SMAT WATER INVESTMENTS GREEN LOAN II

The project will finance the promoter's 2025-2027 investments in water and wastewater infrastructure in the Province of Turin, located in the northern Italian region of Piedmont. The related components include the extension and rehabilitation of water supply networks, rehabilitation of reservoirs and other related works with the application of best available technologies. In the area of sanitation and wastewater, the project concerns investments to extend and rehabilitate sewer systems and wastewater treatment plants, among others. Additional project components include the installation of remote-control systems aimed at increasing efficiency in the operation and maintenance of both current and future assets and networks.

The aim of the promoter is to optimise water use, enhance water service quality, and ensure the security of supply in the designated service area.

The Project is aligned to the InvestEU eligible area of Environment as it supports investments in drinking water supply and sanitation infrastructure in the Piedmont region in Italy. The operation will ensure compliance with key European regulations in the water and wastewater sector and will improve the coverage and quality of water supply and sanitation services in the region including the City of Turin. The Project will contribute to the Bank's policy objectives of Sustainable Energy and Natural Resources as well as Climate Action and Environmental Sustainability.

It will address a number of market failures through positive externalities in the form of environmental and public health benefits, notably improved resilience of water distribution systems against future droughts, heavy precipitation events and reduced exposure to pollution. These benefits are not reflected in water tariffs and would not be realised to the same extent without public intervention. Furthermore, the Project will address a chronic and significant investment gap in water and sanitation services in Italy and will provide long term finance at attractive terms compared to commercial banking funding. EIB's participation as an anchor investor will facilitate the crowding-in of other potential investors and will positively impact the utility's financial stability and financial diversification.

The EIB support is expected to bring a tangible financial value added by lowering the Project's cost of funding and offering a tenor longer than the one normally proposed by other financiers. Considering the Project's funding needs, it is expected that the EIB support will accelerate its overall implementation. The value added brought by the Bank's long-term financing is tangible, impacted by the ongoing geopolitical situation.

Given the Counterparty's ambitious investment plan, resulting in higher debt levels and increased exposure to the Bank, the InvestEU guarantee significantly enhances the EIB's contribution in terms of loan amount, tenor, and risk structure (unsecured).

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.

Some of the project components might be subject to a mandatory Environmental Impact Assessment (EIA) report, including public consultations. The decision of the competent Authorities regarding their EIA will be assessed during appraisal. The above-mentioned facilities are likely to fall under Annex II of the EIA Directive 2011/92/EU amended by the Directive 2014/52/EU, SEA Directive (2001/42/EC), Habitats Directive (92/43/EEC), Water Framework Directive (WFD) 2000/60/EC, Urban Waste Water Treatment Directive, Drinking Water Directive (EU) 2020/2184 and Birds Directive (2009/147/EC). It is expected that the projects will generate significant environmental and public health benefits from reduced discharge of untreated wastewater to environmental bodies because of rehabilitated and upgraded sewer systems and wastewater treatment plants. Investments in water supply networks will result in reduced water losses, and thus a more rational use of increasingly scarce water resources. The full environmental details will however be further examined during appraisal.

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. Information on awarded main suppliers/contractors for the implementation of the envisaged operation is not available.