The European Investment Bank provided EUR 100 million to IBERDROLA S.A., and is prepared to provide additional EUR 200 million during 2002, for the extension of IBERDROLA's electricity distribution network in Spain. The project includes geographically dispersed schemes located mainly in assisted areas. It will help to meet electricity demand by improving the quality and reliability of supply and will also reduce technical losses. It will allow as well fulfilling regulatory requirements regarding safety and environment protection.

The investment consists of the study, design, supply, erection and commissioning of transformer capacity, overhead lines and underground cables. It will be implemented in the period 2002 - 2004.

Investment by IBERDROLA will help to achieve a degree of market opening in Spain much wider than the minimum required under EU Directives on the internal electricity market. It is foreseen that by 2003 all Spanish consumers will be free to choose a supplier through electricity trading companies. The new infrastructure will be open to all agents in the sector.

The EIB 10-year loan will have a 3 years grace period.

The EIB was set up in 1958 to finance investment furthering EU integration. The EIB concentrates lending in areas considered top priority by its shareholders, the European Union Member States. Current priorities are: EU regional development, i2i, environmental improvement and protection, preparation of candidate countries for accession, as well as support of EU development and cooperation policy with some 150-partner countries. The latter in South Eastern Europe, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.

i2i - Innovation 2000 Initiative- focuses on human capital formation, research and development, dissemination of innovation, development of SMEs and entrepreneurship, as well as information and communications technology networks.

In 2000, the EIB provided loans totalling some EUR 36 billion. The Bank borrows on the capital markets the funds for its lending. Its bonds have regularly been rated "AAA" by the leading rating agencies. The EIB may finance up to 50 percent of project cost. On average it provides one third of the funding and co-finances investments with other institutions.