The European Investment Bank, the European Union's long-term financing institution, is lending EUR 75 million (1) to the Syrian Arab Republic for the expansion and up-grading of the Syrian electricity transmission system. The loan was signed on the occasion of a visit of an EIB delegation to Damascus, headed by Vice President Francis Mayer, to discuss the development of future EIB-Syrian co-operation.

This is the first EIB financing operation under the Third EEC-Syria Financial Protocol. EIB has restated its activities in Syria, which were frozen since 1992, following the resolution of bilateral debt issues between Syria and EU Member States.

The project, costed at EUR 279 million, includes the construction and expansion of twenty-one sub-stations (230/66/20 kV), the construction of 733 km of overhead power lines (230 kV) and the laying of 40 km of underground cables (230 kV) needed to strengthen and to interconnect with the existing network. By helping to satisfy electricity demand, the improvements to the power transmission network will encourage economic development.

The EIB finance, for 20 years with a five-year grace period and a 2% interest rate subsidy (from the European Union's budget), will go mainly to support the construction and up-rating of sub-stations at Aleppo and Damascus. In addition to the EIB, funds for the projects are being provided by the Syrian Government, the Saudi Fund and the Kuwait Fund. The Project will be implemented by the Public Establishment for Electricity Generation and Transmission (PEEGT) under the supervision of the Ministry of Electricity. The project is due for completion by end-2003.

Since the first co-operation agreement between Syria and the EEC in 1979, the EIB has lent EUR 98 million under the first two financial protocols for the Aleppo -Tal Kojak and Damascus-Jordan highways, the Mehardeh power station, the drainage system of the lower Euphrates, and the Al Thawra irrigation network near Lattakia.

The EIB is owned by the European Union's Member States, and raises the bulk of its finance through borrowing on capital markets (AAA issuer). It finances capital investment promoting EU economic policy objectives, and operates outside the EU within the framework of the EU's external co-operation policy. In 1999, the EIB lent some EUR 32 billion, of which EUR 4 billion in non-member countries. The EIB is a lead player in implementing the EU's "Euro-Mediterranean Partnership" and its priority objectives. In this context, it has been given a mandate for the period 2000-2007 to provide up to EUR 6 425 million of funding for projects in the twelve Mediterranean partner countries that have signed cooperation and/or association agreements with the EU.The Third EEC-Syria Financial Protocol provides for EUR 110 million in EIB loans, with a 2% interest rate subsidy and EUR 2 million in risk capital drawn from EU budgetary resources. 

(1)1 EUR: 0596700 GBP, 40.6272 SYP