The European Investment Bank has formally agreed to finance upgrading and expansion of the water infrastructure programme for eThekwini Municipality in KwaZulu-Natal, South Africa. The municipality provides water and sanitation services to nearly four million people in the greater Durban area. The Bank will provide a long-term loan of EUR 50 million, representing 15% of the total investment cost of the programme, to Rand Merchant Bank (RMB), the investment banking arm of FirstRand Bank Limited in South Africa, to allow it to fund this project at reduced rates.
The eThekwini Municipality investment programme includes replacement of 1,600 km of old asbestos water mains and the construction of both the 60km Western Aqueduct and the 57km Northern Aqueduct, to be implemented by the eThekwini Municipality’s Water and Sanitation Unit.
Plutarchos Sakellaris, European Investment Bank Vice President for Africa said: “The European Investment Bank is working with key partners across South Africa to support investment in the country’s water infrastructure and thereby contribute towards achieving the Millennium Development Goals.”
Laurent Scholtz, Head of Municipal Finance at Rand Merchant Bank said: “The expansion of the water infrastructure in this region will enable the eThekwini municipality to increase access to water in this area. RMB has contributed to this programme through the implementation of an innovative long-term funding structure.”
This project will improve efficiency of the water supply system by reducing leakage as well as interconnecting networks and enhancing resilience of the overall system to enhance service levels, supplement existing water supply and better cope with climatic uncertainties. The programme will contribute to South Africa’s achievement of the Millennium Development Goals by improving access to piped drinking water in previously un-served areas and ensure the free basic water consumption policy developed by the municipality, in line with the country objectives. The South African public sector is committed to addressing the shortage of capacity of water networks and meet demands resulting from increased access, economic development and population growth, across the country.
This project is consistent with the European Investment Bank’s water lending policy encouraging sound water management, optimising use and efficiency of existing networks and increasing its resilience to climate change. The long-term funding for bulk water and additional infrastructure will contribute to reducing tariff increases for end users.
The eThekwini water project is part of an integrated approach by the European Investment Bank to support the water supply chain in KwaZulu-Natal, including upstream bulk water and the upgrade of water supply network and treatment facilities by Umgeni Water. The European Investment Bank is currently considering financing Trans Caledon Tunnel Authority Mooi-Mgeni Transfer Scheme Phase 2, a crucial upstream bulk water project that will provide additional resources to the region.
Notes for the Editor:
- The European Investment Bank has been active across Africa for over 40 years. The bank follows policies and objectives set down by its shareholders, the 27 European Union member states, whose Finance Ministers are European Investment Bank governors. In 2009, the European Investment Bank provided over EUR 1.1-billion funding to sub-Saharan Africa. The bank supports public sector projects that are critical for private sector development and the creation of a competitive business environment. It provides a broad range of financing instruments including loans, guarantees and risk capital to Africa, selecting projects that can deliver sustainable economic, social and environmental benefits.
- European Investment Bank lending in South Africa focuses on public interest infrastructure projects, including municipal infrastructure, power, water and private sector support and contributes towards achievement of the Millennium Development Goals.
- Previous South African water projects funded by the European Investment Bank include the Berg Water project (EUR 100-million), the Vaal pipeline project (EUR 85-million) and the South African component of the Lesotho Highlands Water Project (EUR 45-million).
- Since 2000, the European Investment Bank has provided over EUR 531-million funding for water projects across Africa. In southern Africa, this has included projects in Lesotho, Mozambique, Tanzania, Swaziland, Botswana and South Africa.