The EBRD today signed a 13-year follow-up loan of 1.5 billion roubles (equivalent to €35 million) for Rosvodokanal (RVK), Russia’s leading private sector water operator, to upgrade the services it provides to five million clients spread over seven Russian cities and to fund further regional development projects.

This funding will be matched by a parallel loan of a further 1.5 billion roubles which Russia’s Bank for Development and Foreign Economic Affairs, Vnesheconombank (VEB) plans to advance as part of a fund-raising operation for RVK closely coordinated with the EBRD.

In April 2008 the EBRD advanced an initial loan of 1.5 billion roubles to RVK, also with a 13-year maturity. Since that first EBRD loan RVK has invested some 5 billion roubles (€125 million) in its water company assets, an unprecedented financial commitment to the sector for contemporary Russia.

In the local market where there is little private sector interest in funding infrastructure projects for longer than five years, the EBRD’s 13-year loans provide the long-term finance essential for such an ambitious programme of capital expenditure projects to modernise the supply of drinking water and treatment of sewage.

RVK’s programme focuses on the upgrade and construction of water extraction facilities, modernising and extending water networks, energy efficiency improvements, installing automated control systems, as well as improving sewage collection networks and treatment facilities.

The proceeds of the new EBRD loan will in the first instance finance investments in three important regional centres: Tyumen, Tver and Orenburg. RVK also operates water services in Barnaul, Kaluga, Krasnodar and Omsk.

Russia’s three leading private water operators have a combined 11 per cent share of the market, with RVK being the largest with an estimated five per cent share. RVK is controlled by Russia’s Alfa Group.