Modernization of Water Services

The Water and Sanitation Services Modernization Project in Bosnia and Herzegovina aims to strengthen the institutional, financial and legal framework and capacity in the water and sanitation sector with a view to ensuring sustainability of investments in infrastructure. The goal is to increase the operational efficiency of public municipal utility companies in the Federation through a series of gradual improvements and to achieve the economic sustainability of utility companies at the local level.

The project consists of three components:

Component 1: Modernization of the regulatory and institutional framework

Component 2: Strengthening the municipal framework for the provision of water supply and sanitation services.

Component 3: Municipal investment projects – improvement of access, quality and efficiency of water supply and sanitation services. Construction of water supply and sanitation network, drinking water and waste water treatment plants.

The project is supported by the World Bank loan and aligned with existing projects and available financial sources from other international financial institutions and bilateral donors. The loan funds for this project for the Federation amount to 25 million euros out of a total of 51.5 million euros approved for BiH. The repayment period is 32 years with a grace period of 7 years, which is included in the repayment period. The initial grant funding for this project for the Federation is US$1,150,000.00. The value of the loan that the municipality/town borrows can amount to 100% of the value of the investment.

The Loan Agreement for the Water and Sanitation Services Modernization Project (Loan No. 93020-BA) as well as the Grant Agreement for the aforementioned Project (BiH WSSM Grant No. TF0B8622) were ratified by the Decisions of the BiH Presidency (Official Gazette of BiH/International Agreements No. 05/ 2023) of 12 April 2023. At the session of the House of Representatives of 06 June 2022 and the House of Peoples of 05 October 2023, the Parliament of the Federation adopted the Decision on acceptance of debt under the Loan Agreement between Bosnia and Herzegovina and the International Bank for Reconstruction and Development (IBRD) for the said project (Official Gazette of the Federation of Bosnia and Herzegovina No. 83/23).

In line with the mentioned agreements and the conclusion of the Government of the Federation no. 2039/2023 of 29 December 2023, the Unit for the Implementation of the Modernization of Water and Sanitation Services (PIU) Project was formed in the Federation of Bosnia and Herzegovina, ensuring one of the prerequisites for the start of the implementation of the Project in the Federation of Bosnia and Herzegovina.

Agreements with interested municipalities (Subproject Agreement) will be signed in accordance with the conditions and deadlines acceptable to the World Bank. Interested municipalities are to ensure the technical conditions for the implementation of the Subproject, including the establishment of teams for the implementation of municipal subprojects (PIT), which will be responsible for the implementation of the sub-project in their municipality/town. The end borrower for this loan are the municipalities from the Federation of Bosnia and Herzegovina that will be included in the Project.