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EBRD’s experience in

Urban Transport Infrastructure.

Financing Opportunities in

Romania

Constanta, 12 July 2016

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What is the EBRD?

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• €30 billion capital base

• €41 billion portfolio

• €8.9 billion average annual business volume in the

past three years

• AAA rated

• Public financing institution established in 1991 to foster

transition to market economies

• Owned by 65 countries from 5 continents, the EU and

the EIB

• Operates in 35 countries, including ROMANIA

3 key operational principles

• Sound banking

• Transition impact

• Environmental sustainability

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EBRD’s role in the municipal sector

� Structure financing of municipal investments

� Promote commercialisation of services

� Support development of regulatory structures

� Promote appropriate private sector involvement

� Improve environmental, social, health and safety

� Facilitate donor grant for technical assistance and commercial loan (co-)financing

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Key sectors covered by MEI

� Water & Wastewater – improved quality of service and

environmental compliance

� Urban Transport – improved public transport services,

traffic management and more efficient and safe networks

� Solid Waste Management – improved efficiency and

frequency of collection; adequate disposal; prevention of

groundwater contamination

� District Heating – renewal of obsolete heating and distribution

systems and significant efficiency gains

� Energy Efficiency

�

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Romania – typical PT problems

� Increased car ownership, generating traffic jams

� Aging PT fleets and deteriorating infrastructure

� PT investments often made on ad-hoc basis, no long

term asset management approach

� Unclear contractual relationships

� Generally weak regulatory and institutional framework

� No continuous focus on customers

� Poor and expensive maintenance

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� Rehabilitation of public transport,urban road network and trafficmanagement systems, to counterthe negative effects of rapidmotorisation

� Improve financial performance oftransport operators to allow accessto financing

� E-ticketing

� New equipment needs to complywith national and EU emissionstandards

Investment challenges

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Financing principles - PT sector

� Based on sound banking principles

� Investments based on sustainable transport

strategies

� Commitment towards market reforms

� Work with clients to define suitable financing

structures together with transition package

� PSC – key component, condition for loan financing

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EBRD financing structures in the UT

1. Corporate loans

– Borrower: transport company, public or private

– Loan repayment based on service payments under PSC

– Backed by a municipal guarantee or a municipal support

agreement (MSA)

– Preferred as it makes the PT company responsible for

investments

– Ex: rolling stock

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EBRD financing structures in the UT

2. Municipal loans

– Non-sovereign loans

– Ex. Rehabilitation of tram tracks, traffic management

systems, ticketing systems, line extensions, etc.

– Support outsourcing of bus supply or contracting out

of bus services to private operators

3. Performance guarantees to the private contractor

– Guaranteeing contractual payment obligations of the client

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• rolling stock (and spare parts)

• workshop equipment

• workshop/depot refurbishment

• ticketing systems

• traffic management

• parking

• urban road rehabilitation and

maintenance

EBRD public transport investments (1)

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Infrastructure rehabilitation prior to rolling stock renewal.

Benefits:

–lower operation costs

–reducing maintenance

–more passengers

EBRD public transport investments (2)

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Signed between transport operator and City

PSC defines:

• Rights and obligations of both parties (who is

responsible for what?)

• Quantity and quality of services delivered under the

contract

• Service payments to the operator for delivering services

under the contract

Public Service Contracts

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MEI financing guidelines (I)

� Maturities between 10 to 15/18 years

� Flexibility on commitment amounts (no 35% rule for public sector) for projects above EUR 5 million, special facilities for smaller projects

� Market pricing and security

� Local currency, where possible

� IFI public procurement rules for works, goods and servicesand competitive procurement for private partners in PPParrangements

� Equity investments, where appropriate

� SMART facility – EUR 120 mil

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MEI financing guidelines (II)

� Investments have beneficial effect on local economy

� Long term finance on self supporting basis at project level -no “soft loans”

� Commercialisation of companies and services

� Tariff reform with cost recovery, collection, e-ticketing

� Technical assistance (TA) to promote institutional reformand commercialisation, including for project preparation andimplementation

� Key TA donor partners: EU and various countries on multi/bi-lateral basis

� Compliance with national and EU environmental standards

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Technical Assistance

� Grants for TA linked to EBRD’s investments (from donors,

pre- and post-signing)

� MoU 2007-2013 - urban transport (from the ROP 2007-

2013):

– PSC

– SUMPs for growth poles and BI

MoU 2014-2020

- A Benchmarking Programme is proposed for the Romanian Public

Transport sector

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SUMP Strategy BI (example)

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Galati Urban Transport

� Borrower – Galati Municipality

� City – 250,000 people

� Project components

� Rehabilitation of streets

� Acquisition of 17 trolley-buses

� E-ticketing system

� Total Investments – Lei 100 million

� TC:

� Preparation of a Sustainable Urban Mobility Plan (SUMP)

� Support for introduction of an e-ticketing system

� Project Implementation support

� Commercialisation of Public Transport Services

� Amend the Public Service Contract between the City and the Company

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Arad Urban Transport: efficient and

reliable urban transportation

� Borrower – Arad Municipality

� City – 185,000 people

� 3 projects:

� Rehabilitation of main trams and road infrastructure

� acquisition of new energy efficient rolling stock (up to 6 new tram vehicles)

� modernisation of the main tram depot

� Total Investments–EUR 35 mln

� TC support (technical cooperation = technical assistance):

– PSC, CDP, e-ticketing, parking plan

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Pitesti Urban Transport

� Borrower - Publitrans

� Structure – EBRD loan backed by

a PSC and a MSA with the City

� Pitesti – 150,000 population

� Project:

� The Project entails the purchase of up to 70 Euro-6 buses ,

� Total Investments– €13 mln.

� TC:

� Support for e-ticketing

� Twinning with another EU company - Commercialisation of Public Transport

Services

� Amend the Public Service Contract between the City and the Company

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Sibiu Urban Transport

� Borrower - Tursib

� Structure – EBRD loan backed by a PSC and a MSA with the City

� Sibiu – 150,000 population

� Project components – two loans:

� Purchase of new buses;

� Relocation of the depot.

� Total Investments– €15 mln.

� TC :

� Amend the Public Service Contract between the City and the Company

� Support for e-ticketing

� Twinning with another EU company - Commercialisation of Public Transport

Services

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Brasov Urban Transport

� Borrower - RAT Brasov

� Structure – EBRD loan backed by a PSC and a MSA with the City

� Brasov – 227,000 population

� Project: � purchase of up to 100 buses (70 large buses

and 30 midi-buses) for the rationalisation of the operations of RATB, replacing a significant portion of the Company's old and inefficient tram and trolley-bus fleet

� Total Investments– €15 mln.

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Belgrade Urban Transport Project

• financing of 110 new buses

• refurbishment workshops

• workshop equipment

• tram track renewal

• power supply

• TC:• assistance with procurement

• new regulatory framework for

public transport

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Krakow public transport project

• tram infrastructure upgrading

• new tramline (fast tram)

• new rolling stock

• TC:

• introduction of PSC

• urban transport strategy

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Croatia: Dubrovnik and bus projects

• bus fleet renewal

• TC• sustainable transport

strategy for historic cities

• environmental standards

for buses and maintenance

• procurement assistance

• twinning programme with

Graz (Austria)

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Lithuania: Kaunas Bus Project

• Financing of 50 new buses,

spare parts and workshop

equipment

• Direct loan to (municipal) bus

company

• EUR 10 million

• No municipal (or sovereign)

guarantee

• TC:• Company Business Plan and

restructuring PT sector

• Introduction of a Public Service

Contract between the Company

and the City

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Lithuania: Kaunas Trolleybus Project

� First trolleybus project EBRD

� Financing of up to 50 new

trolleybuses

� EUR 15 million

� Direct loan to trolleybus

company (without guarantee)

� TC: – Restructuring public transport

network

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City and Company

GSigning Public Service Contract

GEBRD Procurement Policies and Rules

Company

GAdoption of a Business Plan

GTransformation into a joint-stock company

GCorporate Development Programme

City

GSigning Municipal Support Agreement with EBRD

GSound model for financing public transport

GReview of tariff system

GRestructuring public transport network

GReview regulatory and institutional framework

Loan Conditions and Technical Cooperation

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GMunicipality

-good transport doesn’t come for free

-support the transport company by a fair, transparent and sustainable

model for service payments - PSC

-don’t interfere with daily business management

-long term vision and strategy on PT needed

GTransport Companies

-change from product-oriented to client-oriented

-think as a Company, act as a Company

-learn from your colleagues / best practices / benchmarking

Final remarks

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Contact details

Venera VladAssociate Director, MEI

Tel: +40 21 202 7119

Fax: +40 21 202 7110

vladv@ebrd.com