The European Investment Bank (EIB), in line with the Baltic Sea environmental objectives of its first lending mandate for Russia, lends EUR 20 million to the St Petersburg water company Vodokanal for the rehabilitation and modernisation of the city's Northern Wastewater Treatment Plant.

The EIB loan serves to help solve the sewage sludge disposal problems in St Petersburg, which are caused by limited landfill capacities. The project is environmentally driven and intends to improve current sludge disposal practices by installing a treatment system that includes three identical incineration units capable of treating around 120 tonnes of sludge (dry substance) per day. The incinerator will generate electricity and heat and will be equipped with an air pollution abatement system to meet emission limits in compliance with EU legislation. The project is being co-financed by EBRD, NIB, BNP Paribas, as well as the Northern Dimension Environmental Partnership (NDEP) and the Finnish Environment Ministry.

This loan is the second granted by the EIB to Vodokanal, St Petersburg and also the second EIB loan in Russia. The first loan, for an amount of EUR 25 million, was signed in December 2003 to co-finance the completion of the St Petersburg South West Wastewater Treatment Plant, which should be ready by September this year. Both loans underline the EIB's continued support for improving the environment in St Petersburg and the surrounding areas, resulting in a higher quality of life, not only in the immediate region of St Petersburg, but having significant benefits for all countries sharing the Baltic Sea.

The loan is signed under EIB's first mandate for Russia, in line with the Stockholm European Council decision of March 2001. This provides for the financing of environmental investments up to a total amount of EUR 100 million in the Russian Baltic Sea basin under the Northern Dimension.

In December 2004, the Council of the European Union confirmed a further EIB mandate for Russia, Ukraine, Moldova and Belarus for an amount of EUR 500 million. This extended mandate is for projects in the areas of environment, as well as transport, telecommunications and energy infrastructure on priority Trans-European Network (TEN) connections having cross-border implications for EU Member States.

The EIB was set up in 1958 for financing sound long-term investments that further EU policies. Its lending priorities cover regional development, infrastructure, energy, industry and environment. Outside the EU, the Bank contributes to the European development co-operation policy in some 130 countries in Central and Eastern Europe, the Balkans, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.