The European Investment Bank, the European Union's financing institution, is lending £123 million for modernising and renewing London Underground's electricity transmission and distribution systems.

The finance goes to Power Asset Development Company Ltd (PADco), responsible for construction of works carried out as a private finance initiative (PFI) under a 30 year concession awarded by London Underground Ltd. to SEEBOARD Powerlink. PADco is a subsidiary of Powerlink, a consortium of SEEBOARD Plc, Asea Brown Boveri Ltd. and the BICC Group. The EIB loan is being guaranteed during the construction phase by a syndicate of Royal Bank of Scotland, Canadian Imperial Bank of Commerce and Midland Bank.

Under the concession Powerlink is to operate, maintain, upgrade and renew London Underground's electricity generation and distribution systems. The project involves the renewal of the medium and low tension distribution network, provision of new circuits and sub-stations for the Northern Line extension, and works to improve reliability of power supplies through six bulk supply points as well as the decommissioning and closure of the old Lots Road power station. The investment will help meet the Underground's future demand for electricity.

The London Underground private finance initiative will make a major impact on the living and working conditions in London by strengthening the quality and reliability of the underground system. The closure of the obsolete power station which will protect the environment by reducing air pollution. Supporting urban development and efficient environmentally friendly urban transport systems are European Union priorities supported by the EIB.

The European Investment Bank, the European Union's long-term lending institution, finances capital investment furthering EU integration, in particular: regional development; trans-European networks in transport, telecoms and energy; industrial competitiveness and integration; SMEs; environmental protection; and energy security. It also operates outside the EU within the framework of the EU's co-operation external policy. Owned by the Member States, the EIB raises its funds on capital markets (AAA issuer). Sir Brian Unwin is the first British President of the institution and assumed office in 1993. In 1997, the EIB lent over ECU 26 billion, of which some £3 billion in the UK, and borrowed ECU 23 billion on capital markets.

The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 June 1998, when ECU 1 = 0.657 GBP.