The European Investment (EIB) signed a loan of EUR 100 million today with Companhia de Gás de São Paulo (Comgás) for the upgrade and extension of the company’s gas distribution network and operations in the São Paulo metropolitan area.

Comgás is the largest gas distribution company in Brazil, holding a concession for gas distribution in urban and industrial areas in the state of São Paulo, which includes São Paulo, Campinas, Baixada Santista and Vale do Paraíba. The loan will contribute to financing the expansion of Comgas’  natural gas network by 2,500 km and rehabilitation measures on the existing grid to reduce gas losses, namely the replacement of 158 km of old cast iron pipes, the replacement of meters and the upgrading of regulator stations. Investments will also include the installation of new information systems and the establishment of new office facilities to manage the larger network. Works are expected to be finished during the second quarter of 2012.

The project will have a positive socio-economic impact as it will enable some further 210,000 costumers in the residential, commercial and industrial sectors to benefit from access to a secure, safe and reliable natural gas supply. In addition, environmental benefits from the project will be considerable, as planned works also include a reduction of leaks, displacement of oil-based fuels and efficiency improvements.

Comgás, a company controlled by BG Group and Shell, obtained a 30-year concession in 1999, winning an international tender. The concession covers an area of 54,000 km2 with a population of 29.2m., an area that generates 25% of Brazil’s GDP.

The EIB is extending this loan in the context of the current lending mandate for Asia and Latin America (ALA IV) to finance operations that contribute to climate change mitigation or to support the presence of the European Union (EU) in those regions through Foreign Direct Investment and the transfer of technology and know-how. The project supports these objectives as it will contribute to a reduction of CO2 emissions and a more efficient use of energy, and two European companies are Comgás’ majority shareholders.

The European Investment Bank is the EU’s long-term financing institution promoting European objectives. Set up in 1958, the EIB operates in the 27 EU Member States and more than 130 countries outside the EU. Lending operations outside the EU are part of the EU co-operation policy with third countries. Since 1993 the Bank has carried out four successive lending mandates for Asia and Latin America. The EUR 3.8 billion regional ceiling of the current mandate (ALA IV) is broken down into indicative sub-ceilings of EUR 2.8 billion for Latin America and EUR 1 billion for Asia.