The European Investment Bank (EIB), in line with the Baltic Sea environmental objectives of its first lending mandate for Russia, lends EUR 40 million to the Russian Federation for the completion of the St Petersburg Flood Protection Barrier. This project will serve to protect the city of St Petersburg against the risk of flooding resulting from storm surges in the Gulf of Finland.

This is the EIB's first sovereign loan to the Russian Federation, and its third loan for projects in Russia. The loan will serve to complete the 25 km barrier stretching across the Neva Bay in the eastern end of the Gulf of Finland and will thus help to protect the city of St Petersburg and its residents from the risks of floods and from the pollution of contaminants carried by floodwaters. Due to its low elevation of about four meters above sea level, the city has been afflicted by flooding since it was founded in 1703, with floods on average occurring at least once every year. The barrier crosses the island of Kotlin and includes eleven rock and earth sub-embankments, six discharge sluices to accommodate the outflow of the river Neva, and two navigation channels with closing gates.

The project is co-financed by the European Bank for Reconstruction and Development (EBRD) and the Nordic Investment Bank (NIB) as well as funds of the national budget of the Russian Federation. It also receives support from the Northern Dimension Environmental Partnership (NDEP).

This third EIB loan for projects in North-West Russia follows two previous loans to Vodokanal of St Petersburg, the second of which (for the St Petersburg Northern Wastewater Treatment Plant) was signed in early April 2005.

On signing the loan, Mr. Sauli Niinistö, Vice-President of the EIB responsible for operations in Russia as well as the Baltic States, Finland and Sweden, stated: The EIB is pleased to support this historic project which will substantially reduce the risk of flooding that has in the past regularly caused human suffering, including a negative impact on public health, as well as environmental and economic damage in the city of St Petersburg. This project is significant also because it reflects the good cooperation between the Russian Government and the participating international financial institutions as well as the NDEP in implementing priority investments in the Baltic Sea basin of Russia.

The loan is signed under EIB's first mandate for Russia, in line with the Stockholm European Council decision of March 2001, for the financing of environmental investments in a total amount of up to EUR 100 million in the Baltic Sea basin of Russia under the Northern Dimension. Including the current loan, total EIB loans in Russia under the mandate amount to EUR 85 million.

The EIB was set up in 1958 for financing sound long-term investments that further EU policies. Its lending priorities cover regional development, infrastructure, energy, industry and environment. Outside the EU, the Bank contributes to the European development co-operation policy in some 130 countries in Central and Eastern Europe, the Balkans, the Mediterranean region, Africa, the Caribbean and the Pacific, Asia and Latin America.