EuropeAid
Neighbourhood Investment Facility
OPERATIONAL ANNUAL REPORT
The Operational Board of the Neighbourhood Investment Facility
EuropeAid –
http://ec.europa.eu/europeaid/where/neighbourhood/regional-cooperation/irc/investment_en.htm
The Finance Institutions Group (FIG) of the Neighbourhood Investment Facility
Contents
Foreword................................................................................................................3
Introduction ...........................................................................................................4
Description of Activities for the Year 2008 ...................................................................4
1.
Meetings of the NIF Operational Board ...............................................................4
2.
Meetings of the Finance Institutions Group (FIG) .................................................5
3.
Projects that received a final approval of the NIF Operational Board .......................5
4.
Projects that received a provisional approval of the NIF Operational Board ..............6
5.
Sources of funding ..........................................................................................7
6.
Implementation of project approvals..................................................................7
7.
Pipeline 2009 - 2010 .......................................................................................8
8.
Donor coordination..........................................................................................8
9.
Approval of this report.....................................................................................8
Outlook for 2009 .....................................................................................................8
Annex – Description of Approved Projects (situation as at 31.12.2008)............................9
a)
Eastern Region (9 projects) .............................................................................9
b)
Southern Region (6 projects)......................................................................... 12
2
Foreword by Commissioner Benita Ferrero-Waldner
It is with great pleasure that I am presenting you the first
operational Annual Report on the Neighbourhood Investment
Facility. This innovative European financial mechanism created only
two years ago, has already produced impressive results.
The NIF is a key instrument of the European Neighbourhood Policy.
Through concrete measures we aim at linking the EU and its
Southern and Eastern neighbours more closely together, thus
creating an area of friendship and prosperity for the benefit of all of
us.
Benita Ferrero-Waldner
EU Commissioner for
External Relations
and European
Neighbourhood Policy
The first months of activity of the NIF demonstrate that it really
supports the partner countries in their own priorities and in carrying
out necessary investments for the future. In 2008, the NIF has
funded, for example, projects like the renovation of the biggest
hospital of the Republic of Moldova, the building of renewable
energy power plants in Egypt, the rehabilitation of roads facilitating
communication and trade in the Republic of Moldova and in rural
areas of Morocco, as well as the construction of transmission lines
in Georgia improving energy interconnectivity and security.
In the context of the new regional or multilateral processes, in
particular the Union for the Mediterranean, the Eastern Partnership
and the Black Sea Synergy, the NIF is a key financing tool that will
support the implementation of these initiatives.
Implementing large infrastructure projects requires considerable
financial resources. This is why the Neighbourhood Investment
Facility has been designed to create a "partnership” bringing
together the European Commission, the EU Member States, the
European Public Finance Institutions and our ENP partner countries
in order to contribute to common objectives and propose attractive
financing packages.
Operations
signed
in
2008
clearly
show
how
effective
this
partnership can be. The grants from the Facility contributed to the
realisation of projects worth € 2.7 billion, of which € 1.6 billion
comes from loans provided by the European Public Finance
Institutions.
At the same time the NIF also paves the way for concrete donor
coordination, division of labour and harmonisation of procedures.
Indeed, by enabling joint European operations, the NIF generates
greater coherence and better coordination between the donors, in
line with the objectives of the Paris Declaration principles and the
Accra Agenda for Action, bringing greater visibility to the European
dimension of external cooperation.
In short: the NIF's first success stories reflected in this report show
that the European Union is serious about its commitment to its
Eastern and Southern neighbours. I am looking forward to
continuing our work with this important financial tool.
3
Introduction by the Chairman of the NIF Operational Board
We created the Neighbourhood Investment Facility (NIF) under the instruction of our
Commissioner Mrs Ferrero-Waldner in order to provide, to our ENP partners, Community and
Member States' grant support for lending operations led by European multilateral and
bilateral development finance institutions. The NIF approves grants for investment cofinancing, loan guarantee cost financing, interest rate subsidies, risk capital operations and
technical assistance packages. The objective is to associate the European Commission, the
Member States and consortia of European Finance Institutions in order to finance very large
investment projects in the Neighbourhood region.
The present report describes the operational results of the first year of activity of the NIF.
In 2008, the NIF has approved grants for a total of € 71.03 million, half under the form of
direct contribution to the investment cost and half as technical assistance.
The leverage effect of these contributions is high as the corresponding loans from the
European Finance Institutions amount to € 1.65 billion, representing a leverage effect of
more than 23 on average. The total value of projects financed with the support of the NIF
and the Finance Institutions in 2008 reached € 2.7 billion, € 1.1 billion for the East and
€
1.6 billion for the South.
The Chairman of the NIF Operational Board and the NIF Secretariat
Description of Activities for the Year 2008
1.
Meetings of the NIF Operational Board
Prior to the first meeting of the NIF Board, the Member States agreed with the Commission
on the modalities governing the Facility. This was done in a document called "General
Framework" acknowledged by the COREPER in March 2008.
Following this approval, four operational meetings of the NIF Board took place in 2008. They
allowed reviewing and approving the pipelines of operations submitted by the Finance
Institutions. Among the projects included in the two pipelines (East and South), 9 projects in
the East and 6 projects in the South were accepted as final approval. 4 other projects in the
East and 1 project in the South received a provisional approval from the Board.
During the operational session of 26 September 2008, the Member States agreed on the
Rules of Procedure governing the Board as well as on the NIF Trust Fund agreement, which
allows receiving the voluntary contributions from Member States in addition to the EC budget
contribution.
The Board meetings were prepared and organised by the NIF Secretariat created within the
Commission (EuropeAid Unit A/6), which is also in charge of implementing the operational
Board's decisions.
4
2.
Meetings of the Finance Institutions Group (FIG)
Before each meeting of the Board, the Finance Institutions Group
(FIG) chaired by the Commission prepares the deliberations of the
NIF Board. Consequently, four meetings of the FIG were organised in
2008 before each operational Board's meetings.
The FIG was originally composed of four European multilateral public
development finance institutions (EIB, EBRD, CEB and NIB) and of
two European national public development finance institutions (AFD
and KfW). During the third operational Board of the NIF, the
candidature of the Austrian development finance institution (OeEB)
was approved and the OeEB subsequently joined the fourth meeting
of the FIG.
The FIG discusses all proposed projects and presents its technical
advice to the operational meetings of the Board for the projects ready
for provisional or final approval.
The Commission (EuropeAid Unit A/6) is Secretary of the FIG, EIB
being Vice-Chair and Deputy Secretary.
3.
Projects that received a final approval
Eastern Region
The NIF contribution to the nine projects approved for the East amounts to € 37.23million.
The total amount of these projects is around € 1.1 billion.
Country
Consortium of
European Finance
Institutions
Georgia
KfW, EBRD and EIB
Republic of
Moldova
CEB
Republic of
Moldova
EBRD and EIB
Republic of
Moldova
EBRD, KfW and EIB
Republic of
Moldova
EBRD and EIB
Technical Assistance for the Chisinau Airport
Modernisation Project II
Ukraine
EBRD and EIB
Technical Assistance support for Ukrainian
Municipalities
Ukraine
EBRD and EIB
Ukraine
EBRD and EIB
Regional
EBRD
Total
Cost
NIF
contribution
Black Sea Energy Transmission System
220
8
Capacity Assessment and Modernization of the
Republican Clinical Hospital located in Chisinau
18
3
92,5
12
59
3
46,25
1,75
135
5
Technical Assistance for Ukrenergo high voltage
transmission networks
301,28
0,8
Technical Assistance for Burshtyn TPP Rehabilitation
and Efficiency Improvement
250,8
0,8
Technical Assistance support to Financial
Intermediaries
38.25
2,88
Title of the operation
Road Rehabilitation project
Feasibility Study for Improvement of Water and
Sanitation System in Chisinau
5
Southern Region
The NIF contribution to the six projects approved for the South amounts to € 33.8 million.
The total amount of these projects is around € 1.6 billion.
Country
Consortium of
European Finance
Institutions
Egypt
KfW, AFD and EIB
Egypt
Total
Cost
NIF
contribution
Improved Water and Wastewater Services Programme
295
5
KfW and EIB
200 MW Wind Farm project in the Gulf of El Zayt
340
10
Morocco
EIB and AFD
Second national programme for rural roads
397
9,8
Morocco
AFD and EIB
Programme of integrated sustainable development of
urban transport in Rabat and Salé: construction of the
infrastructure of the tramway network
346
5
Tunisia
KfW and AFD
Extension and rehabilitation of wastewater treatment
plants and pumping stations
127
3
Tunisia
KfW, AFD and EIB
Up to 120
1
Title of the operation
Feasibility study for a Concentrated Solar Power Plant
Sector Breakdown
The sector breakdown of the projects approved as final is represented hereunder. The size of
the operations also impacts the distribution of the NIF contribution, with logically more funds
allocated to three big sectors in terms of NIF priorities and investment's magnitude, i.e.
transport, energy and environment. A short summary of each approved project is given in
Annex.
Private
Sector
Social
4%
4%
Mixed
7%
Environment
16%
Energy
29%
4.
Transport
40%
Projects that received a provisional approval
Some projects received a provisional approval, meaning that they will have to be presented
again to the Board, when ready, by their lead finance institution for final approval. The NIF
contribution to the five projects approved on a provisional basis amounts to € 24,5 million.
Country
Lead Finance
Institution
Total
Cost
NIF
contribution
Republic of
Moldova
EIB
Moldova Water Sector Project
44
5
Tunisia
AFD
Rapid railway in Tunis ("Réseau Ferré Rapide")
550
7.5
Ukraine
EBRD
Energy Efficiency Support to Ukrtransnafta
32,8
2
Ukraine
KfW
Loan Guarantee Programme for Municipal
Infrastructure
100
5
Regional
KfW
Establishment of a European Neighbourhood Small
Business Growth Facility (ENBF)
TBD
5
Title of the operation
6
5.
Sources of funding
The NIF combines two sources of funding: the EC Budget and Member States' direct
contributions.
Regarding the EC Budget, two financing decisions were taken by the Commission in 2007
and 2008 allocating a total of € 100 million to the NIF equally divided between East & South.,
The Commission has taken the commitment to contribute a total amount of € 700 million for
the NIF during the period 2007-2013.
Member States complement NIF resources with voluntary direct contributions. In 2008, € 37
million of additional contribution have been pledged. A Trust Fund, managed by the
European Investment Bank, has been opened in November 2008 in order to receive these
direct bilateral contributions. The resources of the Trust Fund will be used as of 2009 to
finance projects together with the European Budget contribution.
Signature of the NIF Trust Fund Agreement
(26/01/2009)
Provisional list of Member
States' direct contributions
already officially announced
Pledge
(2008-2010)
Germany
10
France
10
Poland
3
Czech Republic
2
Spain
2
Austria
1
Bulgaria
1
Estonia
1
Finland
1
Greece
1
From right to left:
Italy
1
Commissioner Benita FERRERO-WALDNER,
Luxembourg
1
Mr Karel SCHWARZENBERG, Czech Minister for Foreign
Portugal
1
Affairs, President of the meeting,
Romania
1
Mr Philippe de FONTAINE VIVE, European Investment Bank
Sweden
1
Vice-President
6.
Total amount (as at 31.12.08)
37
Implementation of project approvals
Within the limited period of time between the approval of the projects by the Board and the
end of the year 2008, the Commission has signed a significant number of agreements to
implement the projects approved by the NIF Board.
Out of the nine projects approved for the East, four projects have been committed in 2008
through the signature of two financing agreements with the Moldovan authorities, one
delegation agreement with KfW for a project in Georgia and one contribution agreement with
the EBRD for a project in Ukraine.
For the South, five out of the six projects approved have been committed. Four financing
agreements have been signed, respectively two with the Egyptian authorities, one with the
Tunisian authorities and one with the Moroccan authorities. A delegation agreement with KfW
has also been signed for a project in Tunisia.
All in all, 80% of the amount approved by the Board in 2008, has been committed and
signed before the end of the year.
7
Most of the projects have benefitted from large media coverage at the occasion of the
signing of their related agreement.
Signing
ceremony
"Improved
Water
in
Egypt,
and
for
the
Wastewater
projects
Services
Programme (IWSP)" and "Wind Farm in the Gulf of
El Zayt" with the Prime Minister, Dr. Ahmed
Mahmoud
Mohammed
Nazif,
the
Minister
of
International Cooperation, Mrs Fayza Abul-Naga,
the Minister of Electricity and Energy, Mr Hassan
Younis, the Minister of Housing, Utilities and Urban
Development, Mr Ahmed El Magraby. On the
European side, for the Commission Mr Richard
Weber, for the KfW (lead Finance Institution for the
projects) Mrs Claudia Arce, for EIB Mrs Jane
McPherson, and for AFD Mr Jean-Hubert Moulignat.
7.
Pipeline 2009 - 2010
The pipelines submitted by the Finance Institutions for the coming years are substantial. The
total value of projects in the Mediterranean area amounts to more than € 6 billion for 2009
whereas in Eastern Europe, the provisional pipeline represents already more than € 1 billion.
In addition, it is worth underlying the effort of coordination and good cooperation by the
Finance Institutions to present a common consolidated pipeline both in the South and in the
East.
8.
Donor coordination
The NIF has proven to be an efficient platform for donor coordination between the Member
States, the European Commission and the Finance Institutions, in line with the commitments
of the Paris declaration. This demonstrates to our partner countries a positive image of
cooperation and dialogue between all European actors.
One of the results of this coordination is that each project supported by the NIF will be
implemented with streamlined procedures under the supervision of a Lead Finance Institution
acting on behalf of the other European donors.
9.
Approval of this report
This report will be submitted for approval to the first meeting of the Operational Board at the
end of March 2009 after technical advice from the FIG, and will be then examined by the first
NIF Strategic meeting of 2009.
Outlook for 2009
The high-level official signature of the Agreement on the NIF Trust Fund, managed and
opened by the EIB, took place in January 2009. It will allow newly approved projects to
benefit from Member States' direct contributions. This is particularly important since,
according to the pipelines already available, the number of operations to be approved in
2009 will be higher than in 2008 and will require more funding.
In 2009, the NIF will bring strong and concrete support to new initiatives such as the Union
for the Mediterranean and the Eastern Partnership.
8
Annex – Description of Approved Projects (situation as at 31.12.2008)
a) Eastern Region (9 projects)
1.
Georgia: Black Sea Energy Transmission System
Total cost: € 220.000.000 of which € 8.000.000 financed by the NIF
Lead Finance Institution: KfW / Co-Finance Institutions: EBRD and EIB
The overall project comprises the construction of a new 500 / 400 kV substation with a
"back-to-back" facility at the Turkish border, the construction of 315 km of a new
transmission line allowing the link between the power supply systems of the Southern
Caucasus countries with Turkey and Europe, and the adaption of two further substations
in Georgia. This shall stabilise the domestic power supply systems and reduce
transmission losses, and also make the region independent from single supply sources.
2.
Republic of Moldova: Capacity assessment and modernisation of the Republican
Clinical Hospital (RCH) in Chisinau
Total cost: € 20.500.000 of which € 3.000.000 financed through the NIF
Lead Finance Institution: Council of Europe Development Bank (CEB)
The project aims to improve the efficiency of health
assistance in the Republic of Moldova by modernising
one of the main hospitals of the country located in
Chisinau. More specifically, by strengthening the
surgical profile and better integrating the different
specialities, this hospital will become a centre of
performance of surgery at regional level, in the best
interest of the 25.000 in-patients and some 100.000
out-patients per year.
3.
Republic of Moldova: Road Rehabilitation project
Total cost: € 92.500.000 of which € 12.000.000 financed through the NIF
Lead Finance Institution: EBRD / Co-Finance Institution: EIB
The project purpose is to halt the deterioration of the
road network in the Republic of Moldova and to ensure
that key road links are maintained. The rehabilitation of
the road network is a necessary improvement of basic
public infrastructure in this country. It will allow better
access to EU markets to encourage foreign direct
investment in Republic of Moldova.
The country's
largely agriculture-based economy is highly dependent
on good land transport infrastructure, and its deteriorating road network could constrain
the country's ability to seize new trade opportunities.
4.
Republic of Moldova: Feasibility Study for the Improvement of Water and Sanitation
System in Chisinau
Total cost: € 59.000.000 of which € 3.000.000 financed through the NIF
Lead Finance Institution: EBRD / Co-Finance Institutions: KfW and EIB
The feasibility study shall form the basis for a large scale phased investment programme
aimed at the improvement of water supply and sewage collection and treatment in
9
Chisinau. Herewith, the living conditions of the population of Chisinau (approx. 800.000
inhabitants) will be improved and environmental impacts will be reduced.
5.
Republic of Moldova: Technical Assistance for the Chisinau Airport Modernisation
Project II
Total cost: € 46.250.000 of which € 1.750.000 financed through the NIF
Lead Finance Institution: EBRD / Co-Finance Institution: EIB
Chisinau's airport is a main gateway to Moldova’s
external trade and a key asset to the country’s
economic
development.
The
operation
involves
rehabilitation and upgrades of the airside facilities at
Chisinau
International
Airport,
commercialisation of the Airport.
and
further
The technical
assistance financed with NIF funds aims at facilitating
the timely and effective implementation of the
project, by procuring the services of a consulting firm to provide assistance and advice to
the Project Implementation Unit.
6.
Ukraine: Technical Assistance support for Ukrainian Municipalities
Total cost: € 135.000.000 of which € 5.000.000 financed through the NIF
Lead Finance Institution: EBRD / Co-Finance Institution: EIB (tbc)
The EBRD is currently developing several investments in Ukraine in municipalities such
as Zhytomyr, Rivne, Lviv, Energodar and Ivano-Frankivsk in the water, district heating
and urban transport sub-sectors. The technical assistance will support these investments
in the form of:
- feasibility studies to assist the municipal companies to prepare bankable investments
designed on the basis of a long-term development plan.
- corporate development to assist the municipal companies to identify and implement the
necessary corporate, financial and operational improvements.
- implementation assistance to assist the companies in the implementation of the
investments, including all aspects of procurement, engineering supervision, etc.
7.
Ukraine: Technical Assistance for Ukrenergo high voltage transmission networks
Total cost: € 301.280.000 of which € 800.000 financed through the NIF
Lead Finance Institution: EBRD / Co-Finance Institution: EIB
The full corporatisation of the National Energy Company
Ukrenergo is one of key Project/Loan covenants of
EBRD/EIB parallel loans for the "Rivne-Kyiv High Voltage
Line
Construction
Project",
a
project
that
will
substantially improve efficiency, quality and reliability of
electricity generation and transmission in Western and
Central Ukraine. The proposed technical cooperation
(TC) assignment will assist the Government of Ukraine
and Ukrenergo to legally and commercially corporatise the national transmission system
operator, introduce modern management information systems, and help the new entity
address and implement corporate sustainable development strategy.
10
8.
Ukraine: Technical Assistance for Burshtyn Thermal Power Plant Rehabilitation and
Efficiency Improvement
Total cost: € 250.800.000 of which € 800.000 financed through the NIF
Lead Finance Institution: EBRD / Co-Finance Institution: EIB
Zakhidenergo, a majority State-owned thermal power generator located in Western
Ukraine, owns three thermal power plants (“TPP”) with a combined installed capacity of
of 4,707 MW representing approximately 10% of the country’s generation capacity,
including the Burshtyn TPP. The project is intended to replace an old unit with a new
modern clean coal power generation unit of 225 MW with full environmental facilities and
to rehabilitate the existing infrastructure and other power units improving at least by
10% their efficiency.
The new clean coal unit is expected to be the first unit of supercritical steam parameters
equipped with full environmental protection systems to be installed in Ukraine and this
will have a significant demonstration effect for all the coal power plants of the country.
Together with the rehabilitation of the existing units, the project will make Burshtyn TPP
to become the most energy efficient coal fired power plant in the country.
9.
Azerbaijan and Georgia: Framework for Capacity Building to support Financial
Intermediaries
Total cost: € 38.250.000 of which €2.800.000 financed through the NIF
Lead Finance Institution: EBRD
The objective of these technical assistance activities for financial institutions in
Azerbaijan and Georgia is twofold. First, they target at improving the local financial
sector's efficiency, effectiveness and transparency, which would result in the provision of
better access to financing for enterprises, particularly Micro, Small and Medium
Enterprises. Second, they aim at creating successful and healthy institutions that finance
the real economy, operate on market principles and follow sound business practices. In
this way, it shall help creating sustainable financial intermediaries.
11
b) Southern Region (6 projects)
1.
Egypt: Improved Water and Wastewater Services Programme (IWSP)
Total cost: € 295.000.000 of which € 5.000.000 financed by the NIF and € 29.000.000
financed by the EC 2008 Annual Action Programme for Egypt
Lead Finance Institution: KfW / Co-Finance Institutions: AFD and EIB
The objective of the project is to improve sustainable water and wastewater services in
four Governorates in the Nile Delta with a population of 16,3 million. It shall improve the
physical infrastructure of the wastewater collection system and treatment as well as the
water supply networks and treatment plants. In line with the EU Water Sector Reform
Programme, the IWSP will support the ongoing reform process of the Egyptian
Government, focussing on sanitation and developing the capacity of the local operating
companies.
2.
Egypt: 200 MW Wind Farm project in the Gulf of El Zayt
Total cost: € 340.000.000 of which € 10.000.000 financed by the NIF and € 20.000.000
to be financed by the EC 2010 Annual Action Programme for Egypt
Lead Finance Institution: KfW / Co-Finance Institution: EIB
The project is part of a larger national programme
supporting the governmental objective of expanding
electricity production from renewable energy sources.
The construction of a wind farm of up to 200 MW on the
West bank of the Gulf of Suez will improve the access to
electricity for the Egyptian population, and contribute to
global
environmental
protection
by
producing
environmentally sound electrical energy and avoiding the
generation of CO2 emissions at a reasonable economic cost.
3.
Morocco: Second national programme for rural roads
Total cost: € 397.000.000 of which € 9.800.000 financed by the NIF
Lead Finance Institution: EIB / Co-Finance Institution: AFD
The construction of new rural roads will allow the opening up of whole regions of the
Moroccan territory with a better access to basic social services such as schools and
healthcare, with a reduction of transportation costs and with an enhancement of
economic productivity. It is expected that 15.500 km of rural roads will have been
constructed between 2005 and 2012 at a rate of 2.000 km per year, improving the
accessibility of more than 3 million people.
4.
Morocco: Programme of integrated sustainable development of urban transport in
Rabat and Salé: construction of the infrastructure of the tramway network
Total cost: € 371.000.000 of which € 5.000.000 financed by the NIF
Lead Finance Institution: AFD / Co-Finance Institution: EIB
The objective of the project is the sustainable improvement of mobility and urban
environment in Rabat-Salé through the construction of a tramway network with a total
length of 32 km and 32 stations. The enhanced quality and capacity of urban public
transport will be adapted to demand and target both the low-income population who
depends on public transports and the middle and upper classes who would renounce
using their cars. The project shall drastically improve the urban environment in terms of
12
security, public health, energy efficiency, reduction of greenhouse effect and control of
traffic congestion.
5.
Tunisia: Extension and rehabilitation of wastewater treatment plants and pumping
stations
Total cost: € 127.760.000 of which € 3.000.000 financed by the NIF
Lead Finance Institution: KfW / Co-Finance Institutions: EIB and AFD
The programme aims at renewing and extending 19 wastewater treatment plants and
130 pumping stations. Its general objective is to protect the water environment against
pollution as well as to improve the living conditions of the concerned populations, i.e. 1,1
million people in 2021, not counting the inhabitants of the downstream areas benefitting
from the quality enhancement of purified wastewater.
6.
Tunisia: Feasibility Study for a Concentrated Solar Power Plant (CSP)
Total cost: up to € 120.000.000 million of which € 1.000.000 is already financed by the
NIF for the feasibility study
Lead Finance Institution: KfW / Co-Finance Institutions: EIB, AFD (tbc)
The
study
has
to
determine
the
feasibility
of
a
Concentrated Solar Power Plant (CSP) plant which would
contribute to global climate protection by producing
environmentally sound electrical energy and avoiding the
generation of CO2 with a reasonable economic effort.
Tunisia
has
excellent
natural
conditions
for
the
production of solar power. In the medium run, solar
power could also become an export product to the EU.
Other countries in the Mediterranean region, notably Egypt, Morocco and Algeria have
begun to invest in such plants. Present costs of CSP-technologies are still above
production alternatives. Therefore, investments in CSP still need financial support with a
high grant element.
13
Neighbourhood Investment Facility
2008 Operational Annual Report
EuropeAid Co-operation Office
Europe, Southern Mediterranean, Middle-East and Neighbourhood Policy
Multi-Country Programmes
[email protected]
http://ec.europa.eu/europeaid/where/neighbourhood/regionalcooperation/irc/investment_en.htm