European Investment Bank (EIB), the European Union’s long-term finance institution, today signed a loan with Lesotho’s Water and Sewerage Authority (WASA) for the expansion and rehabilitation of wastewater and sanitation facilities in Maseru, Lesotho’s capital. EIB provides a EUR 14.3 million oan from own resources with interest subsidy (to be disbursed in South African rand) and a maturity of 25 years. The EIB’s loan will cover 50% of the total project cost of EUR 28.6 million, while the European Commission under the EU Water Facility will provide a EUR 10 million grant and the Government of Lesotho the balance of EUR 4.3 million.
The project will contribute significantly to Lesotho’s efforts to achieve the Millennium Development Goals (MDGs) for sanitation. It foresees the increase of the sanitation coverage in Maseru’s urban and peri-urban areas for some 100,000 inhabitants. The investment programme is adapted to the different income levels of the beneficiaries and includes the connection to central sewer networks as well as the construction of low cost on-site sanitation facilities. Together with the refurbishment of an existing treatment plant and the construction of a new plant, this will contribute to reducing the pollution of Maseru’s raw water sources and to lowering the incidence of water-related diseases.
The finance contract was signed by Mrs. Refiloe Tlali, Chief Executive, on behalf of WASA and by Mr. Jean-Louis Biancarelli, Director General for Operations outside the European Union, on behalf of EIB.
Mr. Biancarelli welcomed “the successful co-operation with the European Commissionon this project which demonstrates the Bank’s role as a key partner in implementing the EU development policy agenda”. Water and sanitation is a focal sector for EU support to Lesotho. Early on in the project preparation stage, the Commission and the Bank co-operated closely together with WASA and the Lesotho authorities, and the main consultancy assignment was financed jointly by the Bank and the Commission under the EIB’s ACP Water Project Preparation Facility.
Mrs. Tlali highlighted the importance of this project to WASA and the people of Lesotho for its positive impact on the pollution of the major source of water supply in the capital city. She commended EIB and the European Commission for their assistance to the country’s sanitation sector and expressed her gratitude to the Government of Lesotho for its support in reaching this important stage of the project She concluded that “we look forward to the continued excellent co-operation of all stakeholders that will ensure the successful implementation of this project”.
Note to the Editor
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 with third countries that have co-operation or association agreements with the Union. Currently, the Bank’s financing in Africa, the Caribbean and the Pacific (ACP) is carried out under the provisions of the ACP-EU Partnership Agreement, signed in Cotonou in June 2000.
The Cotonou Agreement was signed for a 20 year period with successive financial protocols defining the aggregate amount of Community aid to the ACP states for each period.
The first protocol covers the period 2003-2007 and comprises EUR 13.5 billion contributed by the EU Member States (EUR 11.3 billion grant channelled through the European Commission as well as the EUR 2.03 billion Investment Facility (IF) and a EUR 187 million interest rate subsidy allocation, both managed by the Bank] and up to EUR 1.7 billion from the Bank’s own resources.
The second financial protocol covers the period 2008-2013 and will become available upon ratification of the revised Cotonou Agreement that was signed in Port Moresby (Papua New Guinea) in June 2006. Contributions by the Member States under this – 10th - European Development Fund total EUR 22 billion, of which EUR 20.5 billion is grant aid from the EU Member States and EUR 1.5 billion is managed by the EIB under the Investment Facility for loans and interest subsidies & technical assistance. In addition, up to EUR 2 billion is available in the form of loans from the EIB's own resources.
The Investment Facility is a revolving facility (loan amortizations will be invested in new operations), aiming at supporting technically, environmentally, financially and economically sound projects in the private or the commercially run public sector.
In parallel, a EUR 20 million OCT Investment Facility was set up in accordance with the Council Decision of 27 November 2001 on the association of Overseas Countries and Territories (OCTs) with the European Community with a similar aim for the 20 OCTs situated in the Caribbean, the Pacific, and the north and south Atlantic Oceans that are eligible for European Community financial assistance. This is supplemented by up to EUR 20 million from the Bank’s own resources.
The ACP-EU Water Facility was established by the ACP-EU Council of Ministers in May 2004 and aims at achieving the Millennium Development Goal targets in the water sector. The Facility has been developed as an instrument of the European Commission for grant-funding that, when blended with EIB loans, enables the Bank to become involved earlier in the project cycle, helping to improve project preparation. With such Technical Assistance the Bank is able to support innovative project design and implementation, ensuring the benefits of the project also reaches poorer and more vulnerable communities. Following the creation of the ACP-EU Water Facility, the Bank has been able to develop this improved approach to financing projects in the sector.