Luxembourg, 13/10/2004 (Agence Europe) - The European Investment Bank (EIB) is to contribute to the financing of a major project for sustainable improvements to water supplies in Cape Town, South Africa. The scheme - construction of the Berg River dam and supply infrastructures on Berg River - is a key part of an extensive water demand management programme for the conurbation of Cape Town, with its 3.2 million inhabitants. The EIB financing consists in a EUR 100 million loan, which may be drawn in any preferred currency such as EUR but also USD and notably ZAR (South African rand). The loan agreement for the Berg Water Project was signed with Trans-Caledon Tunnel Authority ( TCTA).
The scheme will improve the quantity, quality and reliability of water supplies for a rapidly growing population, as well as for industrial and commercial consumers in South Africa's second largest metropolitan area. Its development took 14 years involving a comprehensive range of stakeholders in decisions on water demand management and efficient use of scare supplies. The evaluation of alternative options covered a wide range of criteria with a special emphasis on environmental considerations. TCTA is the South African Government agency responsible for the implementation and funding of bulk water supply developments in South Africa. EIB funding provides long-term resources for TCTA, mirroring the project's cash-flow profile, with an economic lifespan of more than 40 years. The EIB's finance offers the possibility of South African Rand, the currency of TCTA's revenues, allowing the company to avoid foreign exchange risk exposure. In addition, the Bank's technical expertise has helped support the decision to implement the project and provides comfort to other funding partners and rating agencies.