MM WATER INFRASTRUCTURE UPGRADE II

The project will support the promoter's 2025-2029 investment plan, focusing on water and energy efficiency, the circular economy, and flood resilience. MM (Metropolitana Milanese) is a public company responsible for managing Milan's water and wastewater services, including the distribution of drinking water and sewage management.

The aim is to keep supporting the promoter in its investments to provide integrated water services in Milan's metropolitan area.

The Project aligns with the InvestEU eligible area of Environment, supporting investments in drinking water supply and sanitation in Lombardy, Italy. It ensures compliance with EU water and wastewater regulations and enhances service coverage and quality, including in Milan. The operation contributes to the Bank's policy objectives of Sustainable Energy and Natural Resources, as well as Climate Action and Environmental Sustainability, and is consistent with the Water Resilience Programme.

 It addresses market failures by generating environmental and public health benefits, such as improved resilience to droughts and heavy rainfall, and reduced pollution exposure, which are not fully captured in water tariffs. These outcomes would not be realized to the same extent without public intervention. The Project also tackles a persistent investment gap in Italy's water sector and offers long-term financing on more favorable terms than commercial banking funding.

 The EIB's role as anchor investor is expected to attract additional investors, strengthen the utility's financial position, and diversify its funding sources. EIB support brings tangible financial value by lowering funding costs and offering longer tenors than typically available, and it is expected to accelerate its overall implementation. This is particularly relevant in today's volatile market environment.

 Given the counterparty's ambitious investment plan and increased exposure to the Bank, the guarantee significantly enhances the EIB's contribution in terms of loan amount, tenor, and risk profile.

 The EIB could not provide such type of financing support, or not to the same extent or at the same quantum, without support from the InvestEU guarantee.

Large parts of the underlying investment programme consist of the upgrade and expansion of networks and other facilities in urban areas, with the main environmental impacts being those during construction (noise, dust, traffic etc) and not normally requiring a full environmental and impact assessment (EIA). Any component subject to an EIA will be assessed in accordance with the EIA Directive 2011/92/EU (amended by EIA Directive 2014/52/EU). The promoter is required to comply with all relevant national and European legislation. Overall, the project is expected to bring substantial environmental quality improvements, notably in terms of higher ecological quality of surface and groundwater resources, as well as a more rational use of water resources and reinforcement of adaptation to extreme weather events, thereby increasing the resilience to potential effects of climate change.

The Promoter shall ensure that contracts for the implementation of the Project will be tendered in accordance with the applicable EU procurement legislation Directives 2014/23/EU, 2014/24/EU or 2014/25/EU, where applicable, as well as Directives 92/13/EEC and 89/665/EEC as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required.