For decades, the municipality of Bucharest, Romania struggled with the city’s water and sanitation needs. Because of leaks and waste in the distribution network, water losses were nearly 50 percent. That, along with an inadequate metering system, resulted in low revenues for the municipality, with water consumption levels four times the European Union average. To meet European Union standards, Bucharest was required to make large investments in sewerage and water storage, and to increase accountability and incentives to improve efficiency. But low tariffs meant that investment funds were insufficient.
The municipality hired IFC to facilitate efficiency gains so that consumer service levels could improve with minimum tariff increases, to transfer most of the investment responsibilities to the private sector and make it as self-sufficient as possible, and to avoid the dangers of a private monopoly. In 2000, Bucharest created APA Nova, a joint venture concessionare company, to establish and manage all water and sanitation services in metropolitan Bucharest under a 25-year concession contract. This marked Romania’s first public-private partnership in the water and sanitation sector, and it was one of the first sector transactions in Europe. In the decade since this pioneering transaction paved the way for others, Bucharest has seen dramatic improvements to its water and sanitation needs, including:
- A new water treatment plant which reduced dependence on two older plants.
- Reduced water losses by 44 percent (during the 2002-2006 period).
- A new metering system and reduced leakages, leading to a 50 percent drop in total water demand.