WTE Süd-West

MIGA issued a guarantee of €42.7 million ($56.4 million) to WTE Wassertechnik GmbH of Germany (WTE), a member firm of the Austrian EVN Group, for its €47.5 million equity investment in WTE Süd-West of the Russian Federation. The guarantee covers a period of 13 years and provides coverage against the risks of expropriation and breach of contract. The guarantee replaces a previous shareholder loan and equity guarantee.

The project addresses the increase in demand for water supply faced by the growing city of Moscow. The project consists of the construction of a greenfield water treatment plant that will increase Moscow’s potable water supply capacity by 4 percent. The project enterprise will be responsible for the construction (begun September 2003) of a 250,000 cubic meters per day water treatment plant under a 13.5- year build, own, operate and transfer (BOOT) concession scheme. Water will be channeled from the Moskva River to a processing plant where it will be filtrated using state-of-the-art technologies. The purified product will then be distributed through the municipal water system by Mosvodokanal, the city-owned utility.

The city of Moscow is projected to garner more than $10 million a year (five-year projected annual average) in tax revenues from the project. The project enterprise expects to employ an estimated 170 local workers during construction and about 70 employees on a permanent basis. Average workers’ wages will be 10 to 20 percent higher than the domestic sector standard, and will include social security benefits. In addition to training local management and employees, the project enterprise also expects to transfer operating know-how to Mosvodokanal employees before the transfer of ownership at the end of the concession period. Moreover, the plant’s clean water is expected to improve local health, environmental and safety conditions, and create positive business externalities.

The project addresses MIGA’s priority of supporting basic infrastructure.