The EIB loan serves to finance the design, construction, finance and operation of a new section (18 km) of the E39 trunk road between Handeland and Feda, in south-west Norway, and the operation and maintenance of an existing section of the trunk road between Lyngdal and Flekkefjord.
The E39 Lyngdal-Flekkefjord scheme is one of the three pilot public private partnership (PPP) road projects in the National Transport Plan (2002-2011) approved by the Storting, the Norwegian Parliament. The Project will facilitate the development of international traffic between Norway and Sweden by road, and Norway and Denmark by improving access to Norwegian ports that serve an Objective 2 region of Denmark.
The borrower is Allfarveg AS , a special purpose vehicle owned by (50%) Veidekke ASA and (50%) Sundt AS. Allfarveg AS was created for the sole purpose of undertaking the project which will be carried out under a 28 year Concession Contract with the Norwegian Public Roads Administration (Vegdirektoratet). The Contract charges Allfarveg AS with the construction of the new road by a specified date and its operation and maintenance during the concession period at high environmental, safety and aesthetic standards.
The EIB loan, that has a maturity of 26 years, represents approximately 45% of Project costs. DnB NOR Bank ASA (DnB NOR), together with Nordic Investment Bank (NIB), will provide the remainder of the senior debt for the project.
Mr Sauli Niinistö, the EIB Vice President responsible for the EFTA countries said: Our warmest congratulations to Norway for bringing the second PPP road to financial close. We are pleased that Norway has decided to test the efficiency of public private partnership models for building, financing, operating and maintaining infrastructure, and hope very much that the three pilot projects undertaken will provide convincing results. The EIB as one of Europe's leading financiers of PPPs has made the experience in different parts of Europe that PPPs allow for shorter construction periods and stricter cost management as compared to projects implemented by the public sector, and I hope that this experience can be repeated in Norway.
The EIB is owned by the EU Member States and has the task of supporting EU policy objectives by financing economically viable investment. The EIB has an AAA credit rating and, therefore, is able to borrow funds at keen terms in international capital markets. Since EIB is a non-profit institution, favourable funding costs are passed on to borrowers. The Banks financing in Norway takes place under a lending facility for EFTA countries.
The project signed today is the fifth road project in Norway financed by the Bank under the current EFTA Facility: NOK 250m for E6 Road, NOK 400m for Fjellinjen Oslo Roads, NOK 800m for E18 Vestfold Motorway and NOK 600m for E& Oestfold Road TEN.