An agreement signed between the City of Belgrade and IFC is aimed at supporting the City to increase the energy efficiency of its key urban infrastructure and thereby improve the overall living conditions and reduce the harm to the environment
IFC, a member of the World Bank Group, is collaborating with cities around the world and supporting them with finding solutions for some of the key challenges they are facing. Some of these challenges relate to optimization of public services for citizens. To date, IFC has invested about $10 billion in city-related projects and managed $260 million in municipal advisory projects in recent years, spanning more than 60 countries.
The IFC and the City of Belgrade have recently signed a contract stipulating the IFC advising the city on improving energy efficiency of its public buildings. Could you tell us more about this contract please?
— An agreement signed between the City of Belgrade and IFC is aimed at supporting the City to increase the energy efficiency of its key urban infrastructure and thereby improve the overall living conditions and reduce the harm to the environment in the Capital of Serbia. As part of the agreement, IFC is planning to contribute to Belgrade’s Smart City strategy by developing an Energy Efficiency Action Plan that will identify key investment opportunities for the city related to buildings, district heating, street lighting and other urban infrastructure. We will also help the city to set up and finance an Energy Efficiency Fund. The particular emphasis will be placed on green buildings, both newly built and renovations. IFC will perform benchmarking and propose an investment plan for refurbishing of public buildings in Belgrade, including hospitals, social housing and schools that can be financed through a sub-national loan. In addition, in order to support privately-owned buildings, IFC will explore the potential for a complementary green mortgages and other Sustainable Energy Finance investments with commercial banks.
What does the IFC’s Smart Cities Strategy entail and how is the Strategy going to be implemented in Belgrade?
— In Belgrade, we have already been supporting the city to develop a modern waste to energy facility, we are helping the city to structure the transatction and find an appropriate investor and operator. We are now building on this, by helping the city first identify and prioritize the key energy efficiency opportunities, for exhample: refurbishing public buildings, reducing losses in the district heating network or generting part of it’s heat supply from renewable sources such as solar. We’ll then advise the city on how to get the funding for the resulting projects, for example through the development of an Energy Efficiency Fund.
In which regional cities is the IFC implementing similar projects?
— IFC supports City related projects all around the globe. In the region, we recently had projects in Turkey and Romania. IFC helped Istanbul to structure the transaction for the financing of the major expansions of the metro system and Izmir to find financing for new tramway lines and waste and waste water infrastructure. We have also overseen the structuring and financing of upgrades to the district heating networks in the Romanian cities of Timisoara and Botosani.
These are very financially tasking endeavours. How can the IFC help Belgrade in devising strategies for attracting investors to provide funding for such projects?
— We have been working with the City of Belgrade for some time and one important aspect of the collaboration related to a prudent management of the city’s finances. The city has made major progess in this regard, as demonstrated by the fact that Belgrade recently received it’s first credit rating. On this basis, the key then is two-fold. From a strategic perspective, we can help the city prioritize its project pipeline with respect to financing and other strategic considerations. And from an individual project perspective, we can also help the city to decide whether a project is best realized in partnership with a private investor or whether it is better implemented by the city itself. In either case, IFC can support the city with advice and financing solutions.
In which areas should the investment climate in Serbia be improved and are there specific measures in place that Belgrade could apply locally?
— Serbia is among the global top 10 improvers in this year’s edition of the World Bank Group’s Doing Business report. Serbia has been steadily improving the business environment over the past decade. This strong commitment needs to continue both in terms of improving legislation and increasing the operational efficiency of government agencies and local authorities. The process for starting a business was simplified, considerably reducing the time needed to register from 12 days to 7 days. Serbia also implemented an online system and streamlined the process of obtaining building permits. As a result, an entrepreneur in Belgrade can now build a warehouse in 156 days, down from 327 days previously. And, the property transfer process was simplified by the introduction of effective time limits for issuing new property titles. The report also highlights potential areas of improvement. For example, it takes 125 days to get an electricity connection in Belgrade, compared to the global average of 93 days. It also takes 226 hours to comply with local tax obligations. As was noted in the recent IMF Executive Board review of their standby arrangement with Serbia, much more needs to be done to improve the judicial process and the court system. There are problems Serbia must fix to better ensure consistent application of the rule of law in commercial disputes.
The IFC is already advising the City of Belgrade on structuring and implementing public-private partnerships in waste management and waste water treatment which is a part of the IFC’s Cities Initiatives. What concrete steps can we expect in this segment in the following period?
— Since November 2014, IFC’s team has been advising the City of Belgrade to structure and tender a PPP contract for one of the largest Waste-to-Energy projects in the region. A competitive dialogue with the pre-qualified bidders will be finalized shortly and the Request for Final Proposals is expected to be issued in early 2017. The selection of preferred bidder and contract award are expected later in 2017. The project size could be up to €300 million. In May 2016, IFC PPP Advisory team signed its second mandate with the City of Belgrade to assist in implementing a municipal wastewater investment program. IFC is advising the City on how to structure and finance different components of the municipal wastewater system. The priority is given to development of Belgrade’s central system in which the wastewater treatment plant Veliko Selo is located. The central system will be developed in phases over the next 20 years. The estimated investment of the first phase amounts to €240 million.
Investments in energy efficiency and green buildings are synonymous with smart business. How can long-term investments in these segments benefit Belgrade?
— We know from many countries we work in how investments in energy efficiency can pay off handsomely. Most directly, the enormous sums of money are saved when the same level of service (e.g. heating and lighting) can be achieved by using less energy. The money saved can then be used productively elsewhere. In addition, the use of smart and efficient technologies typically brings other benefits. For example, LED streetlights are not only much more efficient but they can be integrated with traffic management and security systems. More broadly, higher energy efficiency also means less pollution, better air quality and more livable and attractive cities for both people and businesses.