreement

Loan ans s to priv ivat ate/ e/ PPP PPP com

• mpan

anie ies

Private sector indebtedness Need robust legal, regulatory and contractual framework

Sover ereig eign- bac acked d loans ans

Cheap but can become politicised

Munic icipal ipal loan ans s

• r utilit

ity loan ans guarantee eed d by munic icipalit ipality

Independence for self-financing city, but higher cost and burden on public debt book

Financing Municipal Infrastructure by EBRD: Matching Client Capacity to Project Needs

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.

(1) Loan within the balance sheet of the utility company

Central ral Gover ernm nmen ent Munic icip ipalit ality Utilit ility Compan any Privat ate e Compan any Municipality Utilit ility Compan any

Public Service Contract + Support Agreement

Municipality

PPP Contract

Borrower:

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

9 April 2018

21

For all further enquiries, please contact: Pa Pavel Linnik 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

OFFICIAL USE