The high content of hazardous organic and inorganic pollutants, the active growth of pathogenic microorganisms, a decrease in the concentration of dissolved oxygen in water bodies and the disruption of entire ecosystems cause concern for decision-makers and require large investments and financing in wastewater treatment.
The construction of wastewater treatment plants and the implementation of large environmental projects are becoming an important area of activity for both governments and private capital.
According to the World Bank, in 2007-2017, global spending on water and sewerage projects exceeded $ 22 billion, with 84% of investments in wastewater treatment being in greenfield projects, which means a predominance of new facilities in this segment of infrastructure.
In 2014, the average cost of construction of a wastewater treatment plant was $ 16 million, and in 2017 this figure quadrupled, reaching 64 million for a medium-sized facility.
The correct choice of financing instruments for wastewater treatment projects determines the final cost of the project, as well as the time frame and technical level of its implementation. Since modern wastewater treatment plants usually have significant investment costs in relation to the size of the facility, debt financing plays a key role in the implementation of such projects at the local and national level.
Viola Funding Limited is ready to help your company choose the best financing scheme.
We are ready to offer flexible long-term loans for the construction and modernization of the WWTP, as well as facilitate the organization of project finance schemes.
Choosing a financing model for wastewater treatment projects
Due to the variety of financial instruments, the specific formula for financing and implementing a wastewater treatment project is closely related to its nature. In this regard, financiers distinguish between project financing (PF), which isolates the risks of a project from the assets of its initiators, and corporate finance, which is based on the assets and financial performance of the initiators.
The essence of project finance is the implementation of a specific project on the basis of a specially created company (SPV / SPE). A project company with no history of operations has significant capital contributed by project sponsors and has a limited lifecycle that is directly related to the project lifecycle.
For this reason, the financing of wastewater treatment plants is significantly different from the traditional approach to financing business projects.
In the case of investment projects financed and implemented according to this formula, companies usually use high leverage as a result of a high share of borrowed capital in the project structure.
Project sponsors are not liable for SPV debts with their assets or have limited liability, shifting risks and debt servicing onto the shoulders of the project company.
In practice, the vast majority of financial models involve long-term financial liabilities (usually in the form of a bank loan in the case of continental European companies or corporate bonds.
Non-recourse funding is considered one of the main strengths of this model.
Viola Funding Limited offers long-term financing of capital intensive projects, financial modeling, SPV creation and management, tax optimization, project management and consulting services.
Funding wastewater plants through public-private partnerships
Governments are withdrawing from many areas of economic, social and communal activity, remaining formally responsible for these strategically important areas.
Public-private partnership covers the entire area of cooperation between both sectors, including complex organizational measures to achieve the set goal. In a narrower sense, PPP includes special types of contracts between a public authority and a private structure related to the implementation of a specific investment project.
Public-private partnership allows to actively implement projects in conditions of limited availability of public funding, increasing the inflow of investments in environmental projects, as well as accelerating their implementation.
PPP models can assign responsibility for engineering design, construction, operation and project management to private companies, relying on the broad technical and financial capabilities of world leaders.
Improving the efficiency of this type of projects is extremely difficult to achieve within the constraints associated with excessive bureaucratization of the public sector and the traditional lack of funding for wastewater treatment plants in many countries of the world.
The assignment of project risk to the private sector contractor should motivate him to improve the management and implementation of related projects. In most PPP projects, the private sector contractor is paid full payment for his services only if he meets the standards that are constantly being raised in the sector.
International experience in financing wastewater treatment projects demonstrates that the quality of services provided under PPP is generally better than the quality of services provided under traditional government contracts.
By creating competition in the sector, PPP allows consumers to compare government services to market standards.
Water and wastewater treatment project financing; Our financial service.
Viola Funding Limited offers long-term financing for water treatment and aeration projects on flexible terms.
Our comprehensive professional services include the following:
•Investment loans from 50 million euros for up to 25 years. •Financial modeling, detailed assessment and project forecast. •Organization of project finance, including the creation of an SPV.
• The whole range of financial and legal consulting services. • Official guarantees, etc.
Together with international high-net-worth angel investors, we offer advisory services related to the attraction of external financing, the creation and management of SPVs, the organization of public-private partnerships in the EU and beyond.
Investments in the construction and financing of wastewater treatment plants often require professional engineering services.
If you are looking for a reliable financial and technical partner for the implementation of large projects in the field of water and wastewater treatment, please contact our representatives.