1. 1 NETLIPSE Zurich 20th October 2008 EIB – Project Cycle

2. 2 The European Investment Bank (EIB) Long-term Finance Promoting European Objectives 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

3. 3 EIB financing Trans European Network (TEN) - Transport Objectives TENs financing is one of the priority objectives of EIB in pursuit of Community objectives on growth; employment; cohesion; internal market and sustainability EIB prioritises TENs investment in interconnection; intermodality and interoperability of national networks. EIB financing prioritises those projects which are more environmentally friendly. Results In 2007, EIB financed € 9.3 billion for TENs of which €8.1 bn for TEN- Transport EIB financing objective for TENs-Transport for period 2004-2013 is € 75 bn. At end 2007, 39.8% of target was achieved vs 40% time elapsed Sources of TENs Finance from 1993-2006 – EIB loans finance ca. 15-20% of TENs investments – Commission resources (Structural Funds and TENs) financed ca. 13% – National resources financed ca. 40-50% – Private sector risk financed 20-25%

4. 4 Source: “Implementation of the Priority Projects, Progress Report”, background material prepared by DGTREN for the Brno Informal Transport Council in May 2008

5. 5 Project Finance Money at risk for projects, such as Large Infrastructure Special purpose vehicle (SPV) as the borrower Co-funding, complementing sponsors equity, by way of loans, guarantees ; other possible financial instruments Lending and repayment based on project cash flows Reliance on project management capacity and contracts Relatively high ratio of debt to equity (‘gearing’) Finite project life (debt to be repaid at project close) Projects may obtain investment grading from rating agencies

6. 6 Requires project financial model covering entire project life ; validated input data and audit (model audit) Project repayment capacity basis for financial assessment Project financial assessment benefits from understanding the project ; projects benefit from financial assessment Sound financial assessment does not validate the project, but suggests the nature (and level) of the financial product required (for a sample of financial products see next slide) Despite contracts and sound project management, initial credit ratings may change : project finance assessment is required until the earlier of repayment or project-life. Project financial assessment

7. 7 Senior debt, with or without third party guarantee Structured Finance Facility Participation in Infrastructure Equity Funds Loan Guarantees Dedicated Instruments e.g. Loan Guarantee Instrument for TEN Transport projects (LGTT) EPEC ; Collaboration with European Commission (e.g. TEN co - ordinator for Priority projects) and other public and private partners Sample of financing products and / or facilities

8. 8 PROJECT CYCLE A sound project portfolio EIB eligibility Contract signature Project Finance Life- Time Relationship and Contract. Project identification Banking criteria Staff teams Economic Financial Technical Environmental Management Committee Lawyers Contract negotiation Board of Directors Loan approval Project Borrower Guarantor

9. Contacts http://www.eib.org Structured Finance EU/AGI – TEN (Transport) A.J.Gercama, Managerial Advisor gercama@eib.org tel: +352 4379 87323 J. Luukkanen, Head of Division luukkane@eib.org tel: +352 4379 86412