EBRD in 10-year 200 million rouble water loan for Siberian city of Surgut

Bank’s investments in Russian municipal water sector now top 430 million Euros

The European Bank for Reconstruction and Development is providing a long-term loan of 200 million roubles (the equivalent of €4.5 million) to improve the collection of sewage in Surgut, a Siberian city of 300,000 people whose municipal infrastructure the Bank has since 2002 been helping to update.

This 10-year loan brings total EBRD investments in the Russian water treatment sector since the first such transaction was signed in 1997 to €436 million, spread over 16 projects. Water projects account for around 60 percent of all EBRD investments in Russian municipal infrastructure to date.

The latest EBRD funding will be used to renovate the major wastewater collectors in Surgut, a project whose total cost is estimated at around 300 million roubles (€6.8 million).

A pioneering EBRD loan for Surgut signed in 2002 included 981.5 million roubles (the equivalent of €22.5 million) component to fund upgrades to the city’s water supply and sewerage system.

The loan helped transform the city’s water utility into a modern efficiently managed company. Water consumption was cut down and the utility’s creditworthiness increased thanks to the introduction of water-meters and tariff increases. These were, however, carefully coupled with targeted social protection measures for low-income consumers.

The borrower under the latest loan is Gorvodokanal, established in 1998 as Surgut’s municipal water and wastewater operator. The EBRD loan is covered by a guarantee from the City of Surgut.