El Jadida RADEEJ

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	26179
Company name	Régie Autonome Intercommunale de Distribution d’Eau et d’Electricité d’El Jadida (RADEEJ)
Country	Morocco
Sector	Utilities
Environmental category	B
Department	Sub-National Finance
Status	Pending Disbursement

Date SPI disclosed	February 1, 2008
Projected board date	March 3, 2008
Previous Events	Signed: April 29, 2008 Approved: April 3, 2008

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed investment is a Risk Sharing for up to MAD150 million ($19.5 million) for a loan to be provided by local banks to RADEEJ, the municipal water supply, sanitation and electricity distribution utility in El Jadida, Morocco, for investments in sewerage infrastructure.

The IFC’s Risk Sharing will help secure MAD300 million ($39 million) in commercial bank loan(s), to be used for a MAD550 million ($71.5 million) investment program in sanitation facilities, in the framework of Morocco’s National Sanitation Plan (PNAL).

RADEEJ (Régie Autonome Intercommunale de Distribution d’Eau et d’Électricité D’El Jadida), a local public utility which was created in 1971 and acquired legal and financial autonomy in 1977. It provides services to the city of El Jadida and since 1979 to 4 surrounding municipalities and 22 villages, representing a total of about 390,000 inhabitants.

Anticipated development impact of the project

Development of Private Sector and Mobilization of Local Resources:

- The project will contribute to the economic development of El Jadida. It will help attract new business by providing improved infrastructure facilities, and will in particular support the growth of the tourism industry through improved environmental conditions.

- The construction, operation and maintenance of the sewerage network and sewage treatment plants will create business opportunities for private contractors and temporary jobs during construction.

- The project will help a well-managed municipal utility access new sources of financing, without requiring sovereign support. IFC’s participation will ensure that sound credit criteria are used as local financial institutions enter into this new business line. Eventually, it is expected that the demonstration effect will result in local banks financing other municipal utilities without further need for credit enhancement by IFC.

Positive Environmental and Social Impact:

The project will generate environmental and social benefits for the population of El Jadida and surrounding municipalities by reducing health hazards due to the discharge of untreated sewage, reducing pollution of beaches, reducing odors in urban areas, and preventing flooding.

IFC's expected development contribution

IFC involvement will help broaden access to more commercial sources of financing by local distribution utilities in Morocco, allowing for their increased autonomy. It will encourage local commercial banks to increase their exposure to the municipal sector. This will free budgetary space, helping the national authorities concentrate the use of guarantees and other financial support on sectors such as human development, where direct cost recovery is more difficult.

With the support of IFC, RADEEJ would be able to access the long tenors that it seeks, improving its capacity to implement its wastewater management program.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. RADEEJ’s operations help extend water and wastewater treatment services in a region with limited infrastructure for safe disposal of sanitary and industrial wastewater. Wastewater treatment services provided by RADEEJ help in environmental protection and enhancing public health through treatment and disposal of sewage. The scope of the project includes rehabilitation of collection infrastructure and construction of treatment and discharge facilities, and would bring El Jadida and nearby municipalities up to national standards defined in the National Liquid Sanitation Plan (PNAL). RADEEJ is working on extending its sanitation services to include the municipalities of Sidi Bennour, Azemmour and Zemamera, as well as the rural communities of Oualidia and Ouled Frej.

Performance Standards (PS) that are applicable for this investment include:

- PS1: Social and Environmental Assessment and Management System
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement

Upon successful implementation of the agreed mitigation measures, the proposed project is expected to comply with Moroccan laws and regulations, IFC Performance Standards and applicable World Bank/IFC guidelines.

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