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Nordic Investment Bank EU SBSR, June 2010

Nordic Investment Bank EU SBSR, June 2010. Iceland. Norway. Finland. Sweden. Estonia. Latvia. Denmark. Lithuania. Northern Europe's International Financial Institution. Nordic and Baltic countries as owners Started activities in 1976 Baltic countries joined in 2005

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Nordic Investment Bank EU SBSR, June 2010

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  1. Nordic Investment Bank EU SBSR, June 2010

  2. Iceland Norway Finland Sweden Estonia Latvia Denmark Lithuania Northern Europe's International Financial Institution • Nordic and Baltic countries as owners • Started activities in 1976 • Baltic countries joined in 2005 • AAA/Aaa credit rating • Lending in member countries and emerging markets • Headquarted in Helsinki

  3. Strengtheningcompetitiveness Projects in the following sectors and areas of economy: • Environmental investments • Energy • Transport, logistics and communication • R&D and innovation

  4. Enhancing the environment • Significant business potential in the environmental sector. • The environment is a global concern. • All projects considered forfinancing undergo assessmentof potential environmental impact.

  5. Key figures in EUR million • Highlights 2009 • Strong demand for NIB loans • Profit grows to EUR 178 million due to positive valuation on treasury portfolios • Loans outstanding up 5% to EUR 13.8 billion • 70% of disbursements are in priority sectors: the environment, energy, transport and innovation

  6. Long-term financing • Co-financing normally up to 50% of the total project cost • Close cooperation with other international financial institutions as well as commercial banks, export credit institutions and development assistance organisations • Long-term lending instruments: • Sovereign loans or against state guarantees (15-25 years) • Subsovereign loans directly to municipalities (10-20 years) • Corporate loans (5-15 years) • Limited recourse financing including PPP-financing (5-15 years) • SME financing through financial intermediaries (5-12 years) • Grace period up to 5 years

  7. NIB's strategy correlates with the EU SBSR EU STRATEGY for the BALTIC SEA REGION A "PROSPEROUS" BSR AN "ACCESSIBLE AND ATTRACTIVE" BSR AN "ENVIRONMENTALLY SUSTAINABLE " BSR A "SAFE AND SECURE " BSR - competitiveness • maritime safety • cross-border crime • transport, logistics • energy • HELCOM BSAP • climate change NIB "CLEERE" 2000 MEUR NIB "BASE" 500 MEUR NDPTL NDEP INNOVATION ENERGY TRANSLOG & COMMUNICATIONS ENVIRONMENT COMPETETIVENESS ENVIRONMENT NIB STRATEGY

  8. NIB disbursed loans in the Baltic Sea Region 2007-2009 (million EUR)

  9. From Strategy to Projects In order for investments to emerge as a result of the EU SBSR there is a need for: • Priority setting ► Political support (regulatory framework, legislative action, concessions, permitting, tariff setting etc) • Resource allocation • Clear project ownership and active participation by owners (public and/or private sector)

  10. Bankable projects Loans • A loan = Distributing the capital cost over time • Debt service must be covered with local resources Operating revenues and/or budgetary funds • Access to borrowing depends on: Creditworthiness and/or Project quality (profitability = capacity to generate money for debt service)

  11. Bankable projects Security • Guarantees Sovereign, Regional, Local authorities Project owners • Mortgages and or pledges of property • Control over payment streams

  12. Bankable projects -What is needed ? In order to lend banks need: • Willing and able borrowers • Willing = Prepared to take loans at prevailing interest rates to finance part of their investments • Able = Creditworthy enough to be able to service the loan/s and with the other part of the financing secured – banks never (should) provide loans for a 100 % of the project cost • Good quality (feasible) projects • Financiers are focused on all aspects of project feasibility Economic Financial Technical Institutional Environmental • Adequate studies are necessary – the BSAP Fund can help for Baltic Sea projects

  13. EU SBSR Priority Areas of immediate interest to IFIs Priority areas which are likely to include investment components: 1. To reduce nutrient inputs to the sea to acceptable levels 3. To reduce the use and impact of hazardous substances 4. To become a model region for clean shipping 5. To mitigate and adapt to climate change 7. To exploit the full potential of the region in research and innovation 10. To improve the access to and the efficiency and security of the energy markets 11. To improve internal and external transport links 14. To reinforce protection from major emergencies at the sea and on land

  14. Baltic Sea Environment lending facility (BASE) • The facility, alongside national budgets and EU funds, is aimed at assisting in the implementation of the Baltic Sea Action Plan • Allocation of EUR 500 million for financing projects with a positive effect of the Baltic Sea • NIB's facility will provide valuable input to projects that mobilise loan financing

  15. Projects Sparbanken Finn, Sweden (EUR 15 million) • On-lending for small-scale environmental investments in Sweden. Reduction of diffuse emissions to both air and water in the southern parts of Sweden. AS TallinnaVesi, Estonia (EUR 20 million ) • Maintenance and extension of the water supply and sewage networks. UAB Vilniausvandenys, Lithuania (EUR 10.3 million) • Construction of a sludge treatment facility at a wastewater treatment plant in Vilnius Vodokanal of St. Petersburg, Russia (EUR 25 million) • Construction of a pumping station in a sewage collection tunnel as well as the partial upgrading of the Northern Wastewater Treatment Plant in St. Petersburg.

  16. The Climate Change, Energy Efficiency and Renewable Energy (CLEERE) • Facility supports actions for combating and adapting to climate change   • In 2008-2009 years, the initially allocated EUR 1 billion was fully deployed, and, in spring 2010, the facility was extended by another EUR 1 billion  Under the CLEERE facility, NIB finances projects: • in renewable energy • in energy efficiency • using cleaner production technologies that reduce greenhouse gas emissions in industries • dealing with the adaptation of power networks and infrastructure to climate change, such as extreme weather conditions

  17. Projects Kemijoki Oy, Finland (EUR 25 million) • Upgrading and refurbishment of hydropower plants E.ON Sverige AB, Sweden (EUR 100 million) • Financing of the Rødsand II wind farm (200 MW) south of the island of Lolland in Denmark Latvenergo A/S, Latvia (EUR 50 million) • Modernization of hydropower plants on the Daugava river, energy efficiency investments in transmission and distribution networks Republic of Lithuania (EUR 100 million) • Public sector efficiency project and housing renovation programme. Energa SA, Poland (EUR 50 million) • Modernization and construction of low- and medium-voltage electricity networks, including a component of high-voltage lines aimed at connecting renewable energy sources, primarily wind farms

  18. The Baltic sea action plan (BSAP) Fund • NIB & NEFCO took the initiative to set up a targeted technical assistance fund • NIB and NEFCO are jointly acting as fund managers • The BSAP Fund has EUR 10, 6 million available • The financing is provided as grants • In addition to NIB and NEFCO, applications can also me made through other international and national finance institutions, which are active in relation to the BSAP

  19. Eligible purposes: • Project Implementation • Support to project owners for improved efficiency and quality in the project implementation, and for disseminating experience • Institutional Support - Training and support related to project development, preparation and implementation • Demonstration purposes - Purchase of equipment for demonstration purposes • Project Development and Preparation -In particular with a view to making projects "bankable" Eligible Recipients Public or private entities in need of technical assistance and investment grants for implementing the BSAP goals

  20. Project pipeline under preparation • Business plan development for poultry farms • Preparation of manual for biogas projects • Test project for phosphorus removal • Improvement of small and medium-sized WWTPs

  21. The project cycle PUBLIC SUPPORT, DONORS PROJECT OWNERS PREPARATION IMPLEMENTATION Concrete projects LENDERS, FINANCIAL INVESTORS IDENTIFICATION OPERATION SUPERVISION EVALUATION

  22. Thank you ! Nordic Investment Bank Lending Department Vilius Girkontas Fabianinkatu 34, Helsinki +358 10 618 0240 www.nib.int

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