The European Investment Bank (EIB), the European Union's (EU) long-term financing institution, is lending USD 40 million (ECU/EURO 36.4 million) to Aguas Cordobesas, a joint venture established for the purpose of the project among: Suez Lyonnaise des Eaux, Empresa Constructora Delta, Inversora Central, Sociedad Comercial del Plata, Aguas de Barcelona, Banco de Galicia y Buenos Aires, and Meller. This first EIB loan to a private sector project located outside Buenos Aires will support the expansion and renovation of the water supply network of Cordoba, a centre of significant industrial growth and the second largest city in Argentina with 1.3 million population.

The amount provided by the EIB represents some 47% of the first five-year investment programme of Aguas Cordobesas and will concentrate on the expansion of the Suquia treatment plant. Under a management contract Suez Lyonnaise des Eaux is the technical operator of Aguas Cordobesas, which was awarded in March 1997 a 30 year concession contract for a 24 km square area of municipal jurisdiction. Aguas Cordobesas aims at supplying 97% of the area's population by year 2026. The 10-year loan, inclusive of a 3- year grace period, bears EIB floating rate capped at LIBOR plus 15 basis points and is expected to be guaranteed by a consortium of banks lead by La Caixa. The sovereign risks (war, civil disturbance, expropriation, non-convertibility and non-transferability of currency) are covered by the EU's budgetary guarantee.

The loan is provided in the context of the European Union's co-operation policy with Latin American countries that have concluded co-operation agreements with the EU. In Asia and Latin America (ALA), the EIB may lend up to ECU 900 million during 1997-99 to support technology-transfer capital investment projects or projects implemented by joint-ventures between EU and ALA companies. For private sector projects, the security required by the EIB is limited essentially to covering the non-sovereign risks involved in the financing. The EIB can also support projects implemented by the public sector if these projects foster closer relations between Asia, Latin America and Europe (e.g. telecom and transport), result in environmental improvements, or foster regional integration. The EIB started its operations in ALA in 1993 and has contributed to finance 24 projects in 17 countries.

The EIB was set up in 1958 under the Treaty of Rome to provide loan finance for capital investment furthering EU policy objectives, in particular, regional development, European infrastructure, energy, industry and environment. Outside the Union, the EIB contributes to European development co-operation policy in accordance with the terms and conditions laid down in the various agreements linking the Union to some 130 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.

The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 June 1998 when ECU 1 = 0.66 GBP, 1.09590 USD, 1.09314 ARS.