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EIBs Role in Supporting TEN-T Thomas C. Barrett TEN-T Days 2010, Zaragoza.

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Presentation on theme: "EIBs Role in Supporting TEN-T Thomas C. Barrett TEN-T Days 2010, Zaragoza."— Presentation transcript:


2 EIBs Role in Supporting TEN-T Thomas C. Barrett TEN-T Days 2010, Zaragoza

3 EIB Funding040506070809 TEN-T6. Priority Projects Other Projects 4.4 5.2 6.710.1 PPP in TEN-T0. Senior loans6. SFF in TEN-T0. EIB support for TEN-T lending activity

4 Increased public sector indebtedness will increase requirements for private finance Source: Commission Services, Sustainability Report 2009

5 Developing the Loan Guarantee for TEN Transport projects (LGTT) Promoting capital markets for TEN-T finance Equity for TEN-T finance : The Marguerite Fund Deploying cohesion funding for TEN-T : JASPERS New funding for clean transport : the European Clean Transport Facility (ECTF) European PPP Expertise Centre (EPEC) : working with DG MOVE and the TEN-T Executive Agency EIB initiatives to promote TEN-T investment

6 Broadening of the scope of LGTT? The LGTT is an EUR 5 bn EIB guarantee programme for which EUR 1 bn risk capital has been jointly provided by the EIB and EU budget. LGTT shares the revenue risk in the early years of TEN-T projects In order to reach a larger pool of candidate projects, EIB/EC is considering broadening the scope of LGTT to availability-based schemes This would allow targeting significant investments in the rail and inland waterway projects which where procured as PPP increasingly have availability based payment mechanisms A clear focus would be to introduce even stronger support for TEN-T priority Projects, most of them in the Rail sector This innovation could substantially open availability based Rail PPPs to Capital Market financing

7 Greater availability of subordinated debt tranches could enhance the credit quality of senior debt in TEN-T projects. The size of this tranches would depend on the risk profile of the project/portfolio Objective to uplift the credit profile of the higher ranking senior debt financing to single-A rating The subordinated tranche could, inter alia, be provided on contingent basis by EIB (subject to its standard credit and other requirements), which would make it similar in structure to LGTT Suitable for risk sharing between public and private institutions. TEN-T budget could contribute to such instrument through risk sharing. Shareholder funding Subordinated Tranche Senior Tranche – Project Bond Normal or elevated level of equity/shareholder/ mezzanine debt Size depends on the project Target rating A/AA Capital markets for TEN-T finance

8 8 European Investment Bank 2020 European Fund for Energy, Climate Change and Infrastructure – the Marguerite Fund The Fund targets an equity base of EUR 1.5bn and an associated Debt Co-financing Initiative (DCI) of EUR 5bn Major publicly funded Core Sponsors (EIB, CDC, CDP, ICO, PKO and KfW) as well as the European Commission, CGD and Bank of Valetta are backing this Fund; Nordic Investment Bank and Black Sea Trade & Development Bank support it through the Debt Co-financing Initiative. Public and private sector investors from all EU countries are expected to join at a later stage. Target sectors: TEN-T, energy and climate change Focus on solid IRR targets - Fund to give preference to projects with satisfactory Economic Rates of Return (ERR) Expected to be a model in the future for other similar public and private funds so as to attract Capital Market Institutions (including private and public pension funds and insurance companies) to invest in TENs infrastructure

9 European Clean Transport Facility (ECTF) ECTF facility is a major EIB financing programme to support investments targeting RDI (Research, Development and Innovation), emissions reduction and energy efficiency in the European transport industry. A clear complement to EIBs existing transport lending instruments This Risk Sharing facility targets larger scale investments with corporate sponsors (or project finance structures). EIB lending under the ECTF facility currently amount to EUR 4.2 bn and targets automotive (OEMs/Suppliers), railroad, aircraft and shipping industries as well as related infrastructure. Example for investments include: i.intelligent traffic management (e.g. variable message signs, advanced traveller information systems, advanced drivers assistance, speed advisory/control, electronic tolls, etc.), and ii.Smart vehicles (e.g. Advanced Drivers Assistance, accident sensors, automated guided vehicles, navigation systems, inter-vehicle communications systems etc.), and Green vehicles (application of ICT in reducing the congestion of vehicles).

10 European PPP Expertise Centre: Working with MOVE and the TEN-T Executive Agency -Promoting best PPP practice to enhance public sector capacity, reduce PPP costs and increase deal flow. -A Guide to Guidance – Sourcebook for PPPs in TEN-Transport launched today -Identifies best available guidance to support public authorities by: -identifying the scope for PPP in TEN-T projects; -providing a roadmap of the PPP procurement phase; -identifying issues which occur during the implementation or renegotiation of a PPP transaction. -Sources of guidance: PPP guidelines worldwide and selected professional publications

11 Thomas C. Barrett, Director, tel: +352 4379 87006 Nicholas Jennett, Head of EPEC, tel +352 4379 87320 Jukka Luukkanen, Head of Division (TEN-T and Investment Funds), tel +352 4379 86412

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