OREANDA-NEWS. June 08, 2009. Opens way for funding key environmental deals without financial guarantees.

The European Bank for Reconstruction and Development and two other international financial institutions today signed an important agreement with the City of St. Petersburg and the city water utility, Vodokanal, laying the foundations for funding key municipal environmental projects without requiring financial guarantees.

The other two institutions signing the agreement were the Nordic Investment Bank (NIB) and the European Investment Bank (EIB).

The EBRD welcomes the City of St. Petersburg’s strong commitment to a clean environment as demonstrated by its backing for this project which is important to all the 55 million people living on the rim of the Baltic Sea, EBRD President Thomas Mirow said at a signing ceremony in the St. Petersburg City Hall in the presence of the City Governor Mrs Valentina Matvienko.

St. Petersburg Vodokanal has long been a pioneer not only in environmental projects but also in pushing through reforms to ensure its financial viability and these latest loans send a clear signal that utility companies in Russia which have equally high standards can be financed without sovereign or municipal guarantees, Mr. Mirow added.

The agreement provides a support framework for the Neva Discharge project under which the EBRD, NIB and EIB agreed to lend ?60 million towards the ?187.1 million cost of cutting the amount of untreated sewage discharged into the Baltic Sea to just six percent of total effluent by 2012.

The loans are made without any financial guarantees being provided by the City of St. Petersburg. The project is part of a programme launched by the Northern Dimension Environmental Partnership (NDEP), which provided a ?24 million grant for it.

The NDEP was set up by the international community in 2001 to tackle the region’s main pollution problems, particularly in NorthWest Russia. The EBRD committed to a ?6 million grant from its Shareholders’ Special Fund for the project and the governments of Finland and Sweden also provided financial support in the form of donor grants.