The European Investment Bank (EIB) is signing a GBP 400 million (EUR 453 million) loan to the special purpose concessionaire Connect Plus, on behalf of the Highways Agency. The loan will help finance the M25 DBFO project – the widening of the M25, the ring motorway around central London.
The M25 project includes widening two sections of the M25 to provide much-needed traffic relief on one of the most strategic and busiest road networks in the UK. The motorway upgrade will have a number of important benefits for the road-users in terms of additional capacity to the M25 and improved, reliable journeys.
Simon Brooks, EIB Vice President responsible for lending operations in the UK, said, “The M25 is a key link on the Trans-European Transport Network (TEN-T) and has been highlighted by the EU as a road of strategic importance which facilitates the free movement of people, goods and services across the Union. The EIB is delighted to reconfirm the EU’s commitment to this project with a GBP 400 million loan and we are convinced that the contract for the M25 will lead to significant advantages for road users in and around the UK capital.”
The project will be managed by the special purpose Public Private Partnership (PPP) vehicle Connect Plus on behalf of the Highways Agency. The EIB loan, which will consist of GBP 185 million direct lending and a further GBP 215 million which is counter-guaranteed by the commercial banks in the construction period, will be used to provide for the widening of a 63 km stretch of the M25, as well as all maintenance works on the M25 network and strategic road links in and out of London, totalling 400km.
As the M25 is one of the busiest motorways in the UK, the widening project will result in more reliable journeys and reduced travel times. The project will also have a positive impact on road safety on certain sections, by helping to keep traffic moving smoothly.
The project design and implementation will be carefully managed, not only to mitigate against negative environmental impacts, such as noise pollution, but also to promote and enhance the environmental benefits. Reduced congestion and improved traffic flows are also expected to reduce carbon emissions. Moreover, the project will include work to improve the A decline in numbers of traffic jams will encourage reductions in car emissions and noise pollution. Moreover, the project will include an efficient drainage system which will ensure that storm water is removed quickly and treated appropriately to avoid flooding.
As well as loan finance, the EIB is bringing considerable PPP financing expertise to the M25 project. The road improvements are in line with the UK government’s transport policy and, as such, the Bank’s contribution is a welcome element to ensure project success.
Background Notes:
The EIB in the UK
The European Investment Bank (EIB) is the European Union’s long-term financing institution which supports projects promoting European objectives. The EIB made its first loan in the UK in 1973 and since then the EIB has lent almost EUR 70 billion to support the UK economy. In the five years from 2004 to 2008 alone, the EIB financed key investment in the UK to the tune of EUR 18.9 billion (GBP 13.3 billion).
In 2008 alone the Bank allocated EUR 3.8 billion (GBP 3 billion) for UK projects ranging from investment helping UK regional development, to protecting the environment, promoting clean and secure energy sources, improving education facilities, promoting the development of national and regional transport, and supporting the activities of small and medium sized enterprises.