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Presentation - European Infrastructure Financing : What new developments are occuring

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education, health. Environmental protection and improvement ... increased co-financing with capital, banking and insurance markets ... – PowerPoint PPT presentation

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Title: Presentation - European Infrastructure Financing : What new developments are occuring


1
Presentation to
Diplomatische Akademie Wien European
Infrastructure Financing What new developments
are occurring?  2 June 2004
2
European Investment Bank European Unions
Financing Institution
  • Created by the Treaty of Rome in 1958, to
    provide long-term finance for
    projects promoting European integration
  • Subscribed capital EUR 163.7bn
  • EIB shareholders 25 Member States of the
    European Union
  • EIBs lending in 2003 EUR 42bn (EUR 34bn
    within the EU) funds raised via bonds
  • not for profit - organisation

3
EIB PROJECT ELIGIBILITY
Economic and social cohesion in an enlarged EU
i2i, RD, Dissemination of innovation, technology
networks,education, health
Support for SMEs
Development of Trans-European and access networks
Environmental protection and improvement
Support for EU development aid and
cooperationpolicies
Promoting European Union policies
4
WHAT ARE THE BENEFITS OF AN EIB LOAN
  • Low cost of "AAA" rating funding benefit passed
    on to clients
  • Large amounts
  • All major currencies, including more and more
    those of the New Member States
  • Long maturities
  • Catalytic effect of participation on other
    banking or financial partners.

5
FINANCING EU ENLARGEMENT
In 2003, EUR 4.6bn for investments in the 10 New
Member States in Central and Eastern Europe,
Cyprus and Malta
FOCUS
  • Communications infrastructure (including TENs)
  • Regional development
  • Industrial competitiveness (including Foreign
    Direct Investment)
  • Environmental protection
  • Health and Education

5
6
LOANS IN THE NEW MEMBER STATES1999-2003 EUR
13.5bn
Estonia 192
  • EURm
  • Acceding states
  • Accession states
  • Applicant states
  • Candidate states
  • --------
  • Energy
  • Communications
  • Water
  • Industry
  • Education,Health
  • Global loans

Latvia 276
Lithuania 249
Poland 4 860
Czech Rep 3 160
Slovakia 880
Hungary 2 149
Slovenia 974
Cyprus 705
A firm commitment to accession
Malta 25
6
7
LOANS IN ACCESSION, APPLICANT AND CANDIDATE
STATES 1999-2003 EUR 6.1bn
  • EURm
  • Acceding states
  • Accession states
  • Applicant states
  • Candidate states
  • --------
  • Energy
  • Communications
  • Water
  • Industry
  • Education,Health
  • Global loans

Romania 2 175
Bulgaria 565
Turkey 2 197
A firm commitment to accession
7
8
(No Transcript)
9
Must for successful PPPs
  • Long term Public Sector Political Commitment
    and adequate financial involvement of the public
    sector
  • Focused, dedicated and experienced public
    sector team PPP Task Force.
  • Favourable legal and institutional framework.
  • Transparent competitive procurement (concept,
    construction and operation phase)
  • Realistic risk sharing.
  • Partnership.

10
Learning Process
Risk-sharing
Value added
Extra costs of PPPs
Benchmarking
Procurement
Extra costs
Value added
11
TRANS-EUROPEAN NETWORKS ANDEUROPEAN TRANSPORT
CORRIDORSProjects financed by the EIB (1993-2003)
Priority TENS
Section financed
Other TENS
Transport corridors, CEC
Section financed
Road/Rail
Electricity

Gas
Airport
Projects of multi- regional character
Inter-modal freight centre
Port
Air traffic management
Oil/Gas platform
12
  • Reconfirmed European Priorities
  • A new start for a quicker implementation of TENs
    after the van Miert Group proposals

13
Reasons for sluggish TENs implementation
  • Absence of common priorities / timetables
  • Structural constraints (e.g. technical
    interoperability limited deregulations)
  • Administrative, legal and environmental
    requirements
  • Inadequate economic viability
  • Limited commitment of state funds but need for
    high public financing and grant support

14
TENs after van Miert
  • Total investment requirements up to 2020
    estimated at EUR 235 billion in priority
    projects.
  • 8 priority projects concerning investments in
    Central Europe. Austria is represented with 6
    cross-border projects, i. a. the Brenner Basis
    Tunnel
  • Total investment requirements in overall TEN
    infrastructure estimated at EUR 600 billion.
  • EIB indicated as key financier for these
    projects.
  • However lack of financial resources is not the
    main cause of slow project implementation.

15
TEN Railway Priority Projects
  • Completion before 2007
  • Fast rail connection Paris, Brussels, Cologne,
    Amsterdam, London
  • Cork-Dublin-Belfast- Stranraer
  • Betuwe Line
  • Öresund Link (completed)
  • Completion before 2010
  • Nürnberg-München/Kufstein-Innsbruck
  • Madrid-Barcelona-Perpignan Madrid-Hendaya
  • TGV Est
  • Torino-Venezia
  • Multimodal link Portugal/Spain with rest of
    Europe
  • Kerava-Lahti
  • West Coast Main Line

16
TEN Road Priority Projects
  • Completion before 2007
  • none
  • Completion before 2010
  • Lisbon/La Coruna Lisbon/Valladolid
    Lisbon/Seville (as part of the multimodal link
    PortugalSpain with rest of Europe)
  • Helsinki/Turku (as part of Nordic Triangle)
  • IRL/UK/BENELUX road link

17
TEN Long-term Horizon Projects
  • Firm government commitment for projects to be
    operational by 2020
  • 8 railway projects in a list of total 18
  • 2 motorway projects
  • 4 intermodal projects
  • Longer-term horizon projects
  • 3 railway projects in a list of total 4
  • no road project
  • Cohesion projects
  • Accessibility and interconnections of networks
  • Cross-border connections

18
TEN Long-term Benefits
  • Time savings equivalent to EUR 8 bn/year
  • Reduction of CO2 emissions by 17 m tonnes/year
  • Reduction of other emissions equivalent to
    external costs of EUR 700 m
  • Stimulate international trade, in particular in
    Central and Eastern Europe
  • Safety improvements
  • Boost GDP growth by 0.23 pa

19
  • 2. Trans-European Networks Investment Facility
    (TIF)

20
Financing for Trans European Transport networks
  • Substantial public sector investment in TENs
    networks
  • EU budgetary sources, EIB finance and private
    sector PPP finance as complementary sources
  • Role of public financing nevertheless remains a
    keystone in major new infrastructure investments

21
EIBs role in TENs growth initiative
  • Expand EIB financing commitments by increasing
    its capacity for existing senior debt
  • Increased acceptance of project risks through the
    EIB Structured Finance Facility instruments
  • Use of financing instruments including EIB
    guarantees and provision for equity and mezzanine
    finance
  • Increase leverage of EIB financing instruments by
  • more effective combination with EU budgetary
    funds and guarantees
  • increased co-financing with capital, banking and
    insurance markets
  • Capitalise on substantial EIB experience by
    greater utilisation of EIB expertise in support
    of public authorities (e.g collaboration with
    national PPP Task Forces and specialist
    infrastructure entities)

New TENs Investment Facility (TIF) 5 products
22
Increased EIB senior lending
  • Proposal
  • 50 billion over period 2003-2010
  • Extra long maturities (35 years)
  • Longer grace periods
  • Special arrangements for exceptional cases (e.g.
    up to 75)

23
Increased EIB senior lending
Equity investors (contractor, concession holder,
etc.)
EIB
Capital markets / banks
Long and medium term loans
Senior secured or guaranteed extra long term loan
Share capital
Project
24
Increased Structured Finance Facility
  • SFF is an existing EIB senior debt product to
    finance higher risk projects (e.g risk during
    construction)
  • Tripled from Euro 500 m to Euro 1500 m

25
Increased Structured Finance Facility
Capital markets / banks
Junior lenders and equity
EIB
Medium term junior loan and share capital
Long term loans
Project
26
(3) EIB and EU guarantees
  • EIB to provide guarantees for private finance
    projects with investment grade rating
  • Combine EIB guarantees with public sector
    guarantees so as to optimise the value for
    money and affordability of priority investment
  • The EU financial regulators should examine the
    Basle II regulatory framework to ensure that TENs
    financing can be effectively assured through EU
    financial markets

27
(3) EIB and EU guarantees
Guarantees
EIB
Capital markets / banks
Member States EU
Private sector
Funding
Project
28
(3) Equity and mezzanine finance
  • Unquestionable lack of equity and mezzanine
    finance for infrastructure projects. However
    investments must pay!
  • Increase availability by leveraged investment
    with private sector infrastructure funds
  • Equity and mezzanine available to priority TENs
    projects
  • Equity funding for PPP project companies and
    construction sector

Increase multiplier effect of EIB / EU finance
by establishment of infrastructure funds
29
(3) Equity and mezzanine finance
Public authorities
Private financiers
EIB
EU
Infrastructure funds
Fund 1
Fund 2
Fund n
Equity and mezzanine
Projects
30
(4) Strengthen EIB Institutional Role
  • Strategic Advisor to the Commission, to Member
    States and Public Authorities on TENS (in
    particular realization of QSPs).
  • Information on financing techniques used in
    Europe.
  • Proposed operator of Commission
    Guarantee Facility for TENs.
  • Combined use of budgetary resources
    and EIB loans for TENs.
  • Collaboration with national PPP Task
    Forces on TENs.
  • Co-financing with specialist national
    financial institutions.
  • Collaboration with EU-TENs Project
    Co-ordinators.

31
Address 100, Boulevard Konrad Adenauer, L-2950
Luxembourg Contact Franz-Josef Vetter Tel
00.352.43.79.72.26 e-mail f.vetter_at_eib.org
http//www.eib.org
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