EIB supports development of the water sector in Armenia
The European Investment Bank (EIB) is providing two loans totalling EUR 30.7 million to finance improvement of the quality and reliability of water supply services and the upgrading of wastewater treatment in Armenia. The EIB funds will help to improve the living standards of Armenia’s citizens and contribute to accelerating the social and economic development of the country. The EIB loans will consist of:
EUR 25.5 million for the rehabilitation and construction of water and sewage infrastructure in Armenia’s secondary cities and small communities and
EUR 5.2 million for the upgrading of water supply infrastructure in selected areas of Armenia’s capital Yerevan and several surrounding villages
The EIB loan of EUR 25.5 million will help to implement over the period 2014-2018 the programme of water infrastructure rehabilitation carried out by four regional water supply companies in rural Armenia, improving water services for some 400,000 people. This programme will be co-financed with EUR 30 million from the German development bank KfW and an EU Neighbourhood Investment Facility (NIF) donation of EUR 15 million, consisting of a EUR 12 million investment grant and a EUR 3 million technical assistance grant. An additional grant of EUR 2.5 million will be provided by the German cooperation ministry (BMZ).
This is the first EIB loan extended in the Eastern Neighbourhood in the framework of the Mutual Reliance Initiative (MRI) jointly developed by the EIB, KfW and the French Agency for Development (AFD). The MRI aims to maximise the complementarities and synergies between the partner institutions and set up a simplified partnership between financiers, which benefits project promoters through lower transaction costs and a larger financing capacity to support their investment projects. In the Armenian water sector project, KfW is the lead financier and as such was responsible for appraising the project and preparing key documentation.
The EIB loan of EUR 5.2 million will support a project to be implemented during 2013-2015 focusing on improving the water supply services in Yerevan. The project will improve the reliability of the service and reduce technical and commercial losses as well as energy consumption and maintenance costs. This project will be co-financed with some EUR 5.3 million from the European Bank for Reconstruction and Development (EBRD) and a NIF grant of EUR 5.5 million.
The EIB has so far provided loans in Armenia, including the current projects, amounting to some EUR 158 million supporting investments important for the country’s development in the areas of transport, public transport and water sector infrastructure and indirectly financing undertakings of small and medium-sized enterprises (SMEs) through EIB partner financing institutions.
The EIB – the European Union’s bank – finances projects in Armenia on the basis of an EU Council and European Parliament mandate for the countries of the Eastern Neighbourhood. The 2014-2020 mandate provides for a total amount of Bank financing in the Eastern Neighbourhood of EUR 4.8 billion to support projects of significant interest to both the EU and its Eastern Neighbours in the areas of local private sector development, social and economic infrastructure and climate change. In addition, the Bank is setting up a EUR 3 billion Neighbourhood Finance Facility to enhance its support for the Neighbourhood Countries.