Signing of a USD 250 mio loan for a public-private partnership energy project in Egypt
In his opening address at the European Investment Bank's conference held today in Madrid on the theme "Promoting investment in the Mediterranean - FEMIP's role", Mr Philippe de Fontaine Vive, EIB Vice-President with responsibility for the Facility for Euro-Mediterranean Investment and Partnership (FEMIP), called for further development of the private sector in the Mediterranean partner countries (MPCs). The conference was organised in conjunction with the Ministry of Economy and Finance (Ministerio de Economía y Hacienda), the Ministry of Tourism and Trade (Industria, Turismo y Comercio) and the Confederación Española de Organizaciones Empresariales (CEOE). Ms Isabel Martín Castellá, EIB Vice-President whose responsibilities include operations in Spain, emphasised the key role of Spanish investors in the Mediterranean region and stressed the need for enhanced support for their financing activities, particularly in terms of facilitating access to the various credit lines.
Mr José Luis Feito, Chairman of the Economics Committee of the Confederación Española de Organizaciones Empresariales (CEOE), greeted the participants and hailed the new momentum given by FEMIP via the range of financial products proposed for investment in the MPCs.
Held at the CEOE's headquarters in Madrid, the Conference was intended to inform the industrial and financial communities and the Spanish trade associations represented in the capital of the opportunities presented by FEMIP for strengthening the private sector in the MPCs.
Distinguished speakers from very different backgrounds, representing Spain, the MPCs, the European Commission and FEMIP, as well as economic organisations active in the countries concerned, addressed some 200 high-profile participants.
This Conference will be followed tomorrow in Valencia by meetings between representatives of Spanish firms active in the Mediterranean region and members of FEMIP's technical staff in cooperation with Centro EuroMediterráneo de Cooperación Empresarial (MEDVALENCIA). Following the conferences for the development of the private sector held earlier this year in the United Kingdom, Morocco, Syria and Tunisia, Mr Philippe de Fontaine Vive stressed that this event formed part of a series of similar gatherings in both the EU and the MPCs, illustrating FEMIP's proactive role in underpinning investment by private operators in the MPCs, whether domestic investment or foreign direct investment (FDI). These meetings provide an opportunity to present the terms of FEMIP operations and also constitute a forum for dialogue with business leaders and the representatives of the public authorities, leading to greater understanding of the constraints and optimal tailoring of FEMIP instruments and operations. The next conference is scheduled for 3 and 4 February 2005 in Athens.
While attending this event, Mr Philippe de Fontaine Vive also signed a USD 250 million loan with Spanish Egyptian Gas Company SAE (SEGAS) for the construction of a liquefied natural gas (LNG) plant as well as the provision of storage facilities and equipment for exporting gas, in Damietta, about sixty kilometres west of Port Said. This is the world's largest project of its type.
SEGAS, the borrower, is a public-private partnership (PPP) company involving two of Europe's leading energy groups, Union Fenosa (Spain) and ENI (Italy), with a combined stake of 80%, and two Egyptian public companies (Egyptian General Petroleum Corporation (EGPC) and Egyptian Natural Gas Holding Company (EGAS)), each owning 10%.
Egypt will benefit from technology transfers thanks to this project and the involvement of the two large European firms. The gas, which will come partly from the West Delta Deep Marine concession, will be destined solely for export on the basis of 5- to 20-year take-or-pay contracts with Union Fenosa, British Petroleum, British Gas and Petronas, all well-known customers with LNG experience. Competitively priced LNG may also find other outlets within the Union and in the United States. This project will enable Egypt to export a portion of its natural gas reserves, generating considerable foreign exchange earnings, and will thus have a positive impact on the country's economy.
Speaking at the signing ceremony, Mr Philippe de Fontaine Vive commented: "This operation follows on from other FEMIP-financed energy projects in Egypt, in particular the LNG-Idku natural gas-fired combined-cycle power plant (the El Nubariya project) and the construction of gas pipelines (the Arab gas line'), connecting Egypt's gas network with Jordan's. All these ventures illustrate the catalytic role that FEMIP can play in capital projects carried out in the MPCs".
Loans in the Mediterranean partner countries (MPCs) are granted under the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). This Facility focuses primarily on developing the private sector and financing social and economic infrastructure underpinning this development.
FEMIP is the culmination of a partnership between the European Union and its Mediterranean neighbours that goes back more than thirty years and was intensified in the 1990s to underpin the Barcelona Process launched at the Barcelona Conference in November 1995. It aims to help the MPCs meet the challenges of economic and social modernisation and enhanced regional integration in line with the Wider Europe Neighbourhood Policy and with a view to the establishment of a Euro-Mediterranean free trade area. It enables Europe to step up its cooperation with the partner countries. Thanks to this Facility, with its increased financial resources, the EIB has been able progressively to expand its lending in the region from EUR 1.5 billion to EUR 2 billion annually. FEMIP gives priority to financing private sector ventures, with the dual aim of liberalising the economies of the MPCs and developing their potential in the run-up to the planned creation of an EU/MPC customs union in 2010. It focuses on foreign direct investment and local private sector initiatives as well as social sector projects, particularly in the fields of health, education and environmental protection, with the aim of fostering social stability and encouraging productive investment.