EBRD mulls RUB 650m loan to Murmanskvodokanal

The EBRD is considering financing construction, rehabilitation, upgrade of water supply and wastewater infrastructure in the City of Murmansk within the Murmansk Oblast. The priority investments to be financed by EBRD will be defined by consultants in a feasibility study.

Transition impact is expected to be achieved through:

• Introduction of transition related performance indicators, to be identified during due diligence;

• Skills and knowledge transfer during the Corporate Development Support Programme and training for the Project Implementation Unit;

• Cost restructuring (demonstration effect), the project will assist the client in its effort to control its costs, including through reduction in operating and maintenance costs and a decline in water and energy losses;

• Introduction of a service agreement to further commercialise the operations of the Company;

• Tariff reform (improved methodology). The new tariff methodology will be adopted to ensure full cost recovery tariffs including investment costs and possibly a shift to multi-year tariff setting.

• Providing an economic rate of return to ensure prudent use of public funds (municipal guarantee)

• Corporatisation of the water utilities in order to improve the service provision and improving financial performance.

Development and implementation of an Environmental and Social Action Plan (ESAP) which will significantly improve the Company’s environmental management and overall performance.

The client:

“Murmanskvodokanal” MUE (the “Company”), a company providing water and wastewater services to both residential and industrial customers in the City of Murmansk and 7 neighbouring settlements and wholly owned by the Murmansk Oblast.

EBRD finance:

Senior corporate loan to the Company of up to RUB 650 million (equivalent of around EUR 14.5 million), guaranteed by the Murmansk Oblast.

Total project cost:

Up to RUB 1 090 million.

Source: cbonds.info