The World Bank approved a Euro 212,900,000 Municipal Services Project Loan for Turkey. The lending instrument for the Municipal Services Project is a Specific Investment Loan with a 17-year maturity, including a 5-year grace period. With this loan, the World Bank has provided more than $1.8 billion in new loans and grants to Turkey over the period July 2004 through June 2005.

The project’s main objective is to support the Government’s sustainable environmental services in selected municipalities. To meet this objective, the project will:

• support the development of municipal infrastructure to improve the environment and quality of water, wastewater, and solid waste management services. This development will be measured by the following indicators: reduction in water losses, increased volume of wastewater treated, increased number of water and sewerage connections, and use of sanitary landfills;
• support municipal utilities to strengthen their financial position, improve operational efficiency, and prepare and implement projects. This will be measured by the following indicators: improvement in working ratios, reduction of water that is unaccounted for, and successful completion of projects; and
• support the institutional strengthening of Iller Bank so that it is able to implement the project in a satisfactory manner.

The Treasury is the Guarantor of the loan and Iller Bank will be in charge of the overall implementation of the project. The project consists of the following components:

1. Municipal Development to support investments in the water, wastewater, and solid waste sectors;
2. Municipal Technical Assistance to support the preparation of feasibility studies, urban planning, preparation of bidding documents, and municipal utility operational improvement plans; and
3. Iller Bank Institutional strengthening to increase the financial and technical capacity, support incremental operating costs, and prepare audits.

„Currently, 70 percent of Turkish citizens live in urban areas. This high urbanization leads to demand for core municipal services that include water, wastewater, solid waste management, and transportation. The World Bank is pleased to help the Government of Turkey in focusing on water, wastewater, and solid waste investments which will bring better water and environment conditions to citizens living in many urban areas,“ said Andrew Vorkink, Country Director for Turkey.

„Given the high rate of urbanization and the need to meet EU environmental directives, Turkey will have to sustain a high level of investments at the local level to develop local infrastructure. This project will contribute towards developing that infrastructure and promoting environmentally and financially sustainable services,“ he said.