A major scheme to improve and secure water supplies for 3.2 million people in Cape Town, South Africa is being financed with EUR 100 million from the European Investment Bank. The EIB, the European Union's long-term lending institution, is supporting the construction of the Berg River dam and supply scheme as a key part of an extensive water demand management programme for the conurbation through a facility which can be drawn in any preferred currency such as e.g. EUR but also USD and notably ZAR.
The loan agreement for the Berg Water Project was signed with Trans-Caledon Tunnel Authority (TCTA) today in Cape Town by Martie van Reinsburg, CEO of TCTA and EIB Vice-President Torsten Gersfelt.
The scheme will improve the quantity,quality and reliability of water supplies for a rapidly growing population, as well as for industrial and commercial consumers in South Africa's second largest metropolitan area. Its development took 14 years involving a comprehensive range of stakeholders in decisions on water demand management and efficient use of scare supplies. The evaluation of alternative options covered a wide range of criteria with a special emphasis on environmental considerations.
TCTA is the South African Government agency responsible for the implementation and funding of bulk water supply developments in South Africa. The Authority was initially created specifically for South Africa's contribution to the successful Lesotho Highlands Water Project.
EIB funding provides long-term resources for TCTA, mirroring the project's cash-flow profile, with an economic life-span of more than 40-years. The EIB's finance offers the possibility of South African Rand, the currency of TCTA's revenues, allowing the company to avoid foreign exchange risk exposure. In addition, the Bank's technical expertise has helped support the decision to implement the project and provides comfort to other funding partners and rating agencies.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects that further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union.
European Investment Bank support for RSA is being provided following an invitation from the Council of the European Union to the Bank to participate in project financing in South Africa, in support of the economic development of the country after the establishment of democratic government.
In June 1995 the Bank was authorised to grant long-term loans for a total amount of up to 300 million EUR for a period of two years. In April 1997 the mandate was extended to mid - 2000 for a further EUR 375 million and in June 2000 for a further period (2000-2006) for an amount of EUR 825 million, bringing the total facilities for South Africa over the period to EUR 1.5 billion.