EBRD releases the last installment of the loan needed for the rehabilitation of the tramway line of Iaşi

Doru Mocanu,

IAŞI

The European Bank for Reconstruction and Development (EBRD) notified the Mayoralty of Iaşi that it accepts to release the final installment of the loan which will be used for the modernization of the tramway lines of Iaşi. The total value of the loan is EUR 15 million and is intended for the funding of an extensive project for the rehabilitation of the electrical transport infrastructure of the city of Iaşi. The release of the last installment of the loan, worth EUR 6 million, was uncertain, as one of the conditions of the EBRD, (converting the Local Public Transport Company into a private company).

"The EBRD gave the go-ahead for the release of the final installment, but we still need the approval of Raiffeisen Bank, the bank through which payments are made. We have sent all the necessary clarifications, and we have explained that Romanian legislation does not allow changing the RATP into a private company. They understood and have given up on this requirement, for now", Mihai Chirica, Technical Manager of the Mayoralty of Iaşi.

The last installment will be used to pay the works executed by German construction company Martin Rose, as well as for funding a new component of the project recently launched - the modernization of the tramway line on the Cuza Vodă street.

RATP Iaşi was supposed to be converted into a private company by the end of 2007, according to the law 51/2006 concerning public utilities companies in the EU, but this hasn"t happened to this day. In fact, the single largest issue that RATP is facing are its long unpaid debts stand at more than EUR 70 million. Over the years, several suggestions for extinguishing these debts have been made, including canceling the debts through an intervention with the European Council.

Recently, the management of RATP Iaşi came up with a new proposal: supplementing the already existing loan by another EUR 10 million, money which would be used for the modernization of an additional four tramway line segments, with the postponing of the company"s privatization until the last drawing of the new loan. "EBRD officials said they would come over to Iaşi to negotiate both the additional loan, as well as the privatization of the company. We are now caught between a rock and a hard place. Law 51/2006 says that we should become a private company, but it does not specify how we should go about it, whereas we"ve got European officials asking us to forego our government business enterprise status", said Maricel Ghercă, manager of RATP Iaşi.