The European Investment Bank (EIB), the European Union's long-term financing institution, is lending EUR 153 million for the construction and operation of a new section of the E18 motorway, between Muurla and Lohja in southwest Finland.
First EIB funding for a Public Private Partnership in Finland
The project will take the form of a Public Private Partnership (PPP), designed to involve the private sector into the provision and financing of public services, with a view to improving efficiency and reducing costs. EIB funds will be lent directly to the private concessionaire, Tieyhtiö Ykköstie Oy, a special purpose vehicle owned by Skanska Infrastructure Development AB Lemminkäinen Oyj, Laing Roads Ltd and Lemminkäinen Oy, which was selected following an international call for tender. The latter will design, build, finance and maintain the motorway under a 24-year concession, granted by the Finnish Road Administration - Finnra. The EIB has been one of the single biggest European financiers of PPPs over the past fifteen years, and has therefore developed a recognised expertise in that field. Its total exposure to PPP projects in various EU Member States exceeds EUR 19.8 billion, 89% of which went to transport, 9% to health and education, and 2% to water treatment projects. PPPs have been mostly concentrated in the UK, Ireland and Portugal, although projects have also been carried out in Greece, Spain, Italy, Austria, Germany and Poland. They are becoming increasingly considered in other EU countries.
The EIB has been one of the single biggest European financiers of PPPs over the past fifteen years, and has therefore developed a recognised expertise in that field. Its total exposure to PPP projects in various EU Member States exceeds EUR 19.8 billion, 89% of which went to transport, 9% to health and education, and 2% to water treatment projects. PPPs have been mostly concentrated in the UK, Ireland and Portugal, although projects have also been carried out in Greece, Spain, Italy, Austria, Germany and Poland. They are becoming increasingly considered in other EU countries.
A priority Trans-European Transport Network
This E18 motorway project is part of a Trans-European Transport Network called the Nordic Triangle, identified by the European Councils of Essen in 1994 and Brussels in 2003, as one of 30 top priority transport corridors across the European Union. These corridors are indeed seen as vital for the free movement of goods, persons and services, and therefore for the economic and social development of the EU. The Nordic triangle links the Scandinavian capital cities to one another, from Oslo-Stockholm-Helsinki to the Russian border, and improves connections to Central Europe. In Finland, the E18 motorway is the busiest east-west corridor, carrying about 60% of all international traffic in the country. The present project will develop the missing 51.3 km section between Turku and Helsinki thus greatly improving travel time, transport efficiency and safety conditions.
The financing contracts for the present loan were signed today in Helsinki, by Mr Sean Latus, Chairman and Mr Gunnar Lundberg, Director of Tieyhtiö Ykköstie Oy, and Mr Sauli Niinistö, Vice-President of the EIB, in the presence of Mr Eero Karjaluoto, Director General of Finnra. During the ceremony, which took place during the EIB's Annual Forum held in Helsinki, Mr Niinistö stated: We at EIB are particularly pleased to participate in the funding of this key section of the Finnish E18 programme supporting many growth areas in the Southwest of the country. The Bank has previously funded other sections of the E18 in Finland and Norway and on this occasion EIB's expertise in implementing the PPP model has been called upon.
The European Investment Bank finances capital investment furthering EU integration, in particular: regional development, research, development and innovation, industrial competitiveness; SMEs; trans-European transport, telecom and energy networks; and environmental protection. It also operates outside the EU within the framework of the EU's policy for co-operation and development. Owned by its Member States, the EIB raises its funds on the capital markets (AAA-rated issuer). In 2004, it borrowed EUR 50bn and lent a total of EUR 43bn, of which EUR 40bn in the EU-25.
The EIB's Annual Forum in Helsinki on the Lisbon strategy
The EU's Lisbon strategy, launched by the European Council in 2000, aims at developing the European Union into a leading knowledge-based economy in the world. Supporting this key policy has become one of the EIB's top priorities, called by the name of the Innovation 2010 Initiative. The EIB has pledged to make loans worth EUR 50 billion available for investment in the fields of education, research and innovation by the end of the decade. This target is well on the way to be reached, since it has already granted a total EUR 32 billion throughout the European Union since 2000.