financing by investment banks
TRANSCRIPT
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EU & Development Bank Financing for Northern Dimension Transport Projects
Tero Lausala, 26.11.2002
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Contents
• Finpro & Project Advisory Services• EU financing: ISPA, Phare, Tacis• European Investment Bank (EIB)• European Bank for Reconstruction
and Development (EBRD)• Nordic Investment Bank (NIB)• World Bank (IBRD & IFC)
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Finland Trade Centers 51 in 39 countries
=
Finpro Marketing Ltd
InternationalMarketing Services
InnovationPrograms
Networking projects with stakeholders
Consulting
Internationalizationplans & operations
MarketInformation Center
Call Center, Advisory and Market Intelligence
Services
Chairman of the Board
Support ServicesHR, Finance, IT, Marketing
President - Finpro
Finpro and Finpro Marketing Ltd
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51 Finland Trade Centersin 39 countries
Our personnel• 210 in Finland Trade Centers• 130 in Helsinki
The Finpro Network Covers Main Target Market Areas
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Finpro Project Advisory Services - Mission
• To assist Finnish firms in their international operations through EU, IFI and UN financed projects in developing and transition economy countries by helping them to find:• business opportunities in procurement
for projects financed by these institutions
• financing for projects identified / sponsored by themselves
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Financiers Monitored By Project Advisory Services
• European Union external aid programs: Tacis, Phare, ISPA, Sapard, EDF, ALA, MEDA, CARDS
• World Bank Group: IFC, IBRD, IDA, MIGA• European Bank for Reconstruction and
Development (EBRD)• European Investment Bank (EIB)• Asian Development Bank (ADB)• Inter-American Development Bank (IDB)• African Development Bank (AfDB)• Nordic finance: NIB, NEFCO, Nopef, NDF• UN system
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International Project Finance Flows Monitored By Finpro/PAS
IFI /PROGRAMME € BILLION REGIONS (SECTORS)WB 23,3 GlobalIDB 8,4 Latin AmericaADB 5,5 AsiaAfDB 1,6 AfricaEIB 5,6 Outside of EUEBRD 3,6 CEE, CIS countriesPHARE 1,5 CEEISPA 1,0 CEE (transport and environment)SAPARD 0,5 CEE (agriculture)CARDS 0,7 BalkanTACIS 0,5 CISCEB 1,6 Europe (social sector)ACP/EDF 2,3 ACP (Africa, Caribbean, Pacific)MED/MEDA 1,0 Mediterranean countriesALA 0,7 Asia and Latin AmericaUN 3,5 GlobalTOTAL 61,3
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Project Advisory Services Network
BRUSSELS• EU programmes
• EIB• EBRD
WASHINGTON• WB Group
• IDB
HELSINKIBasic information and
database on all financiers
MANILA• ADB
ST PETERSBURGleasing office
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Project Advisory Services Staff
• Head of Project Advisory Services Pentti Kotiranta (PAS Brussels)
• Head of PAS Washington Kari Janhunen
• Head of PAS Manila Cristina Marquinez
• Head of PAS Helsinki Tero Lausala
• Head of PAS St. Petersburg Timo Koponen
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Pas Services & Products
• Project consulting and partner search• Project financial consulting• Seminars & training on IFIS and EU: e.g.
World Bank procurement, making Tacis applications, ISPA, ADB
• Emergency aid surveys: e.g. Balkans, India, Afghanistan
• Project database: www.finpro.fi/projectdatabase
• EU Public Procurement Alert Service: www.finpro.fi/tedalert
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EU Finance Instruments
• PHARE: Assistance for the reconstruction of economies in Central and Eastern Europe
• ISPA: Instrument for Structural Policies for Pre-Accession
• TACIS: Technical Assistance to the Commonwealth of
Independent States
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Balkan5 %
others9 %
Latin America3 %
humanitarian aid4 %
food aid4 %
EDF25 %
Asia4 %
South Africa1 %
Mediterranean11 %
PHARE15 %
ISPA10 %
NIS + Mongolia4 %
SAPARD5 %
TotalEUR 9,6 billion
EU’s External Actions in 2000
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EU External Aid Programmes
• Projects are identified by the EU together with the beneficiary countries.
• EC external aid is given by means of contracts to provide services, supplies or works to beneficiary countries.
• Service, supplies and works contracts are awarded after a tendering process.
• Contracts are open on equal terms to all natural and legal persons of the EU Member States and the countries and territories of the regions covered.
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EU Competition Rules
SERVICES
>200.000 EURRestrictedinternational tender,4-8 service providersinvited
< 200.000 EURFramework contract, orSimplified procedureafter consultationwith at least 3 serviceproviders
< 5.000 EUROne single quote
SUPPLIES
> 150.000 EUROpen internationaltender
30.000 < …<150.000 EUROpen local tender
< 30.000 EURSimplified procedure after consultation withat least 3 suppliers
< 5.000 EUR One single quote
WORKS
> 5.000.000 EUROpen international tender; Restricted international tender (special case)
300.000<…<5.000.000 EUROpen local tender
< 300.000 EURSimplified procedure after consultation withat least 3 contractors
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Tacis in 2000-2006
• The new Tacis regulation in force from January 2000• EUR 3 138 million for the period 2000 to 2006 • Move from “demand-driven” to “dialogue-driven” programming• Increased promotion of investment• Greater emphasis on regional and cross-border co-operation• Increase in the number of assistance instruments• Improving the quality of assistance• Incentive Scheme
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Tacis - Areas of Cooperation
• Democracy and the rule of law
• Private sector and economic development
• Social consequences of transition
• Infrastructure networks
• Environmental protection
• Rural economy
• Regional and cross border cooperation
• Nuclear safety
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P R E - A C C E S S I O N A I D T O C E E C O U N T R I E S 2 0 0 0 - 2 0 0 6
P H A R E 1 5 6 0 m i l l i o n € 3 0 % i n s t i t u t i o n b u i l d i n gp e r y e a r 7 0 % i n v e s t m e n t s
P H A R E L S I F 1 0 0 m i l l i o n € i n v e s t m e n t s i n t r a n s p o r t( 1 9 9 8 - 9 9 ) p e r y e a r a n d e n v i r o n m e n t
S A P A R D 5 2 0 m i l l i o n € s u s t a i n a b l e a g r i c u l t u r e p e r y e a r a n d r u r a l d e v e l o p m e n t
( S a p a r d - S p e c i a l A c c e s s i o n P r o g r a m m e f o r A g r i c u l t u r e a n d R u r a l D e v e l o p m e n t )
I S P A 1 0 4 0 m i l l i o n € l a r g e i n f r a s t r u c t u r e i n v e s t m e n t sp e r y e a r i n t r a n s p o r t a n d e n v i r o n m e n t
( I S P A - I n s t r u m e n t f o r S t r u c t u r a l P o l i c i e s f o r P r e - a c c e s s i o n )
(LSIF - Large Scale Infrastructure Facility)
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Phare
• The Phare programme aims to help the countries of Central and Eastern Europe to meet economic and institutional obligations for their eventual membership in the EU.
• Phare provides know-how for a wide range of non-commercial, public and private organisations.
• A specific programme of support, CARDS, covers Albania, Bosnia and Herzegovina, Croatia, the Federal Republic of Yugoslavia and the FYROM.
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Phare
• Implementation decentralized to applicant countries
• Priorities:• 1.Institution-building 30% of the budget is
channelled to the reform of institutions and the encouragement of twinning, legislation harmonisation with the EU, and public administration.
• 2. Mobilisation of investments 70% is allocated to investment projects in industry and infrastructure to meet EU standards and legislation.
• Bridge to the Structural Funds after accession
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ISPA: Sectors Receiving Assistance
1. The environment - bringing the applicants up to EU standards
2. Transport - expanding the trans-European transport networks
3. Technical assistance - directly related to the projects being funded
Eligible countries: Bulgaria, Estonia, Hungary, Latvia, Lithuania, Poland, Czech Republic, Romania, Slovenia and Slovakia.
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ISPA - Instrument for Structural Policies for Pre-Accession
• Pre-accession aid from the year 2000 (until max 2006)• Coverage: initially the 10 central and eastern European candidates; changing according to
accession • Aims: prepare Central and Eastern European Countries for full EU membership• Environmental measures: waste water, drinking
water, solid waste (landfills), air pollution• Transport infrastructure measures: highways, roads, railways, aviation• Budget: EUR 1 billion per year
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ISPA - Instrument for Structural Policies for Pre-Accession
• Criteria: population, per capita GDP and land surface area• ISPA-financing 50-80%, needs national contribution• Consulting, supplies and works• Projects are identified by the candidate
countries in co-operation with the Commission• Minimum size usually 5 MEURO• Contracts for technical assistance, supplies and works are tendered either locally or internationally
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ISPA – Financial Provisions by Country
Bulgaria 8.0% - 12.0%Czech Republic 5.5% - 8.0%Estonia 2.0% - 3.5%Hungary 7.0% - 10.0%Lithuania 4.0% - 6.0%Latvia 3.5% - 5.5%Poland 30.0% - 37.0%Romania 20.0% - 26.0%Slovenia 1.0% - 2.0%Slovakia 3.5% - 5.5%
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M O N IT O R IN G A N D E V A L U A T IO N
P R O JE C T IM P L E M E N T A T IO N
T E N D E RP H A R E
F IN A N C IN G M E M O R A N D U M
P R O JE C T A P P L IC A T IO NIS P A M A N A G E M E N T C O M M IT T E E
N A T IO N A L S T R A T E G Y O N T R A N S P O R T A N D E N V IR O N M E N T
N A T IO N A L P R O G R A M M E F O R T H E A D O P T IO N O F T H E A C Q U ISN A T IO N A L D E V E L O P M E N T P L A N
A C C E S S IO N P A R T N E R S H IP
ISPA Procedure
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How to Succeed in EU Projects ?
Follow up on project pipeline Information gathering: web sites (EuropeAid),
Official Journal, local press Personal contacts with key players - >Act locally
! Networking, alliances, consortium Tender preparation: carefully correspond to
requirements; pay attention to the quality of the bid
National networks (beneficiary countries & EU headquarters & home bases)
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Cohesion / Structural Funds
• Structural Funds are already committed for 2004-2006: EUR 23 billion
• Funds will be 3-4.5 x larger than ISPA (Cohesion Funds)
• Funding available in new sectors (health, urban renewal, urban transport etc)
• prepare large projects to be ready for Structure Fund / Cohesion Fund co-financing after accession
• prepare and finance pilot projects for implementation after accession
• work with regions to develop programmes suitable for regional development funds
Partners can help:Structural Funds 2004-2006
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CURRENT EXTERNAL EU LENDING MANDATES
A global economic development partner 31
EUR million
Central and Eastern European countries 9 280 (2000-2007) (350m for Yugoslavia)
Pre-accession facility (EIB risk) 8 500 (2000-2003)
Mediterranean countries 6 425 (2001-2007)
Euro-Med mechanism (EIB risk) 1 000 (2001-2007)
ACP Countries 3 965 (2001-2007)
South Africa 825 (2000-2006)
Latin America Asia 2 480 (2000-2006)
Russia (2000-2005) 100
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LOAN SIGNATURES OUTSIDE THE EU EUR 23bn (1997-2001)
Executing the EU’s external policies32
In EURm: Accession
Countries
Western Balkan countries
Euro-MediterraneanPartnership countries
Africa, Caribbean,Pacific, OCTSouth Africa
Asia, LatinAmerica
5 366
11 898
625
251
16
776
1 51735
728
1 396
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Regional development
European communicationsinfrastructure
Natural and urban environment
Energy
International competitiveness ofEuropean industry and support for SMEs
i2i, R&D, Dissemination of innovation, technology networks, education, health
EIB PROJECT ELIGIBILITY
Projects promoting Union objectives47
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FINANCING OPTIONS
Tailor-made finance to fit project and promoter49
Large-scale projects ( project size over EUR 25 million)
direct financing indirect financing
Small and medium-scale projects ( EUR 40 000 - EUR 25 million)
Global loans with partner banks High-growth innovative SMEs: investment funds,
venture capital or development capital companies
EIB participation is limited to 50% of a project’s cost.
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EIB: PROJECT CYCLE
A sound project portfolio50
EIB eligibility
Contractsignature
Monitoring
Promoter’s request
Banking criteria
Staff teamsEconomicFinancialTechnical
Environmental
ManagementCommittee
LawyersContract
negotiation Board ofDirectors
Loan approval
ProjectBorrowerGuarantor
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RATIONALE FOR EIB PARTICIPATION IN A PROJECT
52
Up stream, where the EIB financial contribution is critical and the EIB’s technical know-how can influence the project’s concept
Down stream, where the the EIB’s contribution supports the overall financial package
The EIB can become involved either
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Technically sound
Financially viable
Show an acceptable economic return
Comply with environmental protection and procurement regulations
Have adequate security
A project assessment with many facets
PROJECT REQUIREMENTS:
Projects should be:
Eligible for EIB finance
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Cumulative commitments€ 20.2 billion
0
5
10
15
20
1995 1996 1997 1998 1999 2000 2001
€ bn
Introduction to EBRD
• International financial institution founded in 1991, owned by 62 national and supranational shareholders, including EU and CEE countries
• Promotes market-based economies in 27 countries in Central & Eastern Europe and the former Soviet Union
• Provides finance to public and private sectors
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• EU Accession countries
EBRD Geographical Focus
• Western Balkans
• Russian Federation and CIS states
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EBRD Features
• Mandate to foster transition from planned to market economies
• EBRD promotes environmentally sound and sustainable development in all its activities
• Helps facilitate EU grant co-financing and mobilise Technical Cooperation funds to assist municipalities in implementation of projects
• Can finance suitable projects without bank guarantees or sovereign guarantees
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EBRD Investment Selection Criteria
• Financial, economic and technical viability
• Priority projects (environmental, national, local)
• Credit quality borrower• strong economic base (municipality)• financial strength/creditworthiness• institutional capability and potential
• Readiness to implement changes• cost recovery/tariff increases as appropriate• financial and operational performance
improvement• creditworthiness enhancement
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EBRD / ISPA Co-financing
• Memorandum of Understanding between EBRD and ISPA signed in April 2000
• EBRD project appraisal consistent with ISPA evaluation process
• Co-operation in organising technical assistance
• Assistance to municipalities in preparation of applications to ISPA for co-financed projects
• Agreement on procurement requirements
• Approximately €400 million in EBRD-ISPA co-financing
• Total project value of almost €1.3 billion
• Over €650 million of projects in pipeline
• Projects in Czech Republic, Estonia, Lithuania, Poland, Romania, etc.
Co-operation with ISPA EBRD-ISPA Track Record
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Types of EBRD Co-financing with ISPA
• Loan to municipality (eg.Wroclaw, Gliwice)
• Loan to utility with municipal support agreement (eg. Krakow, Bydgoszcz, Kaunas)
• Loan to utility with municipal guarantee (eg. Rybnik)
• Loan to private concession company (eg in preparation - Warsaw)
• Regional facility (eg. in preparation - Dolnysląsk
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EBRD loan terms and costs
• EBRD loan size normally > EUR 10 m
• EBRD can offer up to 15 years maturity if appropriate for infrastructure financing
• Grace periods based on construction
• Loan margins based on credit risk of municipality / utility and market pricing
• Pricing depends on project risk• Loan fees reflect Bank costs• Structure provides low all-in annual
costs for municipality / utility customers
• EBRD Procurement Policies and Rules apply
Grace Period Grace Period
Maturity Maturity
Margins and FeesMargins and Fees
ProcurementProcurement
Loan Size Loan Size
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Nordic Investment Bank
• Finances projects of common interest within the Nordic region
• Finances international investments projects of mutual interest to the customer country and the Nordic countries
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NIB Mission & Strategy
• Promoting Nordic industrial cooperation by financing new investments, infrastructure projects and structural improvements.
• Participating in the financing of projects in the emerging markets thus promoting the globalisation of Nordic industry
• Contributing with financing to the economic transformation and development in the areas adjacent to the Nordic region
• Playing an important role in the financing of environmental improvement investments particularly in the Baltic Sea and Barents Sea regions
NIB:s primary purpose is to promote sustainable economic growth by means of long-term financing.NIB endeavours to reach this goal by:
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NIB Financing Activities
7777 per cent within the 5 Nordic countries per cent within the 5 Nordic countries
2233 per cent in 3 per cent in 377 countries outside the countries outside the Nordic Nordic region region
Total assets in December 200Total assets in December 20011 EUR 1 EUR 155 billionbillion
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NIB Loan Portfolio
EUR million
Total outstanding loans 30.06.2002 9.780
of which International Loans in more than 30 countries 2.133
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NIB Loans Outstanding
0
2 000
4 000
6 000
8 000
10 000
12 000
1994 1995 1996 1997 1998 1999 2000 2001
mE
UR
International loans
Nordic loans
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0100200300400500600700800900
1000
Africa Asia Balticcountries& Poland
Centraland
EasternEurope
LatinAmerica
MiddleEast
NIB Int. Loans Outstanding / Geographical Spread as of 30.06.2002
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NIB Int. Loans Outstanding by Sector / Dec. 2001
Communications25 %
Trade and other services
7 %
Other7 % Manufacturing
22 %
Energy39 %
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NIB Loan Terms & Conditions
• Sovereign loans or guaranteesMaturity: Up to 20 yearsGrace period: Up to 5 years
• NIB financing maximum 50 % of total project cost
• Private sector loans- Terms and conditions similar to other lenders and depending on the project risk
• Loans untied in respect of sources of origin of project components
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NIB Loans to CEE as of 6/2002(EUR million)
Outstanding Signed, not yet
disbursedCroatia 21,9 7,1Czech Republic 111,9 29,8Estonia 88,6 102,2Hungary 0,0 20,1Latvia 59,2 44,6Lithuania 47,0 65,4Poland 197,3 34,0Romania 38,6 35,0Russia 9,5 0,0Slovak Republic 1,5 0,0
TOTAL 575,5 338,2
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The World Bank Group
International Bank for
Reconstruction and
Development
IBRDEstablished: 1945
IDAEstablished: 1960
IFCEstablished: 1956
MIGAEstablished: 1988
International Development Association
International Finance
Corporation
Multilateral Investment
Guarantee Agency
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IBRD & IDA Lending FY 2002Share of Total Lending of USD 19.5 billion
South Asia 18%$3.5 billion
Middle East and North Africa 3%$0.6 billion
Latin America and theCaribbean 22%$4.4 billion
Europe and Central Asia 29%$5.5 billion
East Asia and Pacific 9%$1.8 billion
Africa 19%$3.8 billion
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IBRD and IDA Lending by Sector FY 2002
Education7%
Agriculture, Fishing &Forestry6%
Water, Sanitation, & FloodProtection3%
Transportation12%
Law & Justice & PublicAdministration27%
ICT1%
Health & Other SocialServices12%
Finance15%
Energy & Mining10%
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Transportation Sector IBRD and IDA Lending by Region, FY 2002
Latin America and the Caribbean 19%
Europe and Central Asia 3%
Middle East andNorth Africa 3%
East Asia and Pacific 23%
South Asia 31%
Africa 21%