European Investment Bank provides €420m water infrastructure loan for Portugal

The European Investment Bank (EIB) is providing a €420 million loan to Águas de Portugal (AdP) and its operating subsidiaries to finance investments in water infrastructure in Portugal.

The European Investment Bank (EIB) is providing a €420 million loan to Águas de Portugal (AdP) and its operating subsidiaries to finance investments in water infrastructure in Portugal.

The operation is guaranteed by the European Fund for Strategic Investments (EFSI), the core of the the Investment Plan for Europe – the so-called Juncker Plan. A first tranche of €220 million has been signed in Lisbon by EIB Vice-President Román Escolano and the President and CEO of Águas de Portugal, João Nuno Mendes.

The loan will facilitate the improvement of the quality, efficiency and sustainability of water and wastewater services in Portugal, by supporting the construction and renovation of related infrastructure facilities throughout mainland Portugal.

The EIB said the upgrading of Portuguese water infrastructure will also contribute to fostering economic growth, by creating more than 7,400 jobs during the implementation stage.

The project will also bring important and lasting environmental benefits as it will improve the ecological quality of surface and groundwater resources, triggering more rational use of water resources.

Over the next four years, this EIB financing will contribute to carrying out a large investment programme with more than 1,000 improvements in water supply networks that will directly benefit Portuguese citizens by increasing both the quality and the coverage of the service in Portugal.

The investments will also increase the volume of wastewater managed with improved standards by facilitating the construction of new collection and treatment plants. Over 8 million people are expected to benefit from improved water services and over 6 million from enhanced wastewater services.

The remaining financing of €200 million may be provided through an alternative structure with no recourse to AdP Group. The second tranche, whose final terms are still to be defined, could be an innovative monetisation tool for the municipalities which has not been available to date.

The EIB financing will help to implement and accelerate the ongoing reform of the water sector under PENSAAR 2020 (Portugal’s Strategic Plan for Water Supply and Wastewater Sanitation for 2020).

The EIB has a long-standing relationship with the AdP Group dating back to the 1990s and has played a key role in the last two decades in the financing of the water sector in Portugal. EIB Vice-President Román Escolano said that by promoting more efficient use of water resources the positive impact of the EIB funding would also strongly contribute to climate action, a priority of the EU bank.

João Nuno Mendes, President and CEO of Águas de Portugal Group stressed the importance of the financing contract:

“This funding will enable the implementation of the Infrastructure Investment Plan of AdP, improving the coverage, the service and the resilience of the water supply and wastewater treatment systems in Portugal.”