Under its Facility for Euro-Mediterranean Investment and Partnership (FEMIP), the European Investment Bank (EIB) is lending EUR 50 million to the Egyptian Natural Gas Company (GASCO) for two gas pipelines of a combined length of 152 km in Egypt.
The pipelines form part of the national gas transmission system that transports natural gas from Egyptian offshore and onshore gas production fields to destinations throughout the country. The objective is to bring Egyptian natural gas to major power plants, industries and domestic consumers, and strengthen the gas transmission system in view of the increasing gas demand.
On the occasion of the signing ceremony, Mr Philippe de Fontaine Vive, EIB Vice-President in charge of FEMIP, commented: "This operation follows on from other FEMIP-financed energy projects in Egypt, in particular the LNG Idku and Damietta projects, the El Nubariya natural gas-fired combined-cycle power plant and the construction of Arab gas line , connecting Egypt's gas network with Jordan's. All these ventures illustrate the catalytic role that FEMIP can play in capital projects carried out in the Mediterranean Partner Countries".
The project, which includes the design, construction, commissioning and commercial operation of the two gas pipelines will help reduce power generation costs by replacing oil with gas at existing power stations. Additionally, the new combined cycle plants will raise the overall efficiency of the power system, increase supply of electricity to meet demand growth and diversify energy supplies. Egyptian industry will also benefit from lower cost electricity and will be able over time to adopt internationally competitive gas based technologies. At the same time this conversion will have beneficial effects on the environment as it will significantly reduce polluting emissions.
This operation underpins FEMIP's continuing support to Egypt to develop its promising gas sector, through private and public sector investments.
Financing in the Mediterranean Partner Countries are granted under the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). FEMIP focuses primarily on developing the private sector and financing socio-economic infrastructure underpinning private sector development.
In 2004, FEMIP lent a record EUR 2.2 billion in the Mediterranean Countries, of which EUR 688 million in Egypt. In addition, the aid provided under its Technical Assistance Fund totalled EUR 13.8 million (for further details of FEMIP's results in 2004, see press release of 4 March 2005).
FEMIP is the culmination of a partnership between the European Union and its neighbour countries on the Mediterranean that goes back more than thirty years, and has been intensified in the 90's in support of the Barcelona Process, first launched at the Barcelona Conference in November 1995. FEMIP aims to help the Mediterranean Partner Countries meet the challenges of economic and social modernisation and enhanced regional integration within the framework of Wider Europe-Neighbourhood, and with a view to the establishment of a Euro-Mediterranean free-trade area. It has enabled Europe to step up its cooperation with the Partner Countries. Thanks to this Facility, endowed with increased financial resources, lending activity in the region has increased from EUR 1.5 billion to EUR 2 billion annually. FEMIP gives priority to financing private sector ventures, with the dual aim of liberalizing the economies of the Mediterranean Partner Countries and developing their potential in the run-up to the planned creation of a customs union in 2010. It focuses on foreign direct investment and local private sector initiatives as well as social-sector projects, particularly in the fields of health, education and environmental protection, which are fundamental in achieving social stability and encouraging productive investment.
The EIB has had operational links with Egypt since 1978 and has channelled financing of more than EUR 3 billion to the country. This has been concentrated on support for infrastructure, environmental schemes and private sector businesses - encompassing both large corporates stemming from cooperation between local and European operators and SMEs financed in partnership with the Egyptian banking sector. Some of the flagship projects in the country are in the gas sector: the LNG plant at Idku and Damietta, the Arab gas pipeline or Jordanian gas transmission pipeline, the two gas pipelines, one on each bank of the Suez Canal and the natural gas-fired combined-cycle power plant at Nubariya.