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Jordan, EIB sign 260-million-euro framework loan to support priority water sector projects

Programme supports Kingdom’s adaptation to climate change

By JT - Dec 02,2020 - Last updated at Dec 02,2020

AMMAN — The European Investment Bank (EIB) signed a framework loan of 260 million euros with the government of Jordan to support priority water sector investments of the Ministry of Water and Irrigation. 

The programme will contribute to optimising the production, transmission and distribution of water in Jordan according to a statement from the Planning Ministry.

The EIB’s funds will finance projects in the construction, upgrade and improve various water supply facilities in several governorates across Jordan. The implementation of these projects will improve the resilience of the water supply sector and support adaptation to climate change, as well as creating jobs during both the construction phase and the operation of the facilities, the statement said.

In addition to the bank’s funding, the Economic Resilience Initiative Technical Assistance envelope will provide a three-million-euro grant for technical assistance to support the necessary preparatory and feasibility studies and the allocation of sub-projects under the programme. The Economic Resilience Initiative is part of the EU’s response to the challenges in the Southern Neighbourhood and Western Balkans.

The framework loan seeks to support the objectives of the Jordanian government in the framework of the National Water Strategy 2016-2025, which identifies projects that contribute to a resilient water sector as a key priority. The implementation of the programme will improve Jordan’s Economic Resilience and support the socio-economic infrastructure of the country.

The minister of planning and international cooperation stated that the aim of the agreement is to secure financing for Jordan on concessional terms for the next six years — with an exceptional long repayment period of up to 30 years — prior to the end of the bank’s mandate towards countries outside the European Union at the end of 2020, said the statement. 

The funding is allocated to priority Jordanian water projects to support the objectives under the National Water Strategy 2016-2025, by working to build, modernise and improve various water supply facilities in governorates across Jordan. The implementation of these projects will improve Jordan’s water supply resilience and support adaptation to climate change, in addition to creating employment opportunities during both the construction phase and facility operation.

The minister voiced appreciation of the support by the EIB as a “key development partner to Jordan”, noting that the bank has worked over the past years to provide financing through loans, as well as technical and investment grants to Jordan to finance projects in key sectors such as industry, mining, energy, education, water and sanitation, and private sector development.

EIB Vice President Dario Scannapieco said: “As the Bank of the European Union, we give high priority to climate action projects. We are pleased to reinforce our support to the water sector in Jordan. This framework loan will support the construction, upgrade and improvement of numerous water facilities across Jordan. These projects are much needed to improve people’s access to water over the coming years.”

The EU Ambassador to Jordan, Maria Hadjitheodosiou, said that “the water projects that will be financed under this framework loan will contribute to reinforce the resilience of the water supply sector and enhance Jordan’s capabilities to address climate change challenges”.

“These projects are fully aligned with, and reinforce the EU’s partnership with Jordan and the joint efforts to mitigate the impact of climate change,” she stressed.

The water sector is of central importance to Jordan due to the country’s severe water scarcity and the sector’s role in safeguarding the country’s long-term social and economic stability. Jordan has one of the lowest levels of water availability per capita globally, making it the world’s second most water-scarce country, the statement said. 

Water availability levels are anticipated to decline further over the next years due to climate change and the expected increase in the country’s population. The new EIB financing falls under the EU’s External Lending Mandate (ELM) 2014-2020 and benefits from the EU comprehensive guarantee on a fall back basis. 

It is consistent with the EIB’s External Lending Mandate relating to the development of social and economic infrastructure, the EIB’s Water Sector Lending orientation, as well as the European Neighbourhood Policy.

This new EIB financing is part of the bank’s substantial engagement in the water sector in Jordan, which has been gradually increasing over recent years in the context of the Economic Resilience Initiative, the statement said. 

In 2015, the EIB signed a loan for the Wadi Al Arab Water System II project for $54 million, for which the EU is also providing an investment grant of 13.75 million euros. In 2019, the EIB signed a 65-million-euro loan and a 16.25-million-euro investment grant for the Deir Alla Water and Sanitation project.

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