Financing treatment of water
The “fin” in Aquafin stands for finance, one of the main reasons why the Flemish Region set up Aquafin in 1990. At that time, just 30% of domestic waste water in Flanders was treated before entering a watercourse. Aquafin not only had to develop the treatment infrastructure rapidly and manage it, the company also had to finance the projects necessary for this. This ensured that the impact of the huge investments on government budgets remained low.
Thus, in order to carry out the assigned projects, Aquafin has to constantly go to the financial market. For projects delivered to the region, the company takes out long-term loans, for projects in progress it seeks short-term finance. By the end of 2019, Aquafin had already delivered 4.1 billion in projects to the region.
Flemish Environment Agency and Aquafin
Within the Flemish Environment Agency, both ecological and financial regulators are employed who monitor Aquafin’s activities. The financial regulator monitors the efficient spending of the allocated resources. The ecological regulator evaluates the operation of the treatment infrastructure managed by Aquafin. To check that the infrastructure is performing to an optimal standard, the Flemish Environment Agency and Aquafin have devised a set of indicators which reflect the performance in numerical terms.
Aquafin is assessed annually based on these 5 specific indicators:
is the capacity of the (screw) pumps of the waste water treatment plants used sufficiently?
is the water treated sufficiently there?
is the capacity of the main pumping stations in the sewer system used sufficiently?
are the overflows not working more than expected?
does Aquafin respond sufficiently to incidents occurring in the water treatment infrastructure?
Green investments booming
More and more investors want to invest in projects offering added value for the environment and society. Aquafin capitalises on this trend by issuing green bonds. After all, all of the projects we carry out help improve water quality. Projects for disconnecting stormwater from the treatment infrastructure and optimisation projects to defend the environment better against climate change offer an extra dimension in terms of sustainability.
Aquafin obtains around half of its long-term finance from the European Investment Bank (EIB).
The cooperation is a prime example of how EU loans can have a major impact at local level. The EIB has set itself the target of giving at least 25% of its loans to climate-related projects. We are therefore delighted with the high standards that Aquafin sets itself in that area too.
Who pays the bill?
In Flanders, the water companies are responsible for treating the water used by their customers. They enter into an agreement for this with Aquafin, which assumes the task of treatment for them. Aquafin invoices the water companies for the investment costs as well as the operating costs for the development and management of the regional treatment infrastructure. The water companies can obtain part of the payment from the MINA fund, which is topped up by general tax revenue. They pass on the remainder to consumers via water bills, according to the principle of “the polluter pays”. Consumers also pay the contribution for the removal of waste water via the municipal sewer infrastructure via their water bills. The municipality or its sewer operator must use this income to invest in the infrastructure.