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39th UPDEA GENERAL ASSEMBLY Tanger- 30-31 October 2007 The possibilities offered by the European Investment Bank in support of financing of major infrastructure projects René van Zonneveld-Senior Technical Adviser, Projects Directorate Tanger 30/10/2007 European Investment Bank 1 The European Investment Bank (EIB) European Union’s long-term lending bank set up in 1958 by the Treaty of Rome. Shareholders: 27 EU Member States Governance Board of Governors – EU Finance Ministers Board of Directors - Member States & European Commission Management Committee –EIB’s executive body Audit Committee – independent, non-resident Tanger 30/10/2007 European Investment Bank 2 Loan signatures in the EU in 2006 (EUR m) Tanger 30/10/2007 European Investment Bank 3 EIB Activities Outside the Union Supporting EU Development and Cooperation Policies in Partner Countries EIB external mandates: Pre-accession countries: Candidate countries - Croatia, Turkey and Former Yugoslav Republic of Macedonia Potential candidate countries - The Western Balkans European neighbourhood: Mediterranean Neighbourhood (FEMIP) Russia and Eastern Neighbours Development: Africa, Pacific and Caribbean (ACP) South Africa Asia and Latin America (ALA) Loans of EUR 5.9bn in 2006 Tanger 30/10/2007 European Investment Bank 4 EIB lending in 2006 (in EUR billion) Tanger 30/10/2007 European Investment Bank 5 Benefits of an EIB Loan Benefits of low cost of funding passed on to clients: Large amounts Broad range of currencies Long maturities Attractive interest rates Catalytic effect on participation of other banking or financial partners Tanger 30/10/2007 European Investment Bank 6 Value Added Value-Added of the Bank’s lending activities: Project quality and soundness Financial benefits of EIB funds Technical assistance Project assessment Tanger 30/10/2007 European Investment Bank 7 Project Requirements Projects must: Be technically sound Be financially viable Show an acceptable economic return Comply with environmental protection and procurement regulations Tanger 30/10/2007 European Investment Bank 8 Stages of the Project Cycle Pre-Appraisal – preliminary assessment of the project’s suitability Appraisal – assessment of the soundness of the project, taking into account technical, legal, environmental, social and other impacts of the projects Negotiation – signature of the contract Monitoring – verification of compliance with the contract and possible due diligence requirements Tanger 30/10/2007 European Investment Bank 9 Resources Financial specialists Project Specialists Sector Market Review design Environmental Viability Social Procurement Legal advisers Risk analysis specialists Tanger 30/10/2007 European Investment Bank 10 The EIB project cycle Tanger 30/10/2007 European Investment Bank 11 Mediterranean Neighbours (1) Facility for Euro-Mediterranean Investment and Partnership-FEMIP Established October 2002 EIB can lend up to EUR 8.7bn during 20072013 Priorities: Promotion of private sector Creation of investment-friendly environment Infrastructure projects Investment in human capital Schemes specifically targeting environmental protection Tanger 30/10/2007 European Investment Bank 12 Mediterranean Neighbours (2) Technical assistance FEMIP Support Fund: Framework agreement EC/EIB Project related technical assistance FEMIP Trust Fund 15 Member States and EC Target: Upfront sector studies Private sector development Seed capital Tanger 30/10/2007 European Investment Bank 13 Africa, Caribbean & Pacific (1) Cotonou Agreement mandate Cotonou 1 (2003-2007) Own Resources: 1700 MEUR + 20 MEUR OCT Investment Facility: 2037 MEUR + 20 MEUR OCT Subsidy endowment: 187 MEUR Cotonou 2 (2008-2013) Own Resources: 2000 MEUR + 30 MEUR OCT Investment Facility: additional 1100 MEUR + 30 MEUR OCT Subsidy endowment: 400 MEUR Total loans of EUR 2483m 2002-2006 Tanger 30/10/2007 European Investment Bank 14 Africa, Caribbean & Pacific (2) Investment Facility Revolving Fund Commercial Principles Market practice Instruments Ordinary or senior loans Junior or subordinated loans Quasi-equity (participating, conditional or convertible loans) Equity (direct or indirect) Guarantees Local currency loans Tanger 30/10/2007 European Investment Bank 15 Africa, Caribbean & Pacific (3) Own Resources: Pricing at EIB reference rate Security 1st class- with possibility of political risk carve-out Risk taking- with interest mark-up Tanger 30/10/2007 European Investment Bank 16 Africa, Caribbean & Pacific (4) Republic of South Africa Mandate : EIB can lend up to EUR 0.9bn during 20072013 Focus on infrastructure projects of public interest and private sector support Loans of EUR 80m in 2006 Total loans of EUR 635m 2002-2006 Tanger 30/10/2007 European Investment Bank 17 Africa, Caribbean & Pacific (5) Technical Assistance: Funds from Cotonou Under Cotonou 1; 19 MEUR until end 2007 Under Cotonou 2: 40 MEUR period 2008-2013 EU Africa Infrastructure Trust Fund Tanger 30/10/2007 European Investment Bank 18 EU Africa Infrastructure Trust Fund (1) For grant operations in transborder infrastructure projects in sub-Saharan Africa in the sectors: Energy Transport Water and sanitation Telecommunication and IT Amount pledged: 87 MEUR Participants European Commission, Spain, Italy, France, Netherlands, Austria, Belgium, Germany, Luxembourg, Greece EIB- Fund Manager Tanger 30/10/2007 European Investment Bank 19 EU Africa Infrastructure Trust Fund (2) To be used for Interest rate subsidies Technical Assistance for studies, project preparation, and capacity building Grants for project components with social and environmental benefits Premiums on project risk insurance Tanger 30/10/2007 European Investment Bank 20 Climate Change Technical Assistance Facility (Africa and other countries) EUR 10m managed by the Bank – EUR 5 million from the EIB, EUR 5m from external resources EIB project development expertise, combined with that of consultants Conditional funding reimbursed once the project has yielded carbon credits Activities include: Carbon credit feasibility studies Preparation of carbon credit documentation Validation of the Project Design Document Registration of the project Carbon credit commercialisation activities Tanger 30/10/2007 European Investment Bank 21 Energy considerations (1) Energy supply is a pre-requisite for economic development , at the same time contributing to poverty alleviation, Need for efficient power generation, where feasible using domestic resources, Transmission and distribution network improvement and expansion, Projects for asset life extension through rehabilitation, often combined with capacity increase. Tanger 30/10/2007 European Investment Bank 22 Energy considerations (2) Promotion of interconnectivity between systems, countries and regions for: Mutual assistance, Optimization of production resources, Reduction of outages and losses, Sharing of spinning reserve, Increase security of supply. Tanger 30/10/2007 European Investment Bank 23 Energy considerations (3) High priorities for: Renewable energy, Energy efficiency measures, Demand side management. Tanger 30/10/2007 European Investment Bank 24 Energy considerations (4) Great importance should be given to the activities of the regional power pools: Regional cooperation, Development coordination, Promoting interconnectivity, Resource optimization. Tanger 30/10/2007 European Investment Bank 25 Concluding remarks Energy is considered very important factor for economic development, In order to attract financiers, bankable documentation is needed, Early involvement of financiers is important. EIB has a wide variety of financial facilities, and is ready to participate with you in developing further the electricity sector in Africa. Tanger 30/10/2007 European Investment Bank 26 For more information… http://www.eib.org/ [email protected] Tel: +352 43 79 31 00 Fax: +352 43 79 31 99 Tanger 30/10/2007 European Investment Bank 27