The European Commission and the European Investment Bank (EIB) has signed a Cooperation Agreement establishing the Loan Guarantee Instrument for trans-European transport network projects (LGTT). This new instrument will facilitate greater participation of the private sector in the financing of transport infrastructure of European significance, especially for investments in TENs projects where there is a high level of revenue risk in the early operational period of a project.
The LGTT, which forms part of the Trans-European Transport Network (TEN-T) programme and the EIB’s Action for Growth initiative, will partially cover this risk and thereby significantly improve the financial viability of TENs investments. The capital contribution of €1 billion (€500 million each from the Commission and the EIB) is intended to support up to €25 billion of total capital investment.
‘LGTT is a significant new instrument for financing European infrastructure. Not only are we making this innovative instrument available to the market today, but we also reiterate that private participation in the financing of transport infrastructure of European interest is welcome and needed’, said Commission vice-president in charge of transport Jacques Barrot when signing the agreement. ‘For some projects, a partnership between the public and the private sector can prove to be the most efficient way forward. The new guarantee instrument, unlocking billions of new investment for TEN-T, is a powerful tool to facilitate such partnerships.’
‘The LGTT will provide significant additional risk capital that should facilitate and accelerate private sector investment in TENs. It is in addition to the TENs Budgetary Resources from the Commission and existing loans from EIB. It is also a demonstration of very effective cooperation between two EU Institutions to support the development of the Trans-European Transport Network’, said EIB President Philippe Maystadt. ‘To complete the range of financial products available to Trans-European Network projects, we are joining forces with the European Commission to facilitate private sector involvement in core transport infrastructure.’
For the period 2007-2013 alone, the investment needs in TEN infrastructures are expected at some €300 billion in total.