CASAN BRAZIL WATER AND SANITATION FL

Framework loan to modernise the water supply and sewage services of CASAN, a public water utility provider to municipalities through concessions within the state of Santa Catarina (Brazil).

This project will improve access to water and sanitation services in CASAN's area of operation. The purpose it is to achieve the objectives under the "Sanitation legal Framework" (Marco Legal do Saneamento-2020), as well as the Sustainable Development Goals such as number 3, 6, 11, 13, 14 and 17. It is estimated that the loan will be used for the construction of new wastewater treatment plants (WWTPs), expansion of services to unconnected customers, ensure service provision due to population growth and new required infrastructure

This loan will finance investments in water and sanitation projects across the Brazilian state of Santa Catarina via public water and sanitation company CASAN. Most of the components financed (83%) will directly contribute to climate change mitigation and adaptation by extending collection and treatment capacities for wastewater and improving water supply systems' efficiency.

Promoting expanded sanitation services to underserved communities the operation is strongly aligned with EU priorities in Brazil (particularly the Green Deal Team Europe Initiative for Brazil and its Sub-Initiative on Sustainable and Smart Cities and the Global Gateway Investment Agenda, mentioning modernization of the water and sewage services of public water utilities) as well as with Brazil's Intended Nationally Determined Contribution and its recent legal framework for basic sanitation. The EIB's participation addresses various market failures, such as positive externalities not fully captured by tariffs (avoided public health costs, improved water quality, reduced greenhouse gas emissions, and enabling socio-economic development).

The EIB offers financial and non-financial benefits, including a longer maturity and choice of currency (EUR/USD/synthetic BRL) and interest rate type at disbursement. By financing only up to 50% of the underlying projects, the EIB's participation will help crowd in private sector capital, diversifying CASAN's funding mix.

The Promoter will be required to implement and operate the investments in conformity with national laws, as well as the EIB's environmental and social standards. The project intends to bring environmental benefits by pollution abatement in water bodies and mitigate climate change through the reduction in emissions due to wastewater treatment. Most of the individual components to be financed under the investment loan are expected to have limited environmental and social impacts. However, some of the investments may fall under Annex II of the EIA Directive 2014/52/EU (amending the EIA Directive 2011/92/EU) if located in the EU, requiring the competent authorities to determine whether an environmental impact assessment (EIA) is required. Where a formal EIA is required (or would be required, were the project located in the EU), a copy of the Environmental & Social Impact Study or the Non-Technical Summary (NTS) or equivalent document will be provided to the Bank, and published on its website. The Promoter will also be required to verify that none of the schemes submitted for financing by the Bank have a significant negative impact on any site of nature conservation importance. The Promoter's capacity to ensure that the schemes are in compliance with the EIB's environmental and social standards and the principles of relevant EU Directives will be also verified at appraisal The project is expected to contribute to climate action and environmental sustainability (CA&ES) objectives, in particular to climate mitigation, climate adaptation, sustainable use and protection of water and marine resources.

The Bank will require the Promoter to ensure that implementation of the project will be done in accordance with the Bank's Guide to Procurement.