Washington D.C., November 29, 2001
—The International Finance Corporation, the private sector arm of the World Bank Group, has signed an agreement with the City of Belgrade (CB), capital of the Federal Republic of Yugoslavia, to act as lead advisor in assessing and implementing the privatization of the Solid Waste Municipal Company, Gradska Cistoca (GC).
As part of the agreement, IFC will study various forms of private sector participation, including the sale of shares, concessions, leasing contracts, management contracts, and other public-private schemes that might best suit Gradska Cistoca. Once a private sector participation strategy is agreed upon, IFC will identify potential operators, market the project, and organize and implement the international tender for the operators.
With around 2,300 employees, GC is responsible for providing solid waste management (collection and disposal) and street sweeping in the metropolitan area of Belgrade, with a population of more than 2 million inhabitants. Although the sector of solid waste was well-developed in Belgrade ten years ago, the current situation has deteriorated substantially, reflecting ten years of limited investment and lack of maintenance.
Mr. Nenad Bogdanovic, President of the CB’s Executive Board, called this transaction a milestone for Belgrade. “This agreement will provide momentum to, not only Belgrade’s, but also other cities privatization programs, and pave the way for further restructuring of the country’s economy,” he said. “IFC’s track record for transparency, and its ability to deal effectively with both governments and the private sector in structuring successful transactions make the Corporation the right choice for this program,” he added.
Ms. Denise Leonard, Manager of IFC’s Private Sector Advisory Services, said: “The privatization will result in significant and sustainable benefits for the population. Not only will this transaction help strengthen the financial situation of the city, it is also a good opportunity to initiate the privatization process and start a track-record for the city.”
IFC will provide a total of $1,397,000 for technical assistance to support the project. Through its donor-funded trust funds program, the governments of Denmark, Greece, Norway, and Sweden provided $912,000 for specialized technical, accounting, economic, market and public research consultants, while the government of France directly provided a fund of $485,000 for a specialized legal consultant.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
