Transcript Document

EUROPEAN INVESTMENT BANK
Promoting European Objectives
Amman, 21-24 March
Thomas van Gilst, Senior Water Sector Economist
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CONTENTS
1.
2.
3.
4.
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The European Investment Bank
EIB Activity in the Water Sector
Project Identification and Development
EIB – EC cooperation
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1. European Investment Bank
EIB Headquarters in Luxemburg
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EIB: Background Information
Birth:
Treaty of Rome, 1958
Purpose:
“Provide long term lending to promote European objectives”
Shareholders: 27 EU Member States
Governance:
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• Board of Governors
- EU Finance Ministers
• Board of directors
- Member States & European Commission
• Management Committee
- EIB’s executive body
• Audit Committee
- Independent, non-resident
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Breakdown of the EIB’s capital
As at 1 April 2009
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EIB: Priority Objectives
 Within the Union:
•
•
•
•
•
•
Cohesion and convergence
Small and medium-sized enterprises (SMEs)
Environmental sustainability
Knowledge Economy
Trans-European Networks (TENs)
Sustainable, competitive and secure energy
 Outside the Union:
•
•
•
•
•
Private sector development
Infrastructure development
Security of energy supply
Environmental sustainability
Support for EU presence in Asia & Latin America via
Foreign Direct Investment
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EIB: 2010 key figures
 Projects signed
• European Union
• Partner countries
• Total Lending
EUR
63.0 bn
EUR 8.8 bn
EUR 71.8 bn
 Borrowings
EUR 67.0 bn
Subscribed capital (at 01/04/2009)
EUR 232.4 bn
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EIB Signatures 2010 (in EUR)
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EIB Signatures 1958-2010
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Largest Supranational Lender
450
EUR bn
400
350
300
250
200
150
100
50
0
EIB
World
Bank
IADB
ADB
NIB
IFC
EBRD
AfDB
Loans outstanding (signed)
World Bank, IFC: June 2010
EIB, IADB, ADB, NIB, EBRD, AfDB : December 2009
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Organisation Structure
Board of
Governors
27 members
Audit
Committee
Board of
Directors
28 directors
18 alternates
+ 6 experts
Management Committee
EIB Group
Compliance Office
IG
Inspectorate
General
SCC
President
8 Vice-Presidents
OCCO
SG-JU
Strategy and
General
Corporate Centre Secretariat
Legal
Affairs
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RH
Human
Resources
Ops A
Operations
in the
European
Union and
Candidate
Countries
Ops B
FI
PJ
RM
TMR
Operations Finance
Projects
Risk
Transaction
outside the Directorate Directorate Management Management
European
Directorate
and
Union and
Restructuring
Candidate
Countries
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EIB Activities Outside the Union
Loans of EUR 8.8bn in 2010
Supporting EU Development and Cooperation Policies
in Partner Countries
3 Broad categories of EIB external mandates:
Pre-Accession Countries
Candidate Countries: Croatia, Iceland, Former Yugoslav Republic of
Macedonia, Montenegro and Turkey
Potential Candidate Countries – Western Balkans
European Neighbourhood
Mediterranean Partner Countries (FEMIP)
Russia and Eastern Neighbours
Development
Africa, Caribbean and Pacific (ACP, PTOM)
South Africa
Asia and Latin America (ALA)
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BORROWING ACTIVITY
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Funding strength adds value for customers
Loan portfolio is mainly funded through bond issues on
international capital markets
Passing on to loan customers of funding advantage,
benefiting from financial strength and stability – AAA
rating – and strong capital market positioning
Non-profit maximising
Large and frequent international bond issuer.
EUR 67.0bn issued in 2010
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Diversification: 35 Currencies (2002 – 2011)
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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
Catalyst for participation of other banking or financial partners
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2. EIB Activity in the Water Sector
Delfland Waste Water Treatment Plant (NL)
Water Kiosk constructed under the EU/EIB Project,
Blantyre, Malawi
St. Petersburg Flood Barrier, Russia
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Disi-Amman Pipeline, Jordan
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General
Largest source of loan financing to the sector,
Annual loan average of about EUR 3bn over the past 5
years (financing 126 major projects),
On average EIB lending represents 30% of the total
investment cost of water projects,
90% of the projects are located within the EU,
EIB lends to public or private utility companies, national
or local authorities or directly for project finance deals.
EIB lending covers the whole water cycle.
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Range of Instruments. Assessment criteria
Long tenors and adequate grace periods
Investment, programme, framework and global loans
Funding of 50 (exceptionally 75)% of total project cost
Co-funding with EC, IFIs, commercial banks
Facilitation of PPP models, where appropriate (eg, Disi)
Support to client throughout the project cycle (eg MOSP)
Due diligence based on multi-criteria: technical, financial,
procurement, environmental, and social (EU Directives,
international standards). Special focus on cost recovery +
sustainability
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EIB’s Lending to the Water Sector 2005-2009
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Breakdown by Region
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EIB Water Sector: Signed Loans 2005 - 2009
REGION
PROJECTS
(N°)
LOANS
(EUR m)
EU
97
13,149
Non-EU
29
1,355
TOTAL
126
14,502
Note % of projects in non EU >> % loans in non EU
Effort in non-EU also an order of magnitude higher
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EIB’s Water Sector Lending Policy
River basin approach (IWRM)
Sector development
Adaptation to climate change
Water efficiency
Development of new water supply
Wastewater and sanitation services
Research and Innovation
Maximise Added Value
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Implementing the Policy: Key Actions (1/2)
IWRM (Integrated Water Resources Management):
Promote IWRM + water services provision in a project
Support transboundary cooperation
Consolidation of institutional framework:
Support appropriate level of integration of utilities to improve
efficiency and enhance borrowing capacity
Enhance financial sustainability (sustainable cost recovery)
Adaptation to climate change (CC):
Adaptation part of new lending priority in EIB CC Strategy
Promoters should consider adaptation in project design
EIB supports technical assistance (TA) with grants
Preparation, implementation of flood risk management project
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Implementing the Policy: Key Actions (2/2)
Water efficiency:
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Support efficiency in: (i) use by consumers; (ii) allocation of
resources; (iii) systems (losses); (iv) management of utilities
Promote principle of cost recovery in line with WFD
Support industries aiming at improving “water footprint”
Development of new water supply:
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Demand side management and efficiency as 1st priority
Finance: (i) desalination with pre-requisites; (ii) dams, basin
transfers and fossil water under strict conditions
Wastewater and sanitation services:
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Always consider them when undertaking water supply projects

Sustainable cost recovery (incl. subsidies)
Sustainable financing (blend loans, grants)

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PROJECT CYCLE
A Test for Sound Investment
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The EIB project cycle
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Stages of the Project Cycle
Pre-Appraisal – preliminary assessment of the
project’s suitability – including EC consultation
Appraisal – assessment of the soundness of the
project, taking into account technical, legal,
environmental, social and other impacts of the
projects – board approval includes EC
Negotiation – signature of the contract
Monitoring – verification of compliance with the
contract and possible due diligence
requirements
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Key project appraisal topics: Sustainability
Institutional & Organisational Performance
Governance, planning, regulation of sector and providers
Regulated and viable service providers
Adequate technical and human resources to execute projects
Operational sustainability – financial (revenues) and human resources to
operate the system as well as the means to maintain the assets
Supports sector development:
Real and well-understood objective: The justification
Consistency with a strategic approach, project should support sector
improvement & development: The Master Plan
Systematic project selection: The Options Assessment
Fast-track solutions, phasing to achieve quick results: The Commitment
Replicability and demonstration effects: The Feed-back, show the way
An appropriate process:
Rational and transparent process of establishing and assessing priorities
and comparing options
Participation of stakeholders, local and national ownership
Consistency with policies in other sector (eg energy, agriculture, industry)
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Key project appraisal topics: Quality
Quality of project planning and design :
Technical, financial and economic viability
Technical: Demand forecast, design, technology, planning and phasing
to cope with uncertainty & cost
Financial: Cost recovery, debt service, robust IRR
Economic: Cost-effectiveness of selected solution, least cost solution,
acceptable ERR
Environmental and social soundness
Environmental & social: Options assessed, E&SIA, EMP, affordability for
low-income populations
Climate Change: Energy efficiency measures; resilience of the project to
climate change impacts, and impacts on resilience of surrounding region.
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Key project appraisal topics: Procurement and
implementation
Transparent and sound procurement strategy
Procurement: International and national open procurement, following
EU procurement Directive
Professional project implementation strategy
Project Management: Use of modern project management tools to
deliver the project in time and within budget
Construction Contract: Use of international best practice and of FIDIC
documents
Construction Supervision: Experienced (international and national)
consulting companies to guarantee construction quality and lifetime of
assets
Common issues: Over-designed, low cost recovery, high env. or
social impact, not affordable to all users
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Project assessment driven by sector challenges
The Past : Investment backlog, poor services, inefficiency
High inefficiency/wastage of resources
Deteriorating infrastructure due to lack of funds
The Present & Future: Increasing CAPEX, competition, risks
More demanding environmental/service quality objectives
Economic growth & urbanisation (water for food, energy…)
Adaptation to climate change
The “3 G’s”: Gaps of financing, project quality and capacity
Grants limited by budget, tariffs by politics, loans by risk
Poorly prepared projects cannot attract enough funding
Weak regulatory, absorption and implementation capacity
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EC-EIB cooperation
Leveraging
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EIB-EC Cooperation at project level
EC most important contributor of:
TA funds for:
Studies or targeted upstream preparatory activities
(regulatory, institutional, etc);
Pre-feasibility or feasibility studies (eg Western Balkans
Investment Framework in BiH & Montenegro)
Project Management Units at the implementation stage
(avoiding delays & cost overruns)
Co-financing
Direct to project promoter or through EIB (Municipal Finance
Facility; EUWF)
Main pro’s:
Softens the burden of loans, making the difference between EIB
involvement in many ACP nations and not;
Accelerates and improves project development.
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EIB-EC Cooperation: Mediterranean example
(“Facility for Euro-Mediterranean Investment and Partnership”)
TA since 1990’s through METAP (Med. Env TA Programme)
establised by WB; EC; UNDP; EIB;
Provided grant finance for FS’s for subsequent investment in
environment projects (including W&S);
By end 2007 39 project preparation studies financed from EIB own
resources leading to Euro 2.8 bn in investments (1 bn financed by
EIB);
Since 2002, FEMIP support fund, using non-repayable aid granted
from the EC’s budget (EUR 105 million for 2003-2006 and EUR 12
million/year for 2007-2013.
Since 2004 also the FEMIP Trust Fund to fund upstream work
such as the “reuse of wastewater in agriculture” study in 2009.
Since 2009, EIB also receives funds from NIF (Neighbourhood
Investment Facility) managed by the EC and the NIF Trust Fund.
30% (40 m) of all TA had been used in the W&S sector as at end
2010.
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Example of Femip Support Fund for projects across the Med region
The “Mediterranean Hot Spot Investment Programme Project Preparation and Implementation Facility” project
(MeHSIP-PPIF), which was launched in March 2009,
aims to support one of Horizon2020*’s four components,
namely the “Pollution Reduction Projects” component.
The Technical Assistance provides the EIB with a
methodological approach to the identification and development
of projects contributing to the Horizon 2020 objectives.
Currently 78 projects identified (estimated investment costs Eur
5.35 billion)
*Horizon2020 is an ambitious initiative launched in 2005 by the Member States of the European
Union and the Mediterranean partner countries with the aim of substantially reducing pollution of
the Mediterranean Sea by 2020.
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THANK YOU FOR YOUR ATTENTION
For more information please contact :
Thomas van Gilst ([email protected] )
EUROPEAN INVESTMENT BANK
http://www.eib.org/
[email protected]
Tel: (+352) 43 79 22000
Fax: (+352) 43 79 62000
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