Review of the sectors transport, infrastructure and communications in romania



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EBRD


The EBRD’s investment programme has been marked by a clear focus on large-scale private transactions and on public private partnerships in infrastructure along the following lines:

Private sector investment
New projects in paper manufacturing, GSM-based cellular telephone services and banking were signed in 1999. These include post-privatisation financing of the rehabilitation of a paper mill, the largest bank privatisation to date (Societe Generale Romanian Development Bank) and the first credit line for SMEs (Banca Transilvania) under the EBRD-EU Horizontal Facility.
Public-private partnerships in infrastructure
The EBRD continued an innovative approach to infrastructure investment by pioneering the use of private finance for public infrastructure. For example, the Bank extended its first two loans to private operators of water supply (Suez-Lyonnaise Timisoara) and district heating (Dalkia Ploiesti) services. Suez Lyonnaise Timisoara project was the first purely private concession of water and wastewater services supported by the Bank. Since December 1999 Romania has been included in the group of EU Accession countries. The government is committed to further accelerating the transition process and the structural reform and to maintain the macroeconomic stabilisation. Its programmes include the privatisation of national and municipal utilities, restructuring of large loss-making commercial enterprises in the industrial sector, agricultural reform, and strengthening of the financial sector. The EBRD’s emphasis on new investment in private companies and privatisation is consistent with the objectives of the government and complements structural reform.
The EBRD’s pipeline of projects is concentrating on:


  • Large-scale privatisation and restructuring with strategic investors;

  • Private sector investment in either local private or joint-venture projects;

  • SME financing, banking and non-banking financial sector;

  • National and municipal infrastructure privatisation and public-private

partnerships.
Major projects to upgrade the transport networks are being implemented with the assistance of the EBRD, the EIB, the World Bank and the EU. However, significant additional levels of investment are needed in order to achieve acceptable standards. Romania will find it hard to find such large budgetary resources. Therefore there will be a continuing need for private capital and finance by the international financial institutions.
The EBRD is contributing to the financing of the programme for upgrading existing roads.

It has also extended further technical co-operation to the National Administration of Roads to review the overall market structure of the roads sector and identify the next stage of restructuring.


At the end of 1999 the Romanian government signed a loan with the European Investment Bank for a motorway project worth EUR 210 million (US$ 212 million). The funds will be used by the National Road Administration for financing the completion of new motorway sections totalling 113 kilometres on the Pan-European corridor IV between Bucharest and the port of Constanta. The financing arm of the EU stated that it has lent over EUR 1 billion (US$ 1.2 billion) to Romania for transport projects since 1991.
The EBRD is engaged in technical co-operation with the Port of Constanta to develop a programme to attract further private sector financing for its operations. The assistance will also address this issue at the smaller seaport of Mangalia. Important for the success of this programme will be the establishment of appropriate legislation for developing private sector concession or lease-based financial packages.
In support of the first private concession in Romania’s municipal sector, the EBRD is providing a EUR 24.7 million loan to Aquatim, a water and waste-water company owned by the Romanian municipality of Timisoara. Aquatim provides services to a population of 380,000 in Timisoara and in smaller neighbouring communities.
Financing from the EBRD worth US$ 190 million helped the new mobile Telephony Company Mobifon. Since the launch of commercial services in April 1997 Mobifon’s Connex GSM mobile telephone service has attracted around 500,000 customers, surpassing twice the level of initial expectations. In November 1999 Vodafone AirTouch announced that it had raised its stake in Mobifon from 10 per cent to 20.1 per cent.

    1. World Bank


Since 1991 the World Bank has built up a portfolio of 29 IBRD-financed projects, of which 22 are currently active, and two Global Environmental Facility (GEF) projects, of which one is currently active. Since 1991, World Bank commitments to Romania total over US$3 billion.
The lending programme of the World Bank aims to help Romania addresses its challenges by: strengthening the social safety net; increasing investments in health, education, and rural development; strengthening the business environment; supporting structural reforms in the financial, utilities, and enterprise sectors; enhancing effectiveness of Government services; and building capacity for environmental protection. Priority is given to advice and financing for EU accession-related programmes.
In fiscal year 1998 the Board of the World Bank approved four loans (totalling US$131 million):

  • A US$26 million General Cadastre and Land Registration Project;

  • A US$30 million Telecommunications Reform and Privatisation Project, and

  • A US$5 million Child Welfare Reform Project.

Four Bank projects (totalling US$340 million) were approved in Fiscal Year 1999:




  • A US$5 million Cultural Heritage Project;

  • A US$10 million Social Development Project - Phase 1;

  • A US$25 million Private Sector Institutional Building Loan;

  • A US$300 million PSAL.

In addition a US$8 million GEF grant was approved for Biodiversity Conservation Management.


The PSAL and the Private Sector Institution Building Loan aimed to build on the reforms initiated under the FESAL. They aimed to support the Government's efforts to stabilise the macroeconomic situation by accelerating structural and banking sector reforms, including privatisation of state-owned enterprises (there were more privatisations in 1999 than there had been in the previous eight years together), and creating an environment conducive to private sector growth and development. They were also aimed at avoiding the human costs associated with privatisation and the resulting potential instability. With the successful completion of the PSAL in June 2000, a new PSAL program will be designed in 2001 to continue and deepen these reforms.
Four projects have been approved in 2000:
(i) US$45 million Mines Closure and Social Mitigation Project,

(ii) a US$11 million Agricultural Support Services Project,

(iii) a US$17 million Trade and Transport Facilitation Project, and

(iv) a US$40 million Health Sector Reform Project.

In 1999, the Romanian authorities requested the country to be included among the pilot group of countries for the Comprehensive Development Framework (CDF). The CDF provides a holistic approach to the challenges of development that integrates the macroeconomic and financial aspects of development with the structural, social, and human dimensions. The consensus-building process is under way in Romania, and the first results will articulate the country's long-term priorities, integrating the medium-term strategy for EU accession as well as the Bank's next Country Assistance Strategy, to be agreed with the Romanian Government in the fall of 2000.



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