The European Investment Bank (EIB), the European Union's long-term financing institution, is lending EUR 115 million (1) to the Syrian Arab Republic for the up-grading of the Syrian electricity distribution system. This new loan signals EIB's firm intention to further support Syrian economic development, further to resuming its activities in Syria in December 2000 following the resolution of some long-standing bilateral debt issues between Syria and EU Member States.

This is the second EIB loan in support of the modernisation of the Syrian electricity network, bringing total EIB lending for this sector to a total of EUR 190 million. A first loan of EUR 75 million has been signed in December 2000. The EIB funds are in the framework of the Third and Fourth EEC-Syria Financial Protocols.

Costed at EUR 349 million, the project includes the construction of forty-one sub-stations (66/20 KV), as well as the overhead power lines (66 KV and 20 KV) and the underground cables (66 KV and 20 KV) needed to strengthen and to interconnect with the existing network.

The Project will be implemented by the Public Establishment for Distribution and Exploitation of Electric Energy (PEDEEE) under the supervision of the Ministry of Electricity. 

Due for completion by end-2005, the project is jointly financed by the EIB, the Syrian Government, the Abu Dhabi Fund, the Arab Fund for the Economic and Social Development (AFESD), and the Islamic Development Bank, as the modernisation of the electricity network is considered a key element to the country's further economic development.

The EIB is owned by the European Union's Member States, and raises the bulk of its finance through borrowing on capital markets (AAA issuer). It finances capital investment promoting EU economic policy objectives, and operates outside the EU within the framework of the EU's external co-operation policy. In 1999, the EIB lent some EUR 32 billion, of which EUR 4 billion in non-member countries. The EIB is a lead player in implementing the EU's "Euro-Mediterranean Partnership" and its priority objectives. In this context, it has been given a mandate for the period 2000-2007 to provide up to EUR 6 425 million of funding for projects in the twelve Mediterranean partner countries that have signed cooperation and/or association agreements with the EU. The Third and Fourth EEC-Syria Financial Protocol provide for EUR 110 million and EUR 80 million respectively in EIB loans, with a 2% interest rate subsidy and EUR 2 million each in risk capital drawn from EU budgetary resources. Since the first co-operation agreement between Syria and the EEC in 1979, the EIB has lent EUR 98 million under the first two financial protocols for the Aleppo -Tal Kojak and Damascus-Jordan highways, the Mehardeh power station, the drainage system of the lower Euphrates, and the Al Thawra irrigation network near Lattakia.

(1) 1 EUR = 0.624100 GBP, 42.7110 SYP