Transcript Фонд за органите на местно

National financing tools for local
environmental infrastructure
Emil Savov
Deputy Executive Director
National Association of Municipalities in Bulgaria
Enterprise for environmental management
• Created in 2002 by the state
• Assists local governments, hospitals, utility
companies, business
• Provides grants and interest-free loans
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Priority areas
- water management
- waste management
- biodiversity and ecosystems preservation
Enterprise for environmental management
Total revenue in 2010 – EUR 43 million
Revenue structure
• Nationally imposed eco fees – on envelopes,
tires, batteries, cars, used motor oil etc.
• Fines defined in 8 laws – on water, protected
areas, waste management, subsurface resources
etc.
• State grant
Enterprise for environmental management
In 2010 PUDOS provided:
EUR 36 mil as grants for investment projects
EUR 1.1 mil as interest-free loans
Intervention areas
• Water and sewer management
• Waste management
• Air monitoring an management
• Biodiversity
• Public awareness
EU membership challenges
Available EU resources for municipal investments –
EUR 3.2 billion for the period 2007-2013
National and sub-national co-funding – 15-20% of project costs
Municipal co-financing needs - matching funds required at the
municipal level is estimated on the order of about EUR 130-150
million* per year, which is twice the level of the total municipal
investments in 2006
Creating a Matching Fund for EU Investment Grants
Key issues to be considered
• How much of municipality’s own source revenues
should be able to contribute?
• How much debt the municipality should be able to
raise?
• How much the project can produce in direct cost
recovery through user charges?
• Impact of the fiscal decentralization policy
Funding needs
• Available funding for municipal investments under the
three Operational programs (2007-13) – EUR 3.2
billion/EUR 460 million per year
• Municipal funding needs – 36% or EUR 1 152 million (cofunding, bridge financing + VAT) – both from own-source
revenue and borrowing
• Number of local governments – 264
• Size of average municipality – 30 000 citizens (largest – 1.2 million;
smallest – 1 440)
• The total municipal Net Operating Surplus is concentrated in 28%
of the local governments
• 40 local governments can borrow freely at the credit market (in
2008, before the world economic crisis)
• FLAG lends to municipalities having limited creditworthiness or
small size which prevents the access to the credit market
Municipal projects’ characteristics
Energy efficiency in public buildings – schools, social
care homes, libraries etc.
Water and sewer systems upgrade
Waste water treatment plants
Regional garbage collection and disposal systems
Renewal of cities’ open spaces – parks, civic centers etc.
Fund for Local Governments and Authorities - FLAG
FLAG was established by the Government in 2007 as a commercial jointstock company/non-banking financial institution registered at the
Bulgarian National Bank
The fund represents a financial instrument of the central government
policy for local and regional development.
Objective - to provide financial assistance to municipalities in the
process of developing and implementing viable investment projects
funded by the EU Structural Funds, Cohesion Fund, and European
Agriculture Fund for Rural Development
Fund for Local Governments and Authorities - FLAG
Funding sources
In EUR million
Source
Amount
Equity
30
EBRD Loan
70
Total
100
Fund for Local Governments and Authorities - FLAG
Types of loans
• Project development (small loans of EUR 50,000 – 500,000 for
project preparation: feasibility studies, technical design, etc.)
• Bridge financing – fills the gap between payments to
construction/suppliers until the reimbursement of the costs from
EU Fund Authority; and
• Municipal co-financing – (5-50% of the investment, depending on
the co-financing requirement) as well as financing ineligible costs
such as VAT.
Fund for Local Governments and Authorities - FLAG
Partnerships
Managing Bank - assists FLAG in the lending process;
Managing Authorities of OP – overall supervision of the municipal
investment projects for compliance with the financial,
procurement and monitoring rules;
EBRD – provides long-term financing for FLAG’s lending process;
assists the development and implementation of FLAG’s policies.
Lending process
Investment
project
Project
development
Municipal Council
The municipal council approves the borrowing by
setting the loan upper limit, interest rate and fees,
type
of
currency,
maturity
and
repayment
schedule/sources.
The mayor submits the loan application form to FLAG
through the Managing bank.
Managing Bank
Assesses the application form and the supporting documents. The bank
assesses the credit history of the borrower, its financial situation for the
last three years and its creditworthiness related to the project to be
financed. As a result the bank develops a proposal for approval/rejection
of the loan application and sets a proposed risk component.
Lending process - 2
Managing Bank
FLAG
Assesses the loan application according eligibility vis-à-vis the
respective Operational Program, project costs analysis and the project
management capacity.
The Board of Directors approves the loan and its terms.
Loan Agreement
A tri-party loan agreement is signed (between FLAG, the
Managing Bank and the borrower).
Monitoring
The Managing bank monitors the execution of the loan.
FLAG and the Managing bank oversee the procurement process
and the project implementation.
Fund for Local Governments and Authorities - FLAG
Main Results
The lending process started in January 2009
Loan contracts: 170 contracts for EUR 90 million,
supporting the implementation of municipal investments
projects of EUR 250 million
Average loan size – EUR 0.5 million
Average maturity – 13 months
Fund for Local Governments and Authorities - FLAG
Offsetting the borrowing costs
Objective: to offset the borrowing costs of resourcepoor municipalities
Source: earmarked transfer from state budget for
2009-2011
Amount – EUR 2 million per year
Access criteria – based on 3 indicators: net operating
surplus; available local resources for debt repayment
per capita and share of municipal own revenues in
the municipal budget
Offsetting levels: 0-90% of the borrowing costs
Contacts
Address: 23 Golash Str.
1111 Sofia, Bulgaria
Tel.: +359 2 943 4467
Fax: +359 2 943 4431
www.namrb.org
NATIONAL ASSOCIATION OF
MUNICIPALITIES
IN THE REPUBLIC OF BULGARIA