Municipal Project Support Facility (MPSF)

Municipal Project Support Facility (MPSF)

Project ID: NIF-East-50

The municipal infrastructure sector in the Eastern Neighbourhood region is going through a process of substantial structural change in terms of providing traditionally public services such as the water supply and wastewater treatment, district heating and public transport. This includes restructuring public utilities at the local level and tariff reforms. As part of a decentralisation process, governments have transferred responsibility to local authorities. The removal of much of the central organisation of and funding for public infrastructure, which used to be offered at virtually no cost to the population, has resulted in inadequate funding and the services have deteriorated both in terms of quality and hours of service. Ageing infrastructure coupled with limited financial resources is pushing municipalities to look pro-actively for cost effective solutions, including by making more use of energy- efficient technologies.

This is where the Municipal Project Support Facility plays a role. It aims to help municipalities provide sustainable municipal services whilst protecting and preserving the urban environment. The main objective is to fund energy efficiency investment projects in the urban sectors that are covered by the Covenant of Mayors (including district heating, urban transport, street lighting and renewable energy) as well as projects related to the water supply and sanitation and solid waste management. The primary beneficiaries of this initiative are the local authorities that have signed up to the Covenant of Mayors. In principle the activities of the MPSF shall lead to bankable projects. The project will work in close coordination with the Multi-donor Trust E5P (Eastern Europe Energy Efficiency and Environmental Partnership) which would be a source of funding for projects supported under the E5P.

Local governments have difficulty attracting financial resources at sustainable interest rates to facilitate project preparation and implementation. In addition, the municipalities in the Eastern Partnership region have little experience in preparing and handling large amounts of funding from European Financial Institutions. The EU’s NIF contribution therefore provides technical assistance to prepare projects to become bankable, sustainable and successful. It is expected that the technical assistance provided thanks to the NIF will lead to investments amounting to around €500 million in municipal infrastructure in the region, thus substantially improving the provision of public services to the population and to people’s quality of life.