The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a EUR 11 million loan from risk capital resources for the rehabilitation of the Réseau Nord. Reinstating and increasing capacity and improving safety, quality and reliability, will bring back the commercial utility, by means of a private concession regime, of the rail connection between the port of Toamasina with the cities of Antananarivo, Antsirabe, Moramanga and the chrome mine at Lake Alaotra.
The project marks the successful conclusion of the privatisation of the country's main railway system. The concession holder is MADARAIL S.A., majority-owned by a holding company controlled by COMAZAR, the South African railway operator who will assume overall operational responsibility. MADARAIL is also the borrower for EIB's loan which has a duration of 20 years and is remunerated on the basis of a combination of fixed and performance-linked elements.
Following the entry into force of the Cotonou Agreement/Investment Facility in April 2003, this loan to MADARAIL is the last project signed in Madagascar in the framework of the second protocol of Lome IV. Total Lomé IV bis loan commitments are now EUR 56 million (in stead of initially expected EUR 30 million). Moreover, as EIB Director Jean-Louis Biancarelli said at the signature of the loan contract in Madagascar: the partnership between the public and private sectors that forms the basis of this project is exemplary for the new type of financing operations that the EIB wishes to support, in particular under the Investment Facility in the future.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects that further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union. The current project is still carried out under the provisions of the Fourth Lomé Convention governing the Bank's financing in Africa, the Caribbean and the Pacific (ACP), which has been concluded.
The EIB has meanwhile launched its new Investment Facility, under the ACP-EU Partnership Agreement, signed in Cotonou in June 2000. Under the Cotonou agreement the total financial aid available amounts to EUR 15.2 billion for 2002-2006, of which EUR 11.3 billion is grant aid from the EU member states, EUR 2.2 billion is managed by the EIB under the Investment Facility, replacing risk capital finance, and up to EUR 1.7 billion is in the form of loans from the EIB's own resources. The Investment Facility is a revolving facility (loan amortizations will be invested in new operations), aiming at supporting technically, environmentally, financially and economically sound projects in the private or the commercially run public sector.
The Republic of South Africa became an associate ACP country in 1997. The Bank has a separate lending mandate from the EU's Member States to provide long term financing for RSA totalling EUR 825 million over the period 2000-2006.