39 th UPDEA GENERAL ASSEMBLY Tanger- 30-31 October 2007

1. 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 European Investment Bank

2. 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 European Investment Bank

3. Loan signatures in the EU in 2006 (EUR m) European Investment Bank

4. 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 European Investment Bank

5. EIB lending in 2006 (in EUR billion) European Investment Bank

6. 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 European Investment Bank

7. Value Added • Value-Added of the Bank’s lending activities: • Project quality and soundness • Financial benefits of EIB funds • Technical assistance • Project assessment European Investment Bank

8. Project Requirements • Projects must: • Be technically sound • Be financially viable • Show an acceptable economic return • Comply with environmental protection and procurement regulations European Investment Bank

9. 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 European Investment Bank

10. Resources • Financial specialists • Project Specialists • Sector • Market • Review design • Environmental • Viability • Social • Procurement • Legal advisers • Risk analysis specialists European Investment Bank

11. The EIB project cycle European Investment Bank

12. 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 European Investment Bank

13. 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 European Investment Bank

14. 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 European Investment Bank

15. 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 European Investment Bank

16. 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 European Investment Bank

17. Africa, Caribbean & Pacific (4) • 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 European Investment Bank

18. 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 European Investment Bank

19. 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 European Investment Bank

20. 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 European Investment Bank

21. 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 European Investment Bank

22. 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. European Investment Bank

23. 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. European Investment Bank

24. Energy considerations (3) • High priorities for: • Renewable energy, • Energy efficiency measures, • Demand side management. European Investment Bank

25. Energy considerations (4) • Great importance should be given to the activities of the regional power pools: • Regional cooperation, • Development coordination, • Promoting interconnectivity, • Resource optimization. European Investment Bank

26. 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. European Investment Bank

27. http://www.eib.org/ info@eib.org Tel: +352 43 79 31 00 Fax: +352 43 79 31 99 For more information… European Investment Bank