Clare Nuttall in Sibiu -

Sibiu, a small city in Romania’s Transylvania, is one of the largest recipients of European Bank for Reconstruction and Development (EBRD) municipal funding across the more than 30 countries where the bank operates. Infrastructure investments have underpinned the growth of the city’s economy and its transformation into a tourist and cultural hub over the last decade.

Back in 2003, “the local authorities started on the very long and difficult path of turning a dusty provincial town into a modern European city,” says Sibiu’s acting mayor, Astrid Fodor.

The first step toward the city’s transformation was jump-starting the local economy, Fodor explains. The Hapsburg city, formerly known as Hermannstadt, with its medieval old town has become one of Romania’s top tourist destinations. However, the new West Industrial Area has also attracted Romanian and international companies especially in the auto-components sector. Sibiu is also strong in health and medicine, food and clothing.

Fodor attributes this to factors including Sibiu’s geographical location, qualified workforce, good standard of living and wide transport links to other European cities. Equally important has been the investments into roads, public transport, water and sewage networks, supported by funding from the EBRD and, since Romania became a member state in 2007, the EU.

The process started a decade ago under Sibiu’s former mayor Klaus Iohannis, who was elected Romania’s new president in November 2014. Since then, his team has continued developing the city under acting mayor Fodor.

City of culture

Modernising urban infrastructure became a priority after 2004 when Sibiu was selected as the 2007 European Capital of Culture, together with Luxembourg. Preparations focused on two areas – upgrading the main streets and rehabilitating the city centre. Sibiu international airport was also upgraded.

“The European Capital of Culture programme motivated the community to come together and work to make this a success. From cultural institutions to hotels and restaurants, local authorities and businesses, we all pulled together and we succeeded in organizing a very good cultural programme,” according to Fodor.

After the event, which gave a boost to tourism, culture and the overall economy, efforts continued. “2007 was an excellent year and an impulse for the further development of the city,” Fodor says.

She points out that infrastructure projects were essential to Sibiu’s emergence as a successful tourist destination. “You can’t have tourists arriving without an international airport, good street infrastructure, a good living environment and, of course, a rehabilitated historic centre to attract guests and properly display the city’s architectural and cultural heritage,” she says.

Since 2003, a total of more than 250 streets have been modernised using a combination of local budget funds, EBRD loans and EU structural funds.

In addition to lending directly to the Sibiu municipality, the EBRD has also worked with the city’s public transport and water and sewage companies.

In 2006, public transport company Tursib contracted a €5mn loan which it used to upgrade the bus fleet with the purchase of 35 new buses. A second €4.8mn loan, agreed in 2014, is financing construction of a new bus depot in the West Industrial Area, which will draw traffic away from the city centre, thereby reducing pollution.

The city’s water and sewage company Apa-Canal Sibiu has also received EBRD funds to co-finance projects to modernise its infrastructure. A benchmarking exercise for water companies in Romania, launched with support from the EBRD, shows that the Sibiu company is one of the best performers within Romania and also compares well with Western European water companies.

Today, Sibiu municipality and its water and transport companies are in a position where they could obtain commercial loans, but according to Venera Vlad, senior banker in the EBRD’s Municipal and Environmental Infrastructure team in Bucharest, the municipality will continue working with the EBRD. “Commercial lenders would like to invest because this is a creditworthy, safe client,” Vlad says. “However, they have chosen to work with the EBRD because they want support with further transition activities.”

The mayor says, “We found in the EBRD a trusted partner on which we could count on to finance the upgrading of city infrastructure, the modernisation of the bus fleet and the building of a new bus depot and, of course, support the local water and sewage company.”

According to Vlad, Sibiu has now become a pioneer for other Romanian municipalities as well as one of the reference cities in the EBRD’s portfolio. “Sibiu is a pioneer of change and structural reform, that has become a model to follow within Romania,” she says.