The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a total of EUR 220 million (1) for energy, education and transport in the Republic of Cyprus. The financing contracts have been signed in Nicosia today by EIB President Mr Philippe Maystadt, during an official visit in Cyprus as follows:
EUR 100 million are advanced to the Electricity Authority of Cyprus (EAC) for upgrading the electricity transmission and distribution networks.
The project comprises 19 transmission schemes and a large number of distribution schemes throughout the southern part of the island extending and reinforcing the promoter's transmission and distribution networks.
Scheduled for completion by end-2005, the project will substantially increase the capacity of the high-voltage transmission grid so as to meet present and future demand whilst maintaining security of supply and reducing network losses.
The present loan is a follow up to the EIB loans of EUR 30 million, granted to EAC in 1998 for upgrading electricity transmission and distribution, a project which is coming to completion at the end of 2002 and EUR 100 m granted in 2000 for investments in new electricity generating plant. These loans form part of the large-scale capital investment programme established in 1994, aimed at developing electricity supply in Cyprus.
EUR 65 million, channelled through the Ministry of Finance, is for the construction of a campus for students at the University of Cyprus, based in Nicosia. Upon completion, the project aims to accommodate up to 4 500 students, and is the first phase of a long-term expansion programme of the University of Cyprus.
Established in 1989, the University of Cyprus completes the national educational system and contributes to the country's social and economic development also by assisting research and cultural activities.
The project will deliver a state-of-the art academic environment in a campus furnished with the latest educational equipment. The investments foreseen include the installation of cabling and IT equipment, thereby fostering the University's capacity to carry out advanced training, e-learning activities and R&D programmes. It will provide the expansion of Faculties of Pure and Applied Sciences, Economics/Business Administration and Engineering, which are fields in great demand and crucial for the enhancement of industrial and research activities.
EUR 55 million goes to the Republic of Cyprus for works to improve the efficiency, safety and capacity of air traffic services in the Nicosia Flight Information Region (FIR). The EIB is supporting the investment because of its wider benefits for the Mediterranean region.
The investment will have substantial air traffic security benefits for Cyprus, by improving safety of airport approach within Cyprus and for international transit flights in its air space . It will allow the full integration of the Cypriot air traffic control services into the European and regional systems and extend its handling capacity from about 200 000 to some 370 000 movements by 2013. The investment comprises the buildings and equipment for the new Area Control Centre at Nicosia, the replacement of the long-range Primary and Secondary Surveillance Radar at Konia, and the replacement of the Instrument Landing System at Larnaca.
The project, scheduled for commissioning by the end of 2006, will be implemented and operated by the Department of Civil Aviation of the Ministry of Communications and Works. It is a follow up to the project completed in 1999 financed by the EIB with EUR 12 million in 1996.
The funds are provided under the Bank's current EUR 8.5 billion pre-accession lending facility, which runs up to the year 2003. Pre-accession facility lending is aimed at projects that will support the integration of Candidate Countries with the EU. A particular emphasis is being given to environmental protection, as well as communications infrastructure, industrial competitiveness and regional development. Cyprus has so far received EUR 350 million under this facility.
The EIB is a lead player in implementing the European Union's priority objectives. In 2001, EIB financing for projects supporting European Union policy objectives totalled EUR 37 billion (up 13% on 1999). EUR 31 billion went to projects within the EU Member States and close to EUR 3 billion to those in the Accession Countries, while lending in other countries ran to EUR 3 billion. To fund these activities, the EIB borrowed EUR 32 billion on the world's capital markets.
The EIB is a major player in EU candidate countries and in EU partner states in the Mediterranean region. EIB finance in Cyprus is provided under the "Euro-Mediterranean lending Mandate" and the "pre-accession facility". Since the beginning of EIB operations In Cyprus, including this loan, a total of some EUR 770 million has so far been advanced by the EIB to support projects in water supply and waste water treatment, industry, energy and transport infrastructure.
In 2001, EIB lending in the Mediterranean Partner Countries (MPC) reached a record EUR 1.5 billion, confirming the position of the EU's financing institution as a major player in the economic development and stability of the region in which it has been operating since 1974.
In the wake of the Barcelona European Council (15/16 March 2002), the EIB is set to step up its cooperation with the MPC by establishing the Facility for Euro-Mediterranean Investment and Partnership (FEMIP), along with operational offices in the region. Scheduled to be inaugurated on 18th October 2002 in Barcelona, the FEMIP will enter into effect in autumn 2002. By associating the beneficiary MPC in the shaping of its activity, will enable the EIB gradually to expand its annual lending in the region from EUR 1.5 billion to EUR 2 billion.
In qualitative terms, the FEMIP will attach initial priority to private-sector projects with the dual aim of liberalising the economies of the MPC and harnessing their potential with the Customs Union in prospect between the EU and the MPC by 2010; the EIB's goal is to increase to 33% the share of private-sector ventures in relation to overall financing. The EMIPF will also place emphasis on social-sector projects, especially in the fields of health, education and environmental protection, stabilising factors in promoting the emergence of productive investment.
(1) The conversion rates used by the EIB: EUR 1 = 0.635200 GBP,0.573230 CYP