Water Supply and Sanitation - World Bank Supports Romania's Municipal Sector

Bucharest, July 24, 2006 – Today, at Victoria Palace, the loan agreement for the 106,2 million EURO Municipal Services Project was signed by the Minister of Public Finance, Sebastian Vlădescu, and the World Bank Director for South Central Europe, Anand Seth. The project agreements for Bucharest and Arad were signed by the Mayors of those municipalities, Adriean Videanu and Gheorghe Falcă. The signing ceremony enjoyed the presence of Minister for Environment and Waters Management, Sulfina Barbu. The project will assist Romania to meet the EU environmental directives in the water and wastewater sectors, through preparation of pipeline of projects for 11 counties for funding by the European Union, and for infrastructure development in the municipalities of Bucharest and Arad.

Romania is expected to join the European Union in 2007, and it is estimated that the costs of bringing water and wastewater services up to EU standards will be around Euro 15 billion by the end of 2018. These costs mainly relate to increasing the coverage of piped water supply, developing sewerage networks, and constructing wastewater treatment plants.

In addition to these investments, the economy will have to bear operation and maintenance costs and investment costs to rehabilitate existing infrastructure. To be able to make the most of EU Structural and Cohesion funds, the Municipal Services Project will provide consulting services to prepare project applications for EU financing in 11 selected counties, including feasibility studies and preparation of complete tender dossiers. This will help local governments enhance the absorption of EU funds made available for these type of services and will improve the quality of service delivered to their citizens. Direct funding by the World Bank is envisaged for the municipalities of Arad and Bucharest.

The Municipal Services Project has three components.

The Project Application for the European Union Component will focus on the preparation of projects for water and wastewater service improvement in 11 counties for approximately 5 million beneficiaries. The Government will seek EU funding for prepared projects.

The Urban Services in Bucharest Municipality Component will provide funding for the extension of water and wastewater investments made under the EU PHARE projects, and will ensure that more households are connected to the sewer system, storm water drains are laid in low lying areas to reduce flooding, and roads are paved.

The Urban Services in the Arad Municipality Component will provide investments for the extension of the sewerage system, in new storm water drainages to be installed in low-lying areas of the city, and in road paving.

Once completed, expected outcomes of the project include:

- completed applications for EU funding in 11 counties in the country;

- approximately 30,000 additional people in Bucharest with access to water and wastewater services;

- approximately 25,000 additional people with access to water and wastewater systems in Arad;

- 62 km of newly paved roads in Bucharest;

- 84 km of rehabilitated roads in Arad;

- 39 sq km of city area protected by floods in Bucharest;

- 81 sq km of city area protected by floods in Arad.

The Municipal Services Project is a specific investment loan with a maturity of 17 years, including a five-year grace period.

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World Bank Supports Romania's Municipal Sector