The Facility for Euro-Mediterranean Investment and Partnership (FEMIP) is granting a EUR 200 million loan for clean energy production in Syria.

The loan to the Syrian Arab Republic is for the construction of a 750 MWe natural gas-fired combined cycle power plant located at Deir Ali, 25 km south of Damascus. The project will be implemented and managed by the Public Establishment of Electricity for Generation and Transmission (PEEGT).

This FEMIP loan is the largest ever signed in Syria, and, so far, the largest in the energy sector signed in 2004 in the Mediterranean Region. It is the third FEMIP loan in the Syrian electricity sector over the last five years, after the Electricity Transmission loan (EUR 75 million in 2000) and the Electricity Distribution loan (EUR 115 million in 2001).

The finance contract was signed today in Damascus by Mr Philippe de Fontaine Vive, EIB Vice-President in charge of FEMIP, and Mr. Mounib Saem El-Dahr, Minister of Electricity.

Mr de Fontaine Vive commented: "The Deir Ali gas-fired power plant constitutes a highly justified investment, which was prepared and designed by the Syrian Ministry of Electricity in line with European and international standards. I am therefore proud that FEMIP is associated to this project and I look forward to its timely implementation over the coming three years. With the Deir Ali power plant, FEMIP entered a new dimension in providing support to the Syrian energy sector: This is its first project in Syria aimed directly at supporting the Government's decision to gradually shift from oil-based to gas-based electricity generation. This strategic goal has the full support of FEMIP and the EU. We will provide all the assistance it takes, together with the European Commission and other donors, to complete this shift within the next ten years. The project has also a true regional dimension given its long-term reliance on regional gas. Given Syria's natural gas reserves, the development of a regional gas market offers tremendous opportunities and challenges for the economic growth of the country. This fits in with the conclusions of the 2nd FEMIP Experts Meeting held under Dutch Presidency last week in Amsterdam. Concrete follow up proposals of this Meeting will be discussed at the next FEMIP Ministerial Meeting to be held in Morocco in June 2005."

Overall FEMIP activities in Syria have witnessed a record year in 2004 with total disbursements reaching EUR 100 million to-date. Syria has also been in 2004 the first Mediterranean Partner Country to benefit from the Bank's newly created FEMIP Technical Assistance Fund. FEMIP Technical Assistance has been extended in 2004 to support private sector development through the establishment of the Bank's FUND for Small and Medium Enterprises (SMEs) in Damascus and to support management development at the Port of Tartous.

For 2005, the EIB has a substantial project pipeline in Syria covering the energy sector, telecoms and the water sector.

Lending in the Mediterranean Partner Countries (MPCs) takes place under the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). FEMIP focuses primarily on developing the private sector and financing socio-economic infrastructure underpinning private sector development.

This is the culmination of a partnership between the European Union and its neighbour countries on the Mediterranean that goes back more than thirty years, and has been intensified in the 90's in support of the Barcelona Process, first launched at the Barcelona Conference in November 1995. FEMIP aims to help the Mediterranean Partner Countries meet the challenges of economic and social modernisation and enhanced regional integration within the framework of Wider Europe-Neighbourhood, and with a view to the establishment of a Euro-Mediterranean free-trade area. It has enabled Europe to step up its cooperation with the Partner Countries. Thanks to this Facility, endowed with increased financial resources, lending activity in the region has increased from EUR 1.5 billion to EUR 2 billion annually. FEMIP gives priority to financing private sector ventures, with the dual aim of liberalizing the economies of the MPCs and developing their potential in the run-up to the planned creation of an EU/MPC customs union in 2010. It focuses on foreign direct investment and local private sector initiatives as well as social-sector projects, particularly in the fields of health, education and environmental protection, which are fundamental in achieving social stability and encouraging productive investment.

In Syria, since 2000 the EIB has provided a total of EUR 440 million for private sector, electricity, health and transport.