The European Investment Bank (EIB), the European Union's (EU) long-term financing institution, is lending EURO/ECU 55 million (1) (USD 60 million) to Transportadora Brasileira Gasoduto Bolivia-Brasil S.A. (TBG), the project company created to develop, construct, own and operate the Brazilian section of the Bolivia-Brazil trans-national gas pipeline. The pipeline will be the backbone of the Southern Cone gas grid. It will help to improve the environment in south and southeast Brazil as natural gas consumption replaces oil products.

The 20 years loan (5-year grace period) is extended on the Bank's attractive interest rates and is the first EIB loan benefiting from a guarantee of the Federative Republic of Brazil. Other multilateral and national financial institutions are expected to provide long-term finance as well. Among the former, the Inter-American Development Bank, the World Bank, the Corporacion Andina de Fomento, and among the latter, BNDES (Brazil's development bank) and Japan's EXIM Bank.

The Bolivia-Brazil 3110-km long gas pipeline, one of the main infrastructure projects in South America, will support the economic development of Bolivia and the regional integration of the energy sector in the Southern Cone. It will allow Bolivia and Northeast Argentina to export natural gas to Brazil, the largest potential market for natural gas in Latin America.

The present loan is provided in the context of the European Union's co-operation policy with third countries that have concluded co-operation agreements. In Asia and Latin America (ALA), the EIB may lend up to ECU 900 million during 1997-99 to support capital investment projects implemented by joint-ventures between EU and ALA companies or, investment that results in environmental improvements or fosters regional integration.

The EIB was set up in 1958 under the Treaty of Rome to provide loan finance for capital investment furthering European Union (EU) policy objectives, in particular, regional development, European infrastructure, energy, industry and environment. Outside the Union, the EIB contributes to European development co-operation policy in accordance with the terms and conditions laid down in the various agreements linking the Union to some 130 countries in Central and Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 September 1998, when ECU 1 = GBP 0.69, USD 1.1759, BRL 138518.