Financing opportunities in water sector within the Sectoral Operational Programme for Environment

1. Financing opportunities in water sector within the Sectoral Operational Programmefor Environment

2. NSRF - Priority 1 – Development of Infrastructure ti European standards NDP - Priority Axis 3 – Protection and improvement of the environment SOP ENVIRONMENT – PRIORITY AXES Global objective of SOP ENV– împrovement of living and environmental standards, focusing, mainly, on compliance with environmental acquis communautaire Specific objective 1 Improvement ofquality and access to waterand wastewater infrastructure Specific objective 2 Development of sustainable wastemanagementsystem Specific objective 3 Reduction of negative environmental impact caused by urban heating plants Specific objective 4 Protection and improvement of biodiversity and natural heritages Specific objective 5 Reduction of the incidence of natural disasters affecting the population Priority Axis 1 Extension and modernization of water and wastewater systems Priority Axis 2 Development of integrated waste management systems and rehabilitation of historically contaminated sites Priority Axis 3 Reduction of pollution from urban heating systems Priority Axis 4 Implementation of adequate management systems for nature protection Priority Axis 5 Implementation of adequate infrastructure for natural risk prevention Approx. euro 2,776 million (CF) Approx.Euro 883 million (ERDF) Approx.Euro 229 million (CF) Approx. Euro 172 million (ERDF) Approx. Euro 270 million (CF) Priority Axis6 Technical Assistance Approx. Euro 182 million (ERDF)

3. Water Sector Specific objectives • Provide adequate water and sewerage services, at accessible tariffs; • Provide adequate drinking water quality in all urban agglomerations; • Improvement in purity of watercourses; • Improvement of the level of WWTP sludge management. Indicative operations • Construction/modernization of water sources intended for the drinking water abstraction; • Construction/rehabilitation of water treatment plants; • Extension/rehabilitation of water and sewerage networks; • Construction/upgrading of wastewater treatment plants; • Construction/rehabilitation of sludge treatment facilities; • Metering, laboratory equipment, leakage detection equipment, etc.

4. Water sector – top priority The most demanding environmental sector • 19 bil. Euro – total estimated investment costs for compliance with EU Directives • Approx. 8.6 Bil. euro needed by 2013, only 4 bil. available within SOP framework • Optimisation of investment cost at macro level – a must • Regionalisation – part of the solution (economies of scale)

5. Water sector – strategic approach Global objective • Improved access to water services of good quality, at accessible tariffs in all urban agglomerations by 2015. Circumstances • Need to comply with EU acquiswithin negotiated transition periods; • High level investment needs, but available EU funds – limited; • Reliable water companies only in some large municipalities; not the case in small and medium agglomerations; • Water sector – generally not attractive for private business yet. Strategy • Development of regional projects - grouping of more agglomerations in the same geographical area – aiming to optimize the investment and operational costs • IDA, ROC – pre-requisite for EU financing • Building on previous experience (MUDP, ISPA, SAMTID) to develop strong operational utilities • Reliable ROC – key

6. Whyregionalisation? Reasons • By 2004: • Urban area - about 230 small and medium towns (of 276) had not managed to attract financing from either EC, IFI or private sector; • Rural area – limited investments for DW infrastructure, but most of the villages lack centralised water systems. • Major problems linked to water services in smaller agglomerations: • Inappropriate maintenance and operating services; • High UfW, mainly caused by leakages in the networks and deficient payments collection; • Lack of investments for rehab./extension of water infrastructure; • Lack of experienced staff for promoting, management and implementation of large scale investments; • Inefficient management of the operating, maintenance and personell costs; • Unclear roles and responsibilities of institutions/authorities invloved in management of public utilities; • Inappropriate institutional framework.

7. Regionalization - objectives • Access international financing in small and medium agglomerations for rehabilitation/modernisation of water infrastructure • Promote self sustainable regional utilities by introducing principles of cost recovery and efficiency of public services

8. Regionalisation – actions Regionalisation of water services - mainly supported by pre-accession programmes, including so far 36 of 42 counties: • 1 Phare TA project - SAMTIDfor 11 counties • Limited investments in DW infrastructure and reorganisation of local water services • 2 ISPA TA projects – FOPIP for other 25 counties • Project preparation in parallel with institutional building support for water companies (regionalisation) • Slightly different approach, but the same final objective

9. Regionalisation – key elements • Municipalities included in the programme – IDA – a collaborative structure; their role to monitor and supervise: • the implementation of the investments • the financial and operational performance of the ROC (via delegated service contract) • ROC – role to implement the investment measures • A PIU set up in each ROC – main local counterpart in the implementation of SOP measures • Delegation contract between IDA and ROC

10. Targets of Regionalization • Improved operation of existing regional systems • Improved lending capability • Investment planning • Optimization of available resources • Capability of meeting EU W & WW Directive • Improved management performance • Access to EU investments • Improved water quality • Improved water supply • Limitation of political involvement in the supply of water and wastewater services • Regional Operator as the mechanism for provision of service to small communities • Availability of more similar companies for benchmarking comparisons

11. 9financing applications for major projects were submitted to the European Commission, out of which 8 have been already approved: Total amount of investment– approx. 1 billion Euro: Cluj-Salaj – 197 millions Euro Giurgiu – 72 millions Euro Calarasi – 100 millions Euro Turda – Campia Turzii – 80 million Euro Tulcea – 100 million Euro Sibiu –90 million Euro Gorj –90 million Euro Teleorman – cca 122 millions Euro Olt –73 million Euro Other applications (Brasov) – estimated to be submitted by the end of 2008; Other 25 financing applications – to be finalized in 2009 – in different stages of preparation Project pipeline in water sector

12. Project pipeline – water/waste water sector

13. Business Opportunities • Participation at public tenders for services and works • Bilateral agreements • PPP (in medium term, more business) • Co-financing

14. Thank you for your kind attention!