Completed local government investments

"One of the fundamental goals of the social and economic policy of our government is to equalize the development opportunities of individual regions of the country and to stop the unfair and shameful division into Poland "A", "B" and "C". It is outside the urban agglomerations, in small and medium-sized cities of Poland, that there is a social and infrastructural deficit of investmentswhich would improve the residents' quality of life. Poland must be active in reducing differences, sometimes even civilizational ones, between large and smaller cities. The program initiated by the Ministry of Development in cooperation with Polski Fundusz Rozwoju and local governments is a great stimulus for the implementation of a number of investments that local communities expect, which will change the daily lives of residents of small cities for better," states Prime Minister Mateusz Morawiecki.

"PFR implements the Package for Medium Cities, which is a part of the so-called Morawiecki Plan, the purpose of which is to speed up investments in the modern infrastructure of Polish local governments. Our goal is to provide Capital for Local Government Development as a key element of the offer of Polski Fundusz Rozwoju for local government units that want to finance investments. I am convinced that our offer will contribute to a significant increase in the dynamics of investments of Polish local governments, in particular in the area of water and sewage infrastructure, heating and revitalization systems," says Paweł Borys, President of Polski Fundusz Rozwoju.

PFR (through Fundusz Inwestycji Samorządowych) will invest in Sądeckie Wodociągi and Miejskie Zakłady Gospodarki Komunalnej i Mieszkaniowej in Limanowa, purchasing minority stakes in these companies. Local governments plan to assign the obtained funds for strategic investments for their residents. The investment horizon of Polski Fundusz Rozwoju is of a maximum of 20 years.
"Today's ceremony proves that the pre-investment meetings with PFR experts have delivered their first results, and that the instrument prepared under the Package for Medium Cities is very much needed. Two cities have already decided to implement projects in this model. This is a pioneering decision which will bring benefits to all sides and is a confirmation that PFR is a safe source of funding for local public investments," states Jerzy Kwieciński, Minister of Investment and Development.

Moreover, by 11 January 2018 Polski Fundusz Rozwoju had concluded more than 20 cooperation and confidentiality agreements with local government units that are considering cooperation with entities such as Polski Fundusz Rozwoju.

"PFR's offer is intended for those local government units which, in the face of limited access to EU aid funds, cannot run into debt further. Our research proves that the value of investment needs of local governments, for which they do not have guaranteed financing, exceeds their ability to incur debt by more than 3 times. In such cases, the offer of Polski Fundusz Rozwoju and the financing instrument which is the Public-Private Partnership is a good instrument for financing public services and a means to implement capital-intensive investments which do not generate income. We are thrilled to be signing the first contracts under our program today. I hope that other local governments will also take advantage of our offer," says Bartłomiej Pawlak, Member of the Management Board of Polski Fundusz Rozwoju responsible for local government investments.

"The Package for Medium Cities is a strategic project that helps smaller cities compete with large ones in attracting external funding, benefiting from innovative sources of funding and attracting private investors. After the first months, we can see that this form of support effectively mobilizes them to apply for funds and affects their development, and thus the local and national economy," states Adam Hamryszczak, Undersecretary of State at the Ministry of Development.

Polski Fundusz Rozwoju is a Partner of the Ministry of Development in the implementation of the Package for Medium Cities program. The role of PFR is to consult with local government units with regard to the possibilities of financing their investment needs. As part of the application process, 150 local governments have applied to PFR. These are governments that are looking for investment opportunities, but do not have the opportunity to obtain grants, and for various reasons, do not want to or cannot get into debt. Most investment needs were reported in the area of road and transport infrastructure (i.e., roads, streets, ring roads, hubs, bridges, stations, railway lines, rolling stock, interchanges) and in the area of cubature (museums, knowledge acquisition centers, schools, kindergartens). Their total value amounts to over PLN 5.5 billion.

The transaction for purchase of minority shares of PEWIK Gdynia by PFR Fundusz Inwestycji Samorządowych was made through the Package for Medium Cities program, which was developed to stimulate economic growth and improve the quality of life in medium-sized cities in Poland. The municipalities of Wejherowo and Kosakowo and the municipalities of Gdynia, Rumia, Reda and Wejherowo, wishing to obtain funding for the modernization of local infrastructure, upon the consent of the municipal and commune councils, conducted a competitive procedure to purchase a minority stake in the Company. From all the entities taking part in the procedure, the most advantageous offer was submitted by PFR FIS.

"Fundusz Inwestycji Samorządowych offers to  local governments forms of support which, on the one hand, cover the capital gap in investment projects and, on the other, do not worsen their Individual Debt Index. We are a partner that provides comprehensive support to local governments, both with regard to funding and comprehensive advice. We want our local government partners to feel that they can count on us and that we are their ambassador in Warsaw," says Bartłomiej Pawlak, Vice-President of the Management Board of PFR.

PFR FIS will become a minority, passive shareholder of PEWIK. According to the investment agreement, it will not affect the current management of the company and after 20 years at the latest the purchased shares will become the property of local governments again. The investment model of the Fund is safe for local governments and their subsidiaries. The Fund invests in well-managed, profitable municipal companies with a stable financial standing.

"This transaction is very beneficial and secure for Gdynia. We will gain additional financing for the investment, and throughout the entire duration of the agreement the municipalities will be the majority shareholder of PEWIK. The water supply company will at that time operate unchanged, implementing all the planned, ambitious and daring investments. The business plan also specifies that the price of water and sewage may not be significantly increased during the term of the agreement and that the new purchaser will not be able to sell its shares to anyone other than the existing shareholders," says Katarzyna Gruszecka-Spychała, Vice-President of Gdynia.

PEWIK in Gdynia, co-owned by the municipalities mentioned before, is in a very good financial standing due to the excellent, long-term local government cooperation. It was not easy to achieve this, however today it allows us to obtain significant capital, which the municipalities will allocate to necessary investments, planned for implementation from 2019, without the need to incur debt and in a completely risk-free manner.  At a time when prices of services and building materials are rapidly growing and when development plans are ambitious, this is a very favorable circumstance.  It may be said that it is a bonus for the residents for years of hard, professional work of the management boards of PEWIK and municipalities - its owners.