Over 6 million people to benefit from European funds for South African water

EU Three European development finance partners and the Development Bank of Southern Africa (DBSA) today formally agreed to finance the Mooi-Mgeni water supply project in KwaZulu-Natal. The agreements were signed at an event in Rosetta to mark the start of construction for the Mooi-Mgeni project.

The European Investment Bank, the French Agency for Development and Germany’s KfW Entwicklungsbank (The German Development Bank), all with a strong track record of supporting water projects in South Africa, signed contracts to provide loan funding for EUR 195 million (approximately ZAR1.8 billion), to the Trans-Caledon Tunnel Authority. Finance contracts were signed by representatives of the financial institutions and James Ndlovu, Chief Executive Officer of the Trans-Caledon Tunnel Authority in the presence of South Africa’s Minister of Water and Environmental Affairs Edna Molewa and Dr Zweli Mkhize, Premier of Kaw-Zulu Natal.

The Mooi Mgeni project will provide water to the Mgeni System that supplies water to 6.3 million people living in the municipalities of Ethekwini, uMgungundlovu and uMsunduzi in KwaZulu-Natal. The project includes construction of the Spring Grove Dam on the Mooi River at Rosetta in the KwaZulu-Natal Midlands. Work at this site was launched today by a sod-turning ceremony. The scheme also includes a conveyance system to transfer water to the Mgeni River catchment. Once constructed, the project improve the security of supply of water in the region, provide an extra 60 million cubic metres each year and address water delivery backlogs.

Highlighting the importance of the project, Plutarchos Sakellaris, European Investment Bank Vice President for Africa said “Availability of clean water is crucial for life and contributing to improved water supply in South Africa is a priority for the European Investment Bank. We are pleased to contribute to more effective financial support for this flagship initiative as lead financier under the Mutual Reliance Initiative.”

In the context of President Zuma’s visit in France in March 2011, Dov Zerah, AFD General Manager underlined “the key importance of securing access to water to guarantee a sustainable urban development in South Africa”.

“The project makes a significant contribution to the improvement of the environmental protection in the greater area of Durban and supports the economic development of the region,“ stated Dr. Norbert Kloppenburg, member of the Executive Board of KfW Bankengruppe.

“Our financial commitment in this project is in line with our mandate of assisting government in the expansion and rehabilitation of infrastructure which is one of the priority sectors. This contribution will go a long way in ensuring that millions of South Africans have access to clean water”, says T.P. Nchocho, DBSA Group Executive

The Mooi Mgeni water project is the first time that the three institutions have streamlined financial cooperation in South Africa, under their Mutual Reliance Initiative intended to enhance the efficiency of large scale development finance projects. The three European institutions also used this occasion to sign a Common Project Terms Agreement that outlines their respective roles and common engagement.

The total cost of the project is ZAR 2.2 billion, approximately EUR 225 million. The project will be co-financed by the European Investment Bank (EUR 80 million), the French Agency for Development (EUR 70 million) and the German KfW (EUR 45 million), that are all public development finance institutions that implement the European Union’s, French Government’s and German Government’s respective development policies. The Mooi Mgeni project will also be supported by ZAR 250 million from the Development Bank of Southern Africa (DBSA).

The project will be managed by the Trans-Caledon Tunnel Authority (TCTA), a state-owned water management body responsible for bulk raw water implementation in South Africa, under the authority of the South African Department of Water Affairs. Water access and supply is one of the priorities of the South African Government.

Since 1995, the European Investment Bank, AFD and KfW have supported South African economic growth by funding large infrastructure programs, such as this bulk water project, which are key to improving quality of life and economic development in South African.

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