Under its Facility for Euro-Mediterranean Investment and Partnership (FEMIP), the European Investment Bank (EIB), the EU's lending institution, is providing EUR 40 million to enable mostly private but also public sector industrial companies to invest in pollution abatement measures. Geographically, the focus is on the greater Cairo and Alexandria areas, where more than 80% of the country's industry is located, although industrial pollution abatement projects can be financed throughout Egypt.
The funds, for this Egyptian Pollution Abatement Project, are advanced in the form of a global loan to the National Bank of Egypt (NBE), the country's largest commercial bank, with strong market shares and branch network. The EIB funds will subsequently be on-lent in smaller portions by the NBE directly to corporates as well as Small and Medium-Sized Enterprises (SMEs), or though other commercial banks located in Egypt. The EIB global loan benefits from a EUR 10 million interest rate subsidy from the European Commission.
The agreement was signed at the EIB headquarters in Luxembourg on 21 November 2006.
The implementation of Egyptian Pollution Abatement Project is assured by the Egyptian Ministry of State for Environmental Affairs, and namely, through its Egyptian Environmental Affairs Agency (EEAA) over a 5-year period from 2007-2012.
The project implementation will be supported by technical assistance grants from the FEMIP Support Fund. A first team of FEMIP-funded short-term consultants already started working with EEAA in September 2006, in a specially set-up Project Management Unit (PMU), in order to appraise technically and environmentally, as well as monitor the projects proposed for finance under this global loan. Also the Government of Finland and the National Bank of Egypt itself will be providing technical assistance support.
This FEMIP operation is a follow-up from the EUR 15 million Egyptian Pollution Abatement Project loan signed in 1996. It underpins FEMIP's ongoing interest for environmental projects in Egypt, where strong demographic and industrial development growth rates dictate strong support for environmental improvements.
Estimated at a total cost of EUR 145 million, this second Egyptian Pollution Abatement Project is financed by EIB, along with the Agence Française de Développement, the Japan Bank for International Cooperation and the World Bank Group.
With EUR 8-10 billion funding by the end of 2006, FEMIP is a major step forward in financial and economic cooperation between the Union and the Mediterranean Partner Countries. Its top priority is to promote private sector development (especially SMEs and FDI) and support projects helping to establish a favourable climate for private investment (economic infrastructure, health and education schemes). FEMIP's ultimate goal is to help the Mediterranean Partner Countries meet the challenges of economic and social modernisation and enhance regional integration in the run-up to the creation of a Euro-Mediterranean free-trade area planned for 2010.
In addition to its loans and technical assistance grants, FEMIP encourages the development of the private sector by acquiring equity and quasi-equity stakes in private companies in order to help Mediterranean Partner Countries speed up their economic and social modernisation, in particular through increased regional integration. These FEMIP activities are financed from the European Community budget (EUR 200 million over the period 2001-2006) and by the FEMIP Trust Fund, which was set up in December 2004 (EUR 33.5 million).
The EIB has had operational links with Egypt since 1978 and has channelled financing of some EUR 3.8 billion to the country. This has been concentrated on support for infrastructure, environmental schemes and private sector businesses - encompassing both large corporates stemming from cooperation between local and European operators and SMEs financed in partnership with the Egyptian banking sector.