1. South East Europe Rail & Public
Transport Development Conference 2013
Jean-Patrick Marquet, Director
Municipal & Environmental Infrastructure
5 June 2013

2. 2
Contents
o 20 years of municipal finance at EBRD
o EBRD approach towards Urban Transport Financing
o EBRD’s Urban Transport Projects in Western Balkans

3. 3
20 years of municipal
finance at EBRD

4. 4
0
100
200
300
400
500
600
700
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Business volume Net Cumulative Business Volume
€ billion
Annualbusinessvolume
Netcumulativebusinessvolume
Activity started in 1994
300 projects signed
• 50% municipal (sub-
sovereign) clients
• 30% private clients/ PPPs
• 20% sovereign
€5bn invested by EBRD
EBRD and municipal finance

5. 5
Annualbusinessvolume
Netcumulativebusinessvolume
Focus sectors
Water & Wastewater – improved quality of
service and environmental compliance
Urban Transport – improved public transport
services (buses, LRT, metro, ferries, etc.) and
more efficient and safe network design
Solid Waste Management – improved
efficiency and frequency of collection;
adequate disposal; prevention of groundwater
contamination
District Heating– renewal of obsolete
heating and distribution systems and
significant efficiency gains

6. 6
Our principles of lending
Transition
Impact
Sound
Banking
EBRD
Addition-
ality
Promotes transition to market-based
solutions, ‘commercialized’
approaches, good corporate
governance, international standards,
private ownership where appropriate
Supports, but does not
replace/underprice
private investment
and/or commercial
finance
Invests in
financially viable
projects, prefer
revenue
generating
projects, co-
financing with
private sector
(banks/sponsors)

7. 7
Matching Client Capacity:
Not all products are suitable for all clients
Sovereign-
backed loans
Cheap but can
become
politicised
Municipal loans
or utility loans
guaranteed by
municipality
Independence for
self-financing city
But higher cost
and burden on
public debt book
Quasi corporate
utility loans
Off-balance sheet
borrowing for city
Need backing of
Public Service
Contract + Support
Agreement
Loans to private/
PPP companies
Private sector
indebtedness
Need robust legal,
regulatory and
contractual
framework
EBRD is flexible and has risk appetite-- we structure projects across the whole
spectrum, e.g., from sovereign loans when legally necessary, municipal loans,
public utility loans backed by municipal guarantee, operational concessions
(DBOM), PPPs based on DBFO to full privatizations

8. 8
EBRD’s approach to
urban transport financing

9. 9
EBRD Urban Transport Vision
The core themes of the Bank’s actions are
• decentralisation,
• commercialisation and
• environmental improvement.
UT infrastructure and services projects should
• promote cost effective capital improvements,
• ensure regular maintenance of existing assets,
• provide environmentally and financially
sustainable services for users.”

10. 10
EBRD Complements UT Financing with
Preparation and Implementation Support
Investment projects:
• Fleet and rolling stock renewal
• Track, power supply and
signalling
• Depot refurbishment and
construction
• Automated Fare Collection
• Vehicle location and real time
passenger information systems
• Metro, LRT, BRT, Tram systems
• Urban roads
• Bridges
Technical assistance:
• Feasibility studies
• Project Structuring
• Tender strategy and procurement
• Technical monitoring and contract
supervision
• Regulatory framework improvement
and institutional capacity building
• Corporate development and
restructuring assistance
• Assistance with preparation of follow-
on investments

11. 11
Approach to Public Transport Financing
EBRD’s typical financing structure is:
• Lending to a transport operator directly
• Financing structure preferably without municipal guarantee
• Based on Public Service Contract (PSC) supplemented with
Municipal Support Agreement (MSA)
• Investments strengthened with adequate Technical
Cooperation programmes
• Comprehensive corporate restructuring
• Steps towards sector reform

12. 12
Common Situation in Public Transport:
Sub-optimal unsustainable arrangements
FARE
REVENUE
TRANSPORT
OPERATOR
CITY
Annual, ad hoc
subsidy payment
(Dependent on
budget availability,
other priorities)
SERVICES
PASSENGERS
Chronic financial gap

13. 13
Needed Foundations for lasting
improvement in Urban Transport
 Create a stable revenue and define revenue sources for public transport –
key for creditworthiness
 Focus on operating cost and service quality for users
 Invest in new rolling stock & infrastructure
 Give citizens real alternative to private transport
 Strengthen regulation
HOW?
 Public Service Contracting (PSC) between public owner and public
transport operator
 Can be used for either municipal or private operators

14. 14
EBRD Proposed Structure for Municipal
Operator Financing
FARE
REVENUE
GUARANTEE
OR
MUNICIPAL
SUPPORT
LOAN
TRANSPORT
OPERATOR
INSURANCE
COMPANY
CITY
PUBLIC
SERVICE
CONTRACT
SERVICES
PASSENGERS
BUS
INSURANCE
COMPENSATION
BASED ON
OBJECTIVES

15. 15
Roles and Responsibilities within PSC
 Municipality as the Client:
 Defines network, policy, service standards, tariffs
 Sets & enforces regulatory framework
 Formally agrees amount and quality of services
 Makes compensation payments to cover difference
between tariff revenues and full operational costs,
(due to social nature of services)
 Operator as Service Provider:
 Takes on operational and managerial risks
 Provides services according to key PSC performance
levels (reliability, punctuality, safety, cleanliness,
customer satisfaction);
 Operates & maintains new and improved rolling stock

16. 16
Financing of Urban Road Infrastructure
Types of projects Emphasis for project structuring
• Rehabilitation and construction
of urban roads and bridges
• Output and Performance Based
Road Contracts
• Assistance for road institution
capacity building
• Automated Traffic Management
and ITS
• Private sector for long term
maintenance
• Parking Management with on-
street and off-street
subsystems
• Private build and operated facilities
• Integrated parking strategies for
better traffic management
• Street Lighting • Privately operated under ESCO’s

17. 17
Some projects

18. 18
EBRD financed UT projects in WB
Existing EBRD projects:
• Serbia: Belgrade Ada Bridge
• Serbia: Belgrade Infrastructure
Reconstruction
• Serbia: Belgrade Traffic Management
• Serbia: Belgrade Public Transport
Infrastructure
• Serbia: Belgrade GSP Rolling Stock
• BiH: Sarajevo Urban Roads Development
• Albania: Tirana Municipal Transport Project Management
• FYR Macedonia: Skopje Urban Transport Project

19. 19
EBRD UT projects under preparation
2014 and beyond:
• Serbia: Sabac off-street parking PPP
• Serbia: Belgrade off-street parking Project
• Montenegro: Kotor-Cetinje Cable Car PPP
• Montenegro: Kotor Fortress Urban Regeneration PPP
• Albania: Tirana Bus Terminal PPP

20. 20
New concept: WB Municipal
Infrastructure Development Fund
•A €100m specialised investment fund established by EBRD and KfW
•Dedicated to finance creditworthy municipal or private sector projects
•Target sectors: water and waste-water, district heating, solid waste
management, energy efficiency, public transport, social infrastructure
•Fund to be managed by an independent Investment Manager
•Loans prepared and processed by participating local banks
•Products include loans to municipalities or private entities in amount
between €0.5-5.0 million and maturity of up to 10 years
•Pricing to reflect municipal credit risk in respective countries
•Project preparation through donor-funded technical assistance
•Fund closing expected 2nd half 2013

21. 21
Contacts
Jean-Patrick MARQUET
Director
Municipal & Environmental Infrastructure
Tel: +44 20 7338 6849
Email: MarquetJ@ebrd.com
European Bank for
Reconstruction and Development
One Exchange Square
London EC2A 2JN
www.ebrd.com/mei