The European Investment Bank, the European Union's long term financing institution, is lending £37 million (EUR 59.5 million) towards a major public finance initiative (PFI) scheme for the modernisation and renovation of 18 schools in Edinburgh.

The finance goes to Edinburgh Schools Partnership, the special purpose concession company, that has been set up to design, rebuild, refurbish and provide services for the schools under a public private partnership (PPP/PFI) project being promoted by City of Edinburgh Council. Edinburgh Schools Partnership is owned by Amey Ventures Limited, the Miller Group Limited, and Bank of Scotland.

The EIB is extending 29 year finance through its Structured Finance Facility set up to allow the Bank to reduce the overall costs of funding for priority projects, notably in the education sector. Under the financing arrangement concluded today the EIB will share both in the construction and operating risks.

EIB Vice President, Peter Sedgwick said: "This PPP scheme will provide major improvements to the City's schools. Modernising and renewing schools and the provisioning of efficient facilities services will enhance the teaching environment and lead to better educational standards and accommodation more suited to the modern curriculum. The scheme will help the Council to reduce costs and to focus on improving educational standards.

"This is a flagship educational project, for the EIB in meeting its objective to enhance human capital and contribute to the development of a knowledge and information based economy in Europe, as well as the first project financed under the Bank's new Structured Finance Facility. It is also a flagship educational scheme for both City of Edinburgh and for the Scottish Executive."

Edinburgh schools is the third Scottish schools PPP/PFI project to be financed by the EIB, for a total of over EUR 280 million (£ 180 million). Previously it has supported Scottish schools projects in Glasgow and Falkirk. Elsewhere in the UK, the Bank has supported similar educational investment in Sheffield and Kirklees for a total EUR 87 million (£ 52 million). The Edinburgh project concerns a mix of new school buildings, the development of existing properties and the rationalisation of premises to make better use of existing resources. It includes the provision of 10 new primary schools, the refurbishment and extension of three special schools, five secondary schools and facilities at a community educational centre, helping to meet the needs of Edinburgh's 56,000 school children.

The European Investment Bank finances capital investment furthering EU integration, in particular: regional development, trans-European networks in transport, telecoms and energy, industrial competitiveness and integration, small and medium sized enterprises, environmental protection, energy security, and health and education projects. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the EU Member States, the EIB raises its funds on capital markets (AAA issuer). In 2000, the EIB lent some EUR 36 billion, of which EUR 3.3 billion (some £ 2.1 billion) in the UK. The EIB's Structured Finance Facility (SFF) was established in 2001 to enable the Bank to widen the scope for product innovation and development, and to extend its activities into higher risk and more complex operations developed on a case-by-case basis.