The EBRD said in its statement that Rigas Udens company will be the first local service utility in Latvia to receive a direct corporate loan from an international financial institution.
"The transaction shows that self-financing municipal services in Latvia can be financed without recourse to sovereign guarantees," said Thomas Maier, the EBRD's director of Municipal and Environmental Infrastructure.
The new EBRD loan will provide funding for the improvement of the water utility's technologies, installation of water meters in the city, extension of sewerage and water networks, etc. In addition, funds will be used for the refinancing of the existing sovereign-guaranteed commitments of the company.
Uldis Bambe, managing director of Rigas Udens, noted that the waste-water element of the project will have a significant environmental benefit for the Baltic Sea. This month the Riga City Council approved total investments to be made during the Rigas Udens and environmental project's second phase from 2001 to 2004 as 25.4 million lats.
Contributions to the project will also be made by the ISPA fund (10 million lats or $16 million) and the European Investment Bank (3 million lats). The Riga City Council will grant 2.4 million lats, and Rigas Udens has planned to allocate 2.3 million lats for value-added tax payments.