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December 2013

EBRD & SIDA join forces to support Kyrgyzstan water project

Source: The Times of Central Asia, 9.12.2013

EBRD with the financial support of Swedish International Development Cooperation Agency (Sida) has announced a bid for consultancy services in rehabilitation of the Batken water supply and waste-water improvement. This is the result of the work conducted between the EBRD and Batken city authorities who in early 2013 approached the Bank with a request to finance the improvement of water supply and waste facilities.

The situation in water supply and waste-water collection in the Kyrgyz Republic can be characterized by severely deteriorated assets; very limited waste-water treatment; high operations and maintenance costs due to the deteriorated state of the assets; low institutional capacity to manage operationally and financially a sustainable water service and unreliable service supply, sometimes for only 2 hours every second day. This infrequent supply means families store water in bathtubs and buckets when supply is available leading to outbreaks of water borne diseases, especially during summer.

In April 2011, the European Bank for Reconstruction and Development (EBRD) approved the Kyrgyz Republic Water and Wastewater Framework. The Osh and Jalalabad Water and Wastewater sub-projects were signed in May 2011. Subsequently, the Karabalta Water sub-project was signed in August 2012, the Kant Water sub-project was signed in May 2013, and the Talas Water sub-project is pending signing within 2013.

The project in Batken city will be implemented by a company created by a merger of the three existing city utilities such as Batken Vodokanal – the main entity that provides portable water in the city; Batken Communal Utility – company that is responsible for solid waste management and street lighting but provides water supply services to multi-story buildings; and Batken Wastewater Utility which provides wastewater services.

It is expected that the city authorities sign a project support agreement with the EBRD this or early next year that will ensure timely payments to the created company, when necessary support in tariff increase to achieve cost recovery of the water supply over time and provide operational subsidies in order to meet financial covenants in the loan documentation.

Meanwhile the pre-sub-project situation is precarious in Batken. It is due to number of reason and one of it is weak institutional and financial reporting capacity. The EBRD fully relies on a consultant who will work with city’s utilities to form the new Company and to ensure that the institutional structure and financial situation is viable as a counterpart for the Bank.

The new Company’s institutional set up need to be well designed and the financial projections improved in advance of loan signing, to ensure that the implementation of the Sub-Project is successful.