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15.11.2016 : Water in EU-External Action Instruments
Water and waste water - 08/02/2017

By 2025, 800 Million people will live in countries or regions with absolute water scarcity and about two-thirds of the world’s population have to live in fear of diminishing water resources. This places water security high on the political agenda. Between 2014 and 2020, the tentative amount of funding spent in the water sector accounts for some 1.7 Billion Euro in more than 50 beneficiary countries/regions (mainly Africa).

By 2030, the demand for water, energy and food will increase by 30 to 50%. Under the Water, Energy and Food Security Nexus, the seven investment facilities of the EU should safeguard the “access to basic services”, which includes water and wastewater projects. According to EU-estimations, water projects cover 20 to 25% of the foreseen budget of the investment facilities. Water blending, as one investment mechanism, is conducted through EIB, EBRD, German KfW and French AFD. EIB is the largest lender to the water sector worldwide. In 2013, this bank invested 424 Million Euro for nine water projects outside the EU. This led to water supply for 656000 households and access to sanitary facilities for 199700 households (July 2016). In the upcoming years, the EIB will spend around 250 Million Euro per year on loans for water projects in sub-Saharan Africa. According to some estimations, 20 Million people could benefit from improved water and sanitation services, and thus, promote health or even safe lives.

To raise the awareness on water projects, the last sector seminar took place on 15th November, 2016 in Hotel Bloom in Brussels Center and specifically focused on water as an EU External Action Instrument.  This event was organized by Germany Trade & Invest, the Association of German Chambers of Commerce and Industry, the Croatian Chamber of Economy and the Wirtschaftskammer Österreich (WKÖ). Numerous Permanent Representations and External Trade Organizations of other EU-Member states assisted as Co-Organizers. 146 representatives of Consulting firms, Enterprises or Investment firms from 15 different EU-Member states participated in this seminar.

At the beginning, a speaker of the Directorate General International Cooperation and Development – Europeaid, DG DEVCO of the EU-Commission introduced the seminar. Furthermore, the European Investmentbank (EIB) as well as the European Bank for Reconstruction and Development, EBRD presented themselves and their activities. In the afternoon, attending companies had the opportunity to link with potential cooperation partner for future tender in B2B sessions. Information stands allowed bilateral exchanges between companies and representatives of the EU, the EIB and the EBRD.

Paolo Ciccarelli, Head of Unit of C5 at DG DEVCO, is in charge of projects focusing on water, infrastructure and cities. He gave a review of the different EU-activities in country-specific water sectors and in how far they offer business opportunities. The financially strongest projects take place in Angola and Senegal. In the regional strategies of Central Asia, Central- and Middle America or East Africa too, the EU focuses on the development of the water sector. With the initiative to fight migration, the EU implements water projects in Western Africa and at the Horn of Africa. Hereby, the EU follows the Nexus-approach, which connects these projects with the aim to provide food and energy. All the projects go hand in hand with the Sustainable Development Goals (SDG), set out by the United Nations in 2015.

Laurent Sarazin, Head of the Legal Department in the DG DEVCO explained the recent rules and regulations of the Practical Guide to Contract Procedures for EU External Actions (PRAG). The presented rules are essential parts of the PRAG 2016, which was published mid-January 2016.

While the EU, as presented by M. Ciccarell, allocates a significant amount of its budget (25%) to water projects, the lion’s share (75%) is agreed upon the so-called Blending. The EU puts the Blending mechanism into practice within the framework of seven investment facilities in several world regions. They connect EU subsidies with loans provided by international financial institutions in order to stimulate private investment. Two investment facilities are essential components of the European External Investment Plan, which aims to support water projects.

Harald Schoelzel, as an expert in the field of water and wastewater, represented the European Investment Bank based in Luxembourg. This bank cooperates with private actors to implement several water projects. Around 4 billion Euro are spent for water projects. Between 2011 and 2015, EU subsidies of 17 billion Euro created a total investment volume of 56 billion Euros in the water sector.  The African ACP countries received in total 466 million Euros. More specifically, Lesotho, Zambia and Uganda were the top recipients. In the future, the financial support of water projects will remain high on EIB’s agenda.

Dr. David Tyler, a specialist for urban and ecological infrastructure at EBRD, emphasized that the importance of clear water is not only essential for humanity, but also for the development of a prosperous society. EBRD allocates 32% of its financial aid to the water and wastewater sector, which is equivalent to 1 Billion Euro. This financial aid is distributed to 124 projects. Companies, which are actively involved in the field of environment and water security, receive 5% of the bank’s financial aid.

The EU increasingly allocates subsidies to the development agencies of EU Member States with the aim to foster water security. Immanuel Gebhardt, responsible director for tendering and contract awarding procedures at the GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit), explained the business opportunities more specifically: In 2015, the GIZ tendered and awarded in total 662, 3 Million Euro for services, construction projects and financing. The national offices of the GIZ tendered 295.8 Million Euro, which resulted in a total sum of tender of 1 billion Euro. Overall, the GIZ spends around 334 Million Euro of its annual budget on water related issues. Water scarcity represents the most pressuring problem in 22 countries. The biggest share of tenders in the water sector was awarded to Africa (39%), the MENA-Region (34%), Asia (13%) and Latin America (10%). Céline Gilquin, Head of the water department at GIZ emphasized the business opportunities for private companies with the example of the Agence Francaise de Développement (AFD): Nearly 10% (700 Mio. Euro) of AFD’s annual financing commitment refers to the water sector. Between 2010 and 2012, two thirds of the financing commitments were exhausted for water projects (72%) and the remaining sum was spent on wastewater projects (28%).

Finally, a company panel took place, where selected companies being involved in the water sector participated. They explained their experiences with tendering by EU external action instruments. Jakob Zeidler, Head of the Implementation Department at the Austrian company Hulla & Co Human Dynamics KG, presented his projects, which were successfully implemented in collaboration with EU institutions. He gave advice and indicated that projects with the EU institutions were very attractive, but the collaboration entailed some negative aspects such as high investments costs and high competition among applicants.