The European Investment Bank is providing a USD 30 million loan (some EUR 34.2 million) (1) to Banco BBA Creditanstalt S.A. to be onlent to Light Serviços de Eletricidade S.A. with the purpose of modernising and expanding its electricity transmission and distribution network in the state of Rio de Janeiro.

Light Serviços de Eletricidade S.A. is 64% owned by Electricité de France International. It was privatised in 1996 and operates in the state of Rio de Janeiro under a 30 years renewable concession granted in the same year. Light has electricity distribution concessions for 30 municipalities, covering some 11 000 km² that account for 70% of the State's population.

The project aims at expanding and improving the quality and reliability of electricity supply to cater for increasing demand and to reduce losses. Some 130 000 new residential customers and 250 new industrial and commercial customers will be served. The project will be implemented mainly in the period 2000-2001, though specific parts may extend into 2002.

The 5-year EIB loan (with 2-years grace period) is capped at LIBOR + 15 basis points. It is guaranteed by a syndicate of banks including Bank Gesellschaft Berlin, Banco Comercial Portugues and Landesbank Rheinland-Pfalz. Risks of currency non-transfer, expropriation, war and civil disturbance are covered by the European Union (EU) budget guarantee.

The loan is provided in the context of the EU co-operation policy with third countries. In Asia and Latin America (ALA), the EIB may lend up to EUR 2.48 billion during 2000-2006 to support capital investment projects implemented by subsidiaries of EU companies or joint-ventures between EU and ALA firms, or investment that results in environmental improvements or fosters regional integration.

The EIB was set up in 1958 to finance investment furthering EU integration. It lends for regional development, infrastructure, energy, industry and environment. Outside the EU, the Bank contributes to the European development co-operation policy in some 130 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America. In 2000, the EIB provided loans totalling some EUR 36 billion.

The Bank borrows on the capital markets the funds for its lending. Its bonds have regularly been rated "AAA" by the leading rating agencies. The EIB works on a non-profit basis and can pass on to project promoters the excellent conditions it obtains on the markets. The EIB may finance up to 50 percent of project cost. On average it provides one third of the funding and co-finances investments with other institutions. 

(1) 1 EUR: 1.84108 BRL, 0.924800 USD, 0.638700 GBP