• European Investment Bank to invest USD 100 million to modernise water supply infrastructure and waste water treatment facilities in Ecuador;
  • The project backed by the European Union, will improve access to water and sanitation across the country;
  • The water project contributes to the achievement of a number of Sustainable Development Goals and to building Ecuador’s resilience to pandemics such as Covid-19.

The European Investment Bank is partnering with Ecuador’s development Bank, Banco de Desarrollo de Ecuador (BDE) to improve water and sanitation networks across the country. The EIB’s USD 100 million loan will part finance the construction and rehabilitation of water supply, wastewater and storm water networks under Ecuador’s national ‘Agua y Saneamiento para Todos’ (water and sanitation for all) programme.

The EIB loan will enable the construction of sewer networks, wastewater treatment plants and stormwater networks in several coastal areas, thus reducing the plastic discharge in the Pacific Ocean. This loan will contribute to the implementation of the Clean Oceans Initiative. The modernization of water supply and sewerage systems in the region will lead to substantial energy savings, reducing water losses in networks and an improvement in wastewater treatment operations. This, also results in a long term investment in the country`s resilience to pandemics such as Covid-19, as it provides steady access to clean drinking water.

EIB and BDE are partnering with Germany’s GIZ under the so-called FELICITY initiative to strengthen the climate action and urban development focus of the investments to be supported by the Framework Loan. FELICITY is a project preparation facility funded by the German International Climate Initiative (IKI), implemented in cooperation with GIZ. The initiative helps project promoters in cities to provide feasibility studies and other preparatory measures, as well as capacity building to BDE.

EIB Vice-President, Ricardo Mourinho Félix, responsible for Latin America said: “Clean water and sanitation are crucial for sustainable economic growth, and to protect human health during infectious disease outbreaks such as the COVID-19. As the largest lender to the water sector globally, the EIB is pleased to be financing and providing its expertise to help BDE improve the region’s drinking water and sanitation services. This project builds on our strong track record of supporting high-impact investment in Ecuador and across Latin America”.

Vice Minister of Finance for Ecuador, Bernardo Orellana outlined the importance of multilaterals in the state's financing strategy: “The low cost loans also had long terms and generous grace periods. The support of the European Investment Bank is another demonstration that Ecuador has the support and confidence of the international community to promote development programs that directly benefit citizens. He recalled that among the priorities of the government of President Guillermo Lasso is the eradication of poverty through the promotion of social equity in access to basic services”.

BDE’s General Manager, Fabian Carrillo, said: “In the Strategic Plan 2022-2025, the public bank plans to double its financial impact with the municipalities, their public companies and associations. In this sense, the relationship with international cooperation, the European Union and the German representation, means access agile and timely lines of credit such as the one offered by the European Investment Bank, which means financing development in accordance with the public policies of the Government”.

EU Ambassador to the European Union to Ecuador, Charles-Michel Geurts said: “In the European Union we are committed to supporting a sustainable post-Covid-19 recovery from an inclusive social approach and respect for the environment. That is why today, through the European Investment Bank, we invest in the resilience of Ecuadorian municipalities, guaranteeing permanent access to drinking water and sewerage to vulnerable populations for their socioeconomic development and protection of the health of Ecuadorians”.

He added: “This is an excellent example of international cooperation, within the framework of the actions of Team Europe, to respond to the Covid-19 crisis; at the level of the European Union through the European Investment Bank, Germany and the GIZ; and at the local level with the Development Bank of Ecuador. In addition, it is a first milestone in the efforts to develop the EU's decentralized cooperation with the Decentralized Autonomous Governments (GAD), which will be accompanied by non-reimbursable funds from the EU for Technical Assistance. We are also pleased with the direct link of this financing to the Government's priority with the "Ecuador Strategic Plan Grows without Child Malnutrition", which begins with good quality water. In the coming months we look forward to a further important contribution from the EU on another crucial issue: childhood vaccines.”

The Head of Cooperation of the Federal Republic of Germany in Ecuador, Mrs. Barbara Schulz-Hönerhoff, said: “The credit agreement between BDE and EIB shows the importance of international cooperation to generate actions that benefit the population. He emphasized that the water and sanitation projects that will be financed by this credit will not only improve water quality to prevent diseases, but will also contribute to the Ecuadorian government's commitment to reduce methane gas emissions generated by wastewater treatment plants. . He stressed that through the FELICITY program, implemented by the German Cooperation GIZ, capacities for access to financing for climate change projects are strengthened.”

Impact of the water project in Ecuador

In concrete terms, the investments will mostly focus on improving the quality of water and sanitation services, and providing water and sanitation services to currently unconnected households. This project is expected to benefit some 500,000 Ecuadorians. It is a long term investment in the country`s resilience to pandemics such as Covid-19, as it provides steady access to clean drinking water, critical for effective crisis mitigation.

The investment programme is expected to reduce Greenhouse gas emissions by more than 60 kt CO2/year, mainly through the reduction of methane emissions generated in deficient wastewater treatment. The project will therefore contribute to the Global Methane Pledge launched at COP26, aiming to cut methane emissions by 30% by 2030, compared with 2020 levels.

International cooperation and development goals

The operation is fully aligned with EIB’s priority areas of intervention under the External Lending Mandate for Latin America 2014-2020, namely development of economic and social infrastructure, climate action, and cooperation with international financial institutions.

The project aims to contribute to the achievement of Sustainable Development Goals 3, 5, 6, 11, and 13 (Good Health and Well-being, Gender Equality, Clean Water and Sanitation, Sustainable Cities and Communities, and Climate Action respectively).

Working with GIZ and the FELICITY programme

The EIB and Germany’s Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) are cooperating to ensure adequate management of climate and environment risks in projects across the globe. The water and sanitation project in Ecuador benefits from so-called FELICITY programme (Financing Energy for Low-carbon Investment – Cities Advisory Facility). FELICITY aims at assisting cities and municipalities to build their capacities to prepare and implement low-carbon infrastructure projects, linked to subsequent potential financing by EIB.

The EIB in Ecuador

The EIB is the largest multilateral public bank in the world and financed around EUR 8 billion in investments outside of the European Union last year. Ecuador is among the biggest beneficiaries of EIB financing in Latin America. Since 2006, the EU bank has provided over EUR 800m to finance investments with favourable conditions – in terms of both maturity and interest rates – with the aim of improving the quality of life of Ecuadorians. EIB supported projects in the country include the Metro de Quito, the Wastewater Project Las Esclusas in Guayaquil, and the ETAPA wastewater project.

The EIB in Latin America

The EIB provides economic support for projects in Latin America by facilitating long-term investment with favourable conditions and by providing the technical support needed to ensure that these projects deliver positive social, economic and environmental results. Since the EIB began operating in Latin America in 1993, it has provided total financing of EUR 10.4bn to support 140 projects in 15 countries in the region.