EIB supports gas supply improvements and diversification in Europe with the EFSI guarantee
The European Investment Bank (EIB i) is lending EUR 50m to Transgaz, the national gas transmission company of Romania, to finance the construction of a new European gas transmission corridor to increase security of gas supply and to reduce energy dependence by making it possible to diversify gas supply routes and sources. This operation is backed by the European Fund for Strategic Investments (EFSI) under the Investment Plan for Europe (IPE).
The new pipeline represents the first phase of the Romanian section of the gas pipeline from Bulgaria to Austria via Romania and Hungary (BRUA). The Transgaz-Brua Gas Interconnection project, estimated to cost over EUR 500m, has been awarded a grant of EUR 179m by the European Commission under the Connecting Europe Facility (CEF). This facility, established in 2013, is a key EU funding instrument to promote growth, jobs and competitiveness through targeted infrastructure investment at European level. It supports the development of high performing, sustainable and efficiently interconnected trans-European networks in the fields of transport, energy and digital services.
The EIB funds will finance the construction of a 478-km natural gas transmission pipeline between Podisor and Recas and the construction of three compressor stations located in Podisor, Bibesti and Jupa in Romania.
European Commission Vice-President Valdis Dombrovskis, responsible for Financial Stability, Financial Services and Capital Markets Union, said: “Thanks to support from the Juncker Plan, the European Investment Bank is providing EUR 50m to Transgaz to build a new 478-km gas pipeline from Bulgaria to Austria via Romania and Hungary. This important cross-border project will increase competition, which is good for the consumer. It will also bring thousands of jobs to the region, which is the fundamental objective of the Juncker Plan. Combining EFSI financing with funds from the Connecting Europe Facility helped the project get off the ground. I would encourage other project promoters to look into the possibility of combining different sources of financing for their investment projects.”
EIB Vice President Andrew McDowell commented: “This strategic project implemented under the Investment Plan for Europe will interconnect the South-East and the Central European gas transmission infrastructure and eliminate the dependence of South-Eastern European countries on a single gas supplier. It will improve the security of supply for these countries, opening up access to potentially cheaper gas, and delivering improved price convergence and transparency, consequently reducing consumer vulnerability. It will have a significant impact on employment, creating some 4 000 to 5 000 jobs during the construction phase and 300 to 400 positions during the pipeline’s operation.”
Romanian Minister of Economy Gheorghe Șimon noted: “The Romanian Government welcomes the conclusion of the finance contract, the first contract signed by a Romanian entity within the Investment Plan for Europe (IPE) to benefit from a guarantee from the European Fund for Strategic Investments (EFSI). In my capacity as Minister, I put my trust in the prospects that Transgaz’s management and the European Investment Bank have opened up. As representative of the Romanian Government among Transgaz shareholders, the Romanian Ministry of Economy supports the upgrading of the national gas transmission system and the EIB funding of some BRUA works is in line with the Government’s initiatives to urge investments in infrastructure development projects.”
Director General of SNTGN Transgaz SA Ion Sterian stated: “This is an outstanding event for our company and for other Romanian and regional gas market players. The finance contract Transgaz signed with the European Investment Bank today explicitly indicates that we are committed and that the optimal conditions for construction of the BRUA project in Romania are in place under the agreed terms. The European Investment Bank has confidence in Transgaz’s ability to successfully complete such a significant project for the development of the EU’s gas transmission infrastructure. We expect this financing to have a positive impact both in terms of achieving local and national synergies for the construction and operation of the pipeline and in boosting confidence and solidarity among the European countries set to benefit from the BRUA project.”
Background information:
The European Investment Bank is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
The Investment Plan for Europe, the so-called Juncker Plan, is one of the European Commission's top priorities. It focuses on boosting investments to create jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment and providing visibility and technical assistance to investment projects.
The European Fund for Strategic Investments (EFSI) is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB to invest in more, often riskier, projects. EFSI is already showing concrete results. The projects and agreements approved for financing under EFSI so far are expected to mobilise some EUR 241bn in investments and support up to 462 000 SMEs across all 28 Member States.