The European Investment Bank (EIB) is lending EUR 313 million for the construction of a tunnel under the Scheldt river to link container terminals in the Port of Antwerp with Europe’s main railway network. The project takes the form of a public private partnership (PPP) between Infrabel, Belgium’s railway infrastructure company, and Locorail NV, a special purpose company owned by a consortium of European construction groups. The project is the EIB’s first rail PPP operation in Belgium and the country’s largest ever PPP.
The 16km double-track Liefkenshoek Rail Link will connect Antwerp’s new Deurganckdok container port with existing track in docks on the other side of the river, thereby improving access to and from Antwerp, one of Europe’s busiest ports, to the continent’s Trans-European Transport Network (TEN-T), a priority lending area for the EIB. The total cost of the project is estimated at EUR 841 million.
The project should result in a significant reduction in greenhouse gas emissions compared with the do-minimum alternative, help reduce local road congestion, air pollution and accident risk and, by diverting freight traffic from commuter lines, increase capacity for commuter train services in Antwerp, one of Belgium’s biggest cities with nearly half a million inhabitants. It involves boring a new 5.5km tunnel under the Scheldt, the renovation of an existing 1.2 km tunnel as well as other tunneling work.
Locorail, the borrower, is a special purpose vehicle owned by CFE NV (25 percent), BAM PPP Investments Belgie BV (50 percent) and Vinci Concessions SAS (25 percent). The consortium, selected after a tender launched in 2006, will design, build, finance and maintain (DBFM) the tunnel for a period of 42 years, including construction, which is expected to take four years. The European Investment Bank lending is for a period of up to 35 years, demonstrating the Bank’s capacity to offer long-term funding for viable projects despite the current difficult conditions in financial markets.
Locorail is raising a total of EUR 714 million in financing facilities. The EIB support will be in two tranches of EUR 200 mln unguaranteed and EUR 113 million guaranteed by a consortium of banks. Co-financing is being provided by six commercial banks: Bayern LB, N.V Bank Nederlandse Gemeenten, Fortis Bank SA/NV, ING Bank N.V., Banco Santander S.A. and Societe Generale Corporate and Investment Banking.
The European Investment Bank is the long-term finance arm of the European Union and is wholly-owned by the EU’s 27 member states. It uses its triple-A credit rating to raise funds on capital markets for on-lending to projects that support or reflect EU policies and objectives. The EIB signed loans in Belgium worth EUR 928 million in 2007, bringing total lending in the country in the past five years to EUR 3.5 billion.