Investment Projects in Municipal Infrastructure

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Investment Projects in Municipal Infrastructure

• Opportunities for the Czech Private Sector
• Seminar Prague, 13 September 2007

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Why Municipal Infrastructure?

• EBRD has dedicated team
• Important in improving lives of citizens
• Emphasis on decentralisation and
  commercialisation of services
• Vital to developing economy

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Focus on Local Services
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Organisation of EBRD Banking Department
Central Europe
Energy
SE Europe Caucasus
Financial Institutions
Infrastructure (Transport and MEI)
Russia Central Asia
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Municipal and Environmental Infrastructure (MEI)
Banking Team

• MEI Team is within
• Infrastructure Group
• 32 professionals
• 50 in the field
• Additional headcount support for MEI within the
  Bank
• Mix of bankers, sector and procurement
  specialists
• Growth through re-organisation

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MEI a decentralised sector team

• HQ London 16
• Bucharest 2
• Moscow RO 6
• Kiev RO 1

• Warsaw 1
• Zagreb 1
• Prague 1
• St Petersburg 2
• Tbilisi 2

Soon to be in Belgrade
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EBRDs role in the municipal sector

• 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 donor grant and commercial loan
  co-financing

EBRD helps municipalities meet their
infrastructure needs
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Municipal infrastructure is a growing part of
EBRD activity
Cumulative Business Volume

• 1.9 billion committed to 7.5 billion in
  investment
• Trend towards non-sovereign and private financing
• 5 Sovereign
• 40 Private
• 55 Municipal
• Business volume by product
• 75 debt
• 25 equity

164 operations
(as of August 07 including EE)
EBRDs municipal projects have had a successful
track record since 1996
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Current financing products used
MEI structures each product according to project
needs
Municipal lending
Non-sovereign public lending to municipalities
Limited or non-recourse project financing to
public or privately-owned concession companies
Loans to utilities
Equity
Investment in private sector concession companies
Revenue and project bonds
Revenue bonds backed by cashflows
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Municipal Environmental Infrastructure
Summary

• Financing for 164 projects, plus 32 re-financings
• Projects in more than 140 municipalities
• Population served by EBRD supported utilities gt
  36 million

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Municipal Environmental Infrastructure
Summary (ii)

• gt 2 billion committed to 7 billion in
  investment
• Trend towards non-sovereign and private financing
• lt 10 Sovereign
• 20 Private
• 70 Municipal
• Business volume by product
• 94 debt
• 5 equity
• 1 guarantee

EBRDs municipal projects have had a successful
track record since 1996
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MEI works with

• Local and regional authorities
• Public and private municipal and regional
  utilities
• International private operators
• Specialised financial intermediaries
• The central government (ETC countries)
• Donors

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MEI Portfolio by Sector
as of end July 2007
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Municipal business sectoral breakdown
(cumulative)
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MEI Portfolio by Region
as of end July 2007
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Municipal activities are evolving with the market

• Shift from sovereign to sub-sovereign and private
• Increased co-financing with commercial banks
• Diversification to non-water sectors
• Moving East and South
• Spear-heading business in second-tier cities and
  regions away from national capitals

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EBRD moving South and East
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Moving East brings results some highlight
deals
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..while remaining at the cutting edge in Central
Europe
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Signed Projects in municipal sector in Russia

• St. Petersburg several projects with the
  City and the Vodokanal
• Ufa District Heating
• Archangelsk Water Infrastructure
• Surgut District Heating and Water Modernization
• Krasnodar Tram Modernization
• Togliatti Bus Project
• Syktyvkar (Komi) Water Infrastructure
• St. Petersburg Flood Protection

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St. Petersburg Waste Water Treatment Plant

• Completion of the SWWWTP to reduce the discharge
  of untreated waste water in the Gulf of Finland
• Loan of 35.5 mln for lab equipment, UV systems,
  clarifiers, aeration systems and area piping
  equipment
• High proportion of donor financing (25) EU,
  Finland, Sweden and NDEP
• Loan to a special purpose company under the
  support of the City
• Opened on September 22, 2005
• Potential additional projects with St. Petersburg
  Vodokanal

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Ufa District Heating Project

• 360 million Rouble loan
• 10 years
• Borrower Municipal Company
• Guarantor City of Ufa
• Installation of individual heating sub-stations
  equipped with automated control and regulation
  systems, as well as heating meters, in about
  one-third of the citys 5,500 residential
  buildings

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Togliatti Bus Project

• Financing of 100 new buses
• Fast Track 4 months from concept to signing
• 370 million Rouble loan
• Disbursed for the purchase of MAZ buses
• Borrower Municipal bus company
• Guarantor City of Togliatti

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Supporting PPPs EBRD Mandate

• MANDATE To support the transition to a market
  economy
• Promote private sector economic activity
• Infrastructure investment to stimulate economic
  development
• Transparency and good corporate governance
• Benefits of competition and efficiency in service
  delivery

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EBRD Mandate and PPPs

• PPPs meet the transition test
• Utilisation of the private sector
• Transparency and competition
• Priority infrastructure investments
• Efficiency and lower costs (public sector
  comparator)

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EBRD Strategy for Supporting PPPs

• Legal Advisory Support
• Review of Concession Laws
• Law in Transition Initiatives
• Technical Assistance
• Support for PPP frameworks
• Project advisory for tenders and implementation
• Financing
• Debt, equity, guarantees

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Experience in Municipal PPPs
Lessons on sponsor strength, clarity of
legal/contractual framework, transparent
procurement approach and importance of political
will.
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Infrastructure Investments in EBRD MEI Projects

• Water and wastewater sector
• water and wastewater treatment plants
• water and sewer networks, including collectors
• pumping stations and reservoirs
• Urban transport
• road rehabilitation
• tram and metro track and station rehabilitation
  and construction
• rolling stock trams, buses and metro cars

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Infrastructure Investment

• Solid waste sector
• New and rehabilitated landfills, including energy
  recapture mechanisms
• Collection vehicles and bins
• Potential waste to energy facilities
• District heating sector
• Primary and secondary distribution networks
  including in-building thermal modules and thermal
  sub-stations
• Energy generation and co-generation facilities
• Social housing
• Rehabilitation and new construction with
  private sector participation
• Energy Efficiency
• Building rehabilitation
• - Carbon credit investments

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Potential Contracting

• Works contracts
• Goods supply
• Consultants
• Feasibility studies
• Project management and supervision
• Corporate development financial and operating
  performance improvement
• Private sector management
• E.g. road maintenance, outsourcing of billing
  services, etc.

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Information Sources About MEI Projects

• Project Summary Documents on EBRD Website -
  30-60 days in advance of Board approval
  identifies project investments and potential
  Technical Consultant opportunities
• General Procurement Notice alerting to
  potential procurement opportunities 30 days in
  advance of procurement
• Tender Notices for specific contracts

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2006 - 2007 Municipal Projects
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2007 Municipal Projects
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Municipal Finance - contacts

• Art Schankler SchanklA_at_ebrd.com
  

• Municipal and Environmental Infrastructure Team
• EBRD One Exchange SquareLondon EC2A 2JN

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www.ebrd.com