The European Investment Bank (EIB), the European Union's long-term financing institution, is advancing EUR 128.25 million to Egypt for gas and oil projects and a EUR 25 million loan for a project designed at the protection of the environment in the Red Sea area. Total of EIB's financing to Egypt in the last 5 years amounts to some EUR 1 billion, thus making Egypt one of the main beneficiaries of EIB assistance in the Mediterranean region.

With a EUR 100 million loan to Misr Oil Processing Company (MOPco), the EIB will play a catalytic role in the financing of a hydrocraker and related process equipment at the Nasr Oil Refinery close to Suez, on the Gulf of Suez. The project, which will benefit from a large private sector input, will contribute to a more rational use of energy and will lead to an improvement in the environmental quality of fuels.

The EIB is also advancing a EUR 28.25 million loan to the Egyptian Natural Gas Company (GASCO) for the construction and commercial operation of a 164 km pipeline transporting natural gas from the region of the Suez Canal (Qantara Gharb) to the Meet Nama distribution plant in the North of Cairo. The pipeline, which will reinforce the national grid, forms part of an investment programme aimed at extending the gas transport network in Egypt, in order to face the expected rapid increase in the national gas demand. The project will offer major environmental benefits by promoting the substitution of oil products by natural gas, reducing substantially emissions and related pollutants. This is the second operation of the EIB with GASCO: with a EUR 50 million loan signed in 1998 the Bank already finances two other gas transport pipelines in the Sinai and Suez areas.

In order to provide financial incentives to invest in environment-friendly infrastructures along the Red Sea Coast, the EIB has also made available a facility of EUR 25 million to part finance investments of the private sector in environmental protection undertaken in tourism resorts in the Gulf of Aqaba, Gulf of Suez and Red Sea. The facility, which is expected to benefit from a 3% interest subsidy under the 1996 MEDA Regulation, will be structured like a global loan. The Borrower is the National Bank of Egypt, the largest commercial bank in Egypt, and a major EIB partner in the country. The long term EIB funding is expected to provide a solid incentive to hotel promoters to invest in pollution abating infrastructures and optimise the use of scarce water and other local resources in a context of rapid sector growth.

The EIB was set up in 1958 under the EC Treaty to provide loan finance for capital investment furthering EU objectives. It participates in the implementation of EU co-operation policies towards third countries that have co-operation or association agreements with the Union. In the Mediterranean region, the EIB operates under the new Euro-Mediterranean Partnership, which complements the EU Member States' own bilateral co-operation policies. Under the Partnership arrangements, the EIB is committed to lend up to EUR 2 310 million between 1997 and 2000 for investment projects in 12 non EU-Member Mediterranean countries. Global loans are financing instruments under which the EIB makes funds available on a long-term basis to a local intermediary, for on-lending in the form of smaller credits in support of small and medium-scale ventures.Total EIB financing since 1978 in Egypt amounts to more than EUR 1.5 billion. Particular emphasis is being given to supporting industrial development, through financing large scale industrial schemes, as well as global loans to the Egyptian banking sector for on-lending to small and medium-sized enterprises investing in medium to long term productive projects. Economic and public infrastructures have largely benefited from EIB funding.