The European Investment Bank (EIB), the European Union's long-term financing institution, announces the provision of grant aid amounting to ESP 2 700 million (ECU 17.9 million) (1), which it is administering at the request of the Spanish Ministry for Economic and Financial Affairs under the European Economic Area (EEA) Financial Mechanism, for the benefit of the "Cinturón Verde de Oviedo SA" towards urban redevelopment works in Oviedo, the capital of the Principado de Asturias.

The project for which the EEA Financial Mechanism grant has been provided consists of : rerouting the RENFE and FEVE railway lines, transferring to the outskirts of the city the narrow-gauge line which currently runs close to the historic centre and the cathedral; revamping the urban layout of the area thus recuperated, including construction of public parks, pedestrian zones, a cycle track and a boulevard, which will form part of the future northern ring-road; redesigning and modernising the RENFE/FEVE railway station. Redevelopment of the area in question - some 40 hectares in the centre of Oviedo - will make it possible to reintegrate two districts which have hitherto been separated by the railway line.

This project is intended to improve the urban environment, revitalising the area concerned, and will therefore have a very direct impact on the local population and its quality of life.

The EIB was set up in 1958 by the Treaty of Rome, which established the European Economic Community, in order to contribute to the integration, balanced development and economic and social cohesion of the Member States by means of long-term financing for capital investment conducive to attainment of the Union's objectives.The EIB is entrusted with administering the funds provided under theFinancial Mechanism established by the EFTA (2) countries which joined the European Economic Area (EEA) in July 1993. That date marked the entry into force of the Agreement to establish a free-trade area between the twelve Member States of the European Union (EU) and six of the EFTA Member States (Austria, Finland, Iceland, Liechtenstein, Norway and Sweden), some of which had applied for membership of the EU. This free-trade area was named the EEA. The Agreement created the Financial Mechanism, which was funded by contributions from the six countries mentioned above, in order to support - by means of interest rebates on loans and/or grants - projects relating to environmental protection (including urban rehabilitation), transport, training and education in Greece, Ireland, Portugal and certain parts of Spain. In administering these funds, the EIB brings to bear its experience in the selection and evaluation of projects, submitting proposals for grant aid to be decided upon by the EEA Financial Mechanism Committee and supervising implementation of projects receiving such grant aid. In Spain, the projects for consideration have been put forward by the Ministry for Economic and Financial Affairs. When three of the donor countries (Austria, Finland and Sweden) became full members of the EU in January 1995, the EU took over their financial commitments. Consequently, funds are at present provided by three EFTA Member States (Iceland, Liechtenstein and Norway) and the European Union. The grant aid available for Spain under the EEA Financial Mechanism has now been fully committed.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 31/3/1997, when ECU 1 = GBP 0.71, ESP 166.

(2) EFTA stands for European Free Trade Association.