BUCHAREST, ROMANIA, Jan. 29—The International Finance Corporation (IFC)
has signed an agreement with the Municipality of Bucharest and Regia Generala
de Apa Bucuresti (RGAB), Bucharest's water and sewerage company, to be
its principal adviser for the corporatization, restructuring, and privatization
of RGAB. The agreement was signed in Bucharest yesterday by Mr. Costin
Berevoianu, RGAB, President and General Director, and Mr. Scott MacLeod,
Manager of IFC's Corporate Finance Services.
IFC's appointment by RGAB follows on the Corporation's earlier assignments
as principal adviser in the successful privatizations of the water utility
of Metropolitan Manila (MWSS), and of the water and electricity services
in Gabon (SEEG), both of which closed last year.
"We are very pleased to have IFC as our adviser on the restructuring
and privatization of RGAB," said Mr. Berevoianu. "We believe
that IFC's involvement will help guarantee the success of the transaction
we are undertaking together."
RGAB is responsible for production and distribution of water and wastewater
services for the Municipality of Bucharest. It presently supplies
drinking water to about 93% of households in Bucharest, as well as to a
large number of industrial, commercial, and institutional customers. Approximately
85% of households are connected to the sewerage system. Bucharest
is the country's largest urban center with a population of approximately
"This project will bring a cleaner, more reliable water supply and
modern sewerage services to the citizens of Bucharest," said Mr. Paul
Hinchey, Director of IFC's Corporate Finance Services. "IFC
is very pleased to have been able to respond positively to the request
from the Municipality of Bucharest for assistance in this endeavor. While
we believe that privatization of RGAB will create significant benefits
for Bucharest and its residents, we also hope that a successful infrastructure
privatization such as this will serve as a model to encourage other public
sector enterprises in Romania and elsewhere to take similar initiatives."
IFC's assignment involves two phases: a transaction structuring phase which
includes corporatization, and a privatization implementation phase. Throughout,
IFC will play the role of principal adviser to RGAB, providing financial
advisory services and defining, coordinating, supervising, and integrating
the work of its specialized consultants. IFC will supervise the competitive
bidding procedures that will bring international operators and investors
into the sector.
IFC is the largest multilateral source of equity and loan financing for
private sector projects in developing countries. The Corporation
has worldwide experience in the privatization of state-owned utilities
and plays a crucial role in providing comfort to prospective private investors
while ensuring protection of the host country's interests.