CAP WATER INFRASTRUCTURE UPGRADE GREEN LOAN

The loan concerns the promoter's investment plan for the modernisation and upgrade of water supply and wastewater infrastructure in the City of Milan as well as across several provinces in the northern Italian region of Lombardy. The project will be implemented in the period 2025-2030.

The aim is to finance water meters, extension and rehabilitation of water supply networks, rehabilitation of tanks and other related work, as well as wastewater investments to extend and rehabilitate sewer systems and wastewater treatment plants (WWTPs), among others. Additional project components include IT investments enabling digitalisation of the operations. Through this project, the promoter aims at optimising water use, improving water service quality, and ensuring security of supply in the concerned service area.

The Project supports investments in water and wastewater infrastructure by a local utility providing "Integrated Water Services" in the Lombardy Region, Italy. It ensures compliance with key European regulations in the water sector, and improves the coverage and quality of water and wastewater services. The Project contributes to the Bank's policy objectives of "Sustainable Energy and Natural Resources" as well as "Climate Action and Environmental Sustainability", and is aligned with the Bank's "Water Resilience Programme". It addresses a number of market failures through positive externalities in the form of environmental and public health benefits, notably reduced pollution incidents from sewerage overflows, improved quality of recipient waters and reduced greenhouse gas emissions from wastewater infrastructure, along with enhanced flood protection in the service area. These benefits are not entirely reflected in water tariffs and would not be realised to the same extent without public intervention.

Furthermore, the Project addresses a chronic investment gap in water services in Italy.

The EIB support to the Project will bring a tangible financial value added by lowering the associated cost of funding and offering, amongst others, a tenor longer the one normally proposed by other financiers. Considering the magnitude of the Project, the EIB support will also contribute to accelerate its implementation. The value added provided by the EIB is even more tangible under the current volatile market conditions, impacted by the ongoing trade conflict and geopolitical issues.

Some of the project components might be subject to a mandatory Environmental Impact Assessment (EIA) report, including public consultations. The decision of the competent Authorities regarding their Environmental Impact Assessment will be assessed during appraisal. The proposed investments are likely to fall under Annex II of the EIA Directive 2011/92/EU amended by the Directive 2014/52/EU. Investments in water and wastewater are expected to have net positive environmental impact, considering their focus on compliance with amongst others the Water Framework Directive (WFD) 2000/60/EC and the Urban Wastewater Treatment Directive. Where and if applicable, and based on a risk-based approach as defined in the EIBG E&S Policy, the requirements of the Environmental Impact Assessment Directive 2011/92/EU as amended by Directive 2014/52/EU, Birds Directive 2009/147/EC and Habitats Directive 92/43/EEC will be checked during appraisal.

The promoter shall ensure that contracts for implementation of the project are tendered in accordance with the applicable EU procurement legislation, (Directive 2014/24/EU and 2014/25/EU as well as Directive 92/13/EEC and Directive 89/665/EEC) as interpreted by the Court of Justice of the EU, with publication of tender notices in the EU Official Journal, as and where required.