Tanger 30/10/2007 1 European Investment Bank 39 th UPDEA GENERAL ASSEMBLY Tanger- 30-31 October 2007 The possibilities offered by the European Investment

Tanger 30/10/2007

1European Investment Bank

39th UPDEA GENERAL ASSEMBLYTanger- 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

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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

GovernanceBoard 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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Loan signatures in the EU in 2006 (EUR m)

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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

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EIB lending in 2006 (in EUR billion)

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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

Catalytic effect on participation of other banking or financial partners

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Value Added

Value-Added of the Bank’s lending activities:

Project quality and soundness

Financial benefits of EIB funds

Technical assistance

Project assessment

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Project Requirements

Projects must:

Be technically sound

Be financially viable

Show an acceptable economic return

Comply with environmental protection and procurement regulations

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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

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Resources

Financial specialists

Project SpecialistsSector

Market

Review design

Environmental

Viability

Social

Procurement

Legal advisers

Risk analysis specialists

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The EIB project cycle

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Mediterranean Neighbours (1)Facility for Euro-Mediterranean Investment and Partnership-FEMIP

Established October 2002

EIB can lend up to EUR 8.7bn during 2007-2013

Priorities:Promotion of private sector

Creation of investment-friendly environment

Infrastructure projects

Investment in human capital

Schemes specifically targeting environmental protection

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Mediterranean Neighbours (2)

Technical assistanceFEMIP 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

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Africa, Caribbean & Pacific (1)

Cotonou Agreement mandateCotonou 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

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Investment Facility Revolving Fund

Commercial Principles

Market practice

InstrumentsOrdinary or senior loans

Junior or subordinated loans

Quasi-equity (participating, conditional or convertible loans)

Equity (direct or indirect)

Guarantees

Local currency loans

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Own Resources:

Pricing at EIB reference rate

Security 1st class- with possibility of political risk carve-out

Risk taking- with interest mark-up

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Republic of South Africa Mandate :EIB can lend up to EUR 0.9bn during 2007-2013

Focus on infrastructure projects of public interest and private sector support

Loans of EUR 80m in 2006

Total loans of EUR 635m 2002-2006

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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

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EU Africa Infrastructure Trust Fund (1)

For grant operations in transborder infrastructure projects in sub-Saharan Africa in the sectors:

EnergyTransportWater and sanitationTelecommunication and IT

Amount pledged: 87 MEURParticipants

European Commission, Spain, Italy, France, Netherlands, Austria, Belgium, Germany, Luxembourg, Greece

EIB- Fund Manager

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EU Africa Infrastructure Trust Fund (2)

To be used forInterest 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

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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

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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.

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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.

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High priorities for:

Renewable energy,

Energy efficiency measures,

Demand side management.

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Great importance should be given to the activities of the regional power pools:

Regional cooperation,

Development coordination,

Promoting interconnectivity,

Resource optimization.

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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.

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For more information…

http://www.eib.org/

[email protected]

Tel: +352 43 79 31 00

Fax: +352 43 79 31 99

http://www.eib.org/

mailto:[email protected]

Documents

Tanger 30/10/2007 1 European Investment Bank 39 th UPDEA GENERAL ASSEMBLY Tanger- 30-31 October 2007 The possibilities offered by the European Investment