•tt & COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 13.01.1998 
C()M(1998) 1 final 
REPORTS FROM THE COMMISSION 
TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT 
• on the implementation of loans granted by the European Investment Bank for projects 
of mutual interest in countries of Latin America and Asia with which the Community 
has concluded cooperation agreements. Interim mandate (1996/1997) 
• on the implementation of European Investment Bank loans for projects in central 
and eastern European countries: Poland, Hungary, the Czech Republic, the Slovak 
Republic, Romania, Bulgaria, Latvia, Estonia, Lithuania and Albania (1996/1997) 
• on the implementation of loans granted by the European Investment Bank in the 
Republic of South Africa (1995-96) 
and 
on the rate of utilization of European Investment Bank loans for projects in the 
Republic of South Africa (from 1 January 1997 to 30 June 1997) 
on the rate of utilization of European Investment Bank loans for projects in central 
and eastern European countries (Poland, Hungary, the Czech Republic, the Slovak 
Republic, Romania, Bulgaria, Latvia, Estonia, Lithuania and Albania) (from 
1 Julv 1996 to 30 June 1997) 
REPORT FROM THE COMMISSION 
TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT 
on the implementation of loans granted by the 
European Investment Bank for projects of mutual interest in countries 
of Latin America and Asia with which the Community has 
concluded cooperation agreements. 
Interim mandate (1996/1997) 
CONTENTS 
1. Introduction 
2. Legal framework 
3. The European Investment Bank's mandate in Latin America and Asia in relation 
to its activities outside the Community 
4. Results of the interim mandate for Latin America and Asia 
5. General comments on operations and assessment of the European Investment 
Bank's action under its interim mandate 
Annex 1: Summary table giving details of operations approved and signed under the 
interim mandate for Latin America and Asia 
Annex 2: Mutual interest of operations approved under the interim mandate for 
Latin America and Asia 
Annex 3: List of countries in Latin America and Asia with which the Bank has 
concluded framework agreements 
_4-
1. Introduction 
This report on the activities of the European Investment Bank (EIB) in a number of 
Latin American and Asian countries has been drawn up in accordance with Council 
Decision 96/723/EC of 12 December 1996 granting a Community guarantee to the 
European Investment Bank against losses under loans for projects of mutual interest 
in Latin American and Asian countries with which the Community has concluded 
cooperation agreements (Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, 
Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, 
El Salvador, Uruguay and Venezuela; Bangladesh, Brunei, China, India, Indonesia, 
Macao, Malaysia, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and 
Vietnam). 
This report covers operations totalling EiCU 275 million which were approved by 
the EIB Board of Directors between the end of the first mandate (22 February 1996) 
and the end of the interim mandate (30 June 1997). 
The last of the three annual reports concerning the first mandate (1993-96) was sent 
to the Council and Parliament in September 1996 (COM(96) 429 final of 
9September 1996). 
2. Legal framework 
The legal framework for the interim mandate in Latin America and Asia is laid 
down in the following decisions and documents: 
- Council Decision 96/723/EC of 12 December 1996 (published in the 
Official Journal of 19 December 1996) granting a Community guarantee to the 
European Investment Bank against losses under loans for projects of mutual 
interest in the above-mentioned Latin American and Asian countries. 
- Decision by the EIB Board of Governors of 11 February 1997 authorising the 
Bank to make loans of up to ECU 275 million from its own resources for a period 
to 30 June 1997 in order to finance investment projects in the Latin American 
and Asian countries which have concluded cooperation agreements with the 
Community and are listed in the Council Decision of 12 December 1996. 
- Contract of guarantee signed by the European Community and the EIB on 
18 and 26 March 1997. Loans totalling ECU 153 million, approved by the 
Board of Directors of the Bank under the above-mentioned decisions until 
publication in the Official Journal of 19 April 1997 of Council 
Decision 97/256/EC of 14 April 1997 relating to the new Community guarantee 
system for the EIB, are fully guaranteed by the Community in accordance with 
-5-
Council Decision 96/723/EC of 12 December 1996. 
- Council Decision 97/256/EC of 14 April 1997 (published in the Official Journal 
of 19 April 1997) granting a Community guarantee to the 
European Investment Bank against losses under loans for projects outside the 
Community (Central and Eastern Europe countries, Mediterranean countries, 
Latin American and Asian countries and South Africa). 
- Contract of guarantee signed by the Community and the EIB on 25 and 
29Julyl997. Loans totalling ECU 122 million, approved by the Board of 
Directors of the Bank between the publication in the Official Journal of 
19 April 1997 of Council Decision 97/256/EC and 30 June 1997, are guaranteed 
by the Community in accordance with Council Decision 97/256/EC of 14 
April 1997 and according to the provisions laid down in the above-mentioned 
contract of guarantee. 
3. The Bank's mandate in Latin America and Asia in relation to its activities 
outside the Community 
The mandate given to the Bank in Latin America and Asia confers on it special 
responsibility for supporting the Community's cooperation policy. Most of the 
Latin American and Asian countries concerned by the Bank's mandate have 
historical, cultural and economic ties with the countries of the European Union. 
These long-standing ties are reflected in a cooperation policy which was established 
by the Community in 1976 with a number of these countries and broadened over the 
years up to the Council Decision of 15 February 1993 concerning Bank operations 
under the first mandate (Council Decision 93/115/EEC, published in the Official 
Journal of 23 February 1993). 
In view of the encouraging results of this first mandate which expired in 
February 1996, it was appropriate to renew it. However, the Council did not reach 
agreement on the ceiling of the 1996 interim mandate until 12 December 1996 
(Council Decision 96/723/EC mentioned in point 2). In view of the date of the 
Decision, the Bank was unable to attain the ceiling of ECU 275 million by 
31 December 1996. Consequently, and in accordance with Article 1 of the 
Decision, the period during which it was to remain applicable was automatically 
extended until 30 June 1997. 
The interim mandate enabled the Bank to consolidate its position as a lender in 
Latin American and Asian countries. Under the Council Decision of 14 April 1997, 
the Bank's operations in those countries will continue to be implemented until the 
year 2000 (see point 2 above). 
4. Result of the interim mandate 
The Bank's Board of Directors approved six operations totalling ECU 275 million 
under the interim mandate. A summary table giving details about project 
commitments and signings (countries, sectors, loan amounts, share of the project 
financed by the EIB, co-lenders, etc.) is set out in Annex 1. 
5. General comments on operations and assessment of the Bank's action under 
the interim mandate 
5.1 As in the case of the first mandate, demand substantially exceeded the funds 
available in 1996/97 owing to the high absorption capacity of the eligible 
countries. As a result, the ECU 275 million of the interim mandate were fully 
committed (mostly in 1997). In 1996, however, it was necessary to reject several 
financing applications from European Union firms because of the lateness of the 
Decision introducing the interim mandate. 
5.2 In accordance with the Bank's interim mandate and as in the case of the first 
mandate, all projects financed will benefit both the Latin American and Asian 
countries concerned and the European Union. In line with this specific concept of 
mutual interest, operations satisfy one or more of the following criteria: transfer 
of European technologies and know-how, cooperation between European and 
local firms, cooperation in the fields of energy and environmental improvement. 
A summary of mutual interest for each of the six operations approved is set out in 
Annex 2. 
5.3 The build-up of projects involving European private partners is continuing. 
The percentage of private projects approved by the Bank had already grown 
during the first mandate (1993: 20%; 1994: 42%; 1995/1996: 46%); it has 
increased to 78% under the interim mandate (see Annex 1). The percentage could 
eventually be higher because it is envisaged that the final recipients of the 
Corporacion Andina de Fomento (CAF) global loan will include private-sector 
promoters. The CAF is a multilateral regional financial institution with its 
registered office in Caracas, whose principal shareholders are the member 
countries of the Andean Pact (Bolivia, Colombia, Ecuador, Peru and Venezuela) 
(see Annex 1). This confirms that EIB financing is particularly well suited to the 
needs of European enterprises in their investment in the emerging countries, 
which make up the majority of the Latin American and Asian countries. 
5.4 The average size of operations is ECU 47 million, disregarding future, distinctly 
smaller loans under the CAF global loan. 
5.5 The sectoral breakdown (see Annex 1) shows activity to be concentrated in the 
industry and energy sectors. The aim is better industrial cooperation between the 
Latin American and Asian countries and the European Union and the breakdown 
is consistent with the objectives of the cooperation agreements signed between 
those countries and the European Union, which frequently stress the specific 
importance of cooperation in the energy field. The concentration of activity in 
industry can also be explained by the fact that European industrial enterprises 
which, in the past, borrowed from the Bank for their investment within the Union, 
are now also 
-7-
requesting Bank finance for their projects in the Latin American and Asian 
countries (often for joint ventures, e.g. the "Vidrio Saint-Gobain" project in 
Mexico). 
5.6 As far as the geographical breakdown is concerned, the Bank endeavours to 
maintain, wherever possible, a fair balance between the two regions concerned. 
However, the operations approved in Latin America account for two thirds of the 
ECU 275 million and those in Asia for only one third (see Annex 1). This is 
mainly due to the very short period available to the Bank for committing the 
envelope. 
5.7 Cooperation with multilateral and bilateral financial institutions in the 
Latin American and Asian countries continues to be good. Three of the six 
operations undertaken are being financed jointly with multilateral institutions 
(World Bank, Asian Development Bank) and/or with bilateral financial 
institutions (Kreditanstalt fiir Wiederaufbau, Commonwealth Development 
Corporation). A fourth loan has been made directly to the CAF, the multilateral 
institution already mentioned. The activities of the Bank and the other 
multilateral and bilateral institutions complement each other at project level and 
coordination between the institutions is good. Complementarity offers sufficient 
opportunities for action in the Latin American and Asian countries to all the 
parties engaged in multilateral financial aid, favours the maintenance of good 
cooperative relations and limits the risks of incompatibility. The Bank is 
increasingly centring its operations on private projects involving European 
companies, as partners in joint ventures or shareholders, while other multilateral 
financial institutions are better placed to head the co-financing of large-scale 
projects (often public) in the infrastructure field. 
5.8 The Bank's cooperation with the European banking sector, in particular in 
respect of guarantees, remains good. The EIB and the European commercial 
banks complement each other in that the latter rarely provide the same type of 
resource as the EIB, particularly as regards duration and period of grace. The 
combination of complementary financial instruments constitutes an added beneflt. 
5.9 It should be noted that the interim mandate falls under two different budget 
guarantee systems: 
• ECU 153 million of the operations approved will be covered by the old 100% 
budget guarantee system (same system as for the first mandate); the following 
loans will be covered by this guarantee: Vidrio Saint-Gobain/Mexico 
(ECU 50 million), Ghazy-Barotha/Pakistan (ECU 21 million), Batangas 
I/Philippines (ECU 60 million) and Pirelli Optical Fibre/Brazil (ECU 22 million); 
• ECU 122 million of the operations approved by the EIB Board of Directors after 
the publication in the Official Journal of Council Decision 97/256/EC of 
14 April 1997 (see 2 above) will be covered by the new 70% global budget 
guarantee system introducing a risk-sharing element between the EIB and the 
Community in respect of a significant proportion of the Bank's lending which the 
Council has set at 25%. For loans where risks are shared, the Community covers 
the political risks arising from currency non-transfer, expropriation, war and civil 
disturbance within the limits laid down in the contract of guarantee signed on 25 
and 29 July 1997. Out of the envelope of ECU 122 million, risks are shared in 
two projects out of the three which have been signed: the aggregate amount 
involved is ECU 82 million, which represents 67% of the proportion of the 
interim mandate falling under the new budget guarantee system. The projects are 
the following (the last two involve risk sharing): CAF global loan, Andean Pact 
(ECU 40 million with no risk sharing between the Bank and the Community 
budget), Batangas II/Philippines (ECU 12 million with the Bank and the 
Community budget sharing the risk) and Mercedes Benz A-Class Mercosul 
(ECU 70 million with the risk being shared). 
5.10 The list of framework agreements establishing the general legal bases for 
carrying out projects in both public and the private sector which were concluded 
between the EIB and the country concerned is given in Annex 3. 
Annex 1 
ALA INTERIM MANDATE 1996 - JUNE 1997 
PROJECT 
Vidrio St-Gobain 
Ghazy Barotha -
second portion 
Batangas Power Plant 
Pirelli Optical Fibre 
CAF Global loan 2 
Mercedes-Benz A-
Class Mercosul COUNTRY 
Mexico 
Pakistan 
Philippines 
Brazil 
Andean Pact 
Brazil SECTOR 
Industry 
Energy (hydro 
power) 
Energy (combined 
cycle) 
Industry 
Global Loan 
Automotive 
industry 
TOTAL 
IN% EIB LOAN 
(M ECU) 
50 
21 
60 
12 
22 
40 
70 
275 
100% BORR WER 
PUBLIC 
X 
X 
61 
22% PRIVATE 
X 
X 
X 
X 
X 
214 
78% ZO NE 
ASIA 
X 
X 
X 
93 
34% LATIN 
AMERIC 
A 
X 
X 
X 
X 
182 
66% n.s. = not yet signed 
EIB LOAN 
AS % OF 
TOTAL 
PROJECT 
COST 
41% 
1% 
12% 
50% 
20% 
10% 
8% DATE OF 
APPROVAL 
OF BOARD OF 
DIRECTORS 
12/11/96 
10/12/96 
29/01/97 
9/06/97 
25/02/97 
29/04/97 
9/06/97 FINANCE 
CONTRACT 
SIGNATURE 3 
12/05/97 
23/07/97 
20.10.97 
20.10.97 
n.s. 
16.10.97 
n.s. Bl- AND MULTI­
LATERAL 
CO-LENDERS 
Asian Development Bank, 
World Bank, 
Kreditanstalt fur 
Wiederaufbau (KfW), 
Islamic Development Bank 
KfW, Commonwealth 
Development Corporation 
KfW 
1 Loan falling under the risk-sharing agreement. 
2 Corporacion Andina de Fomento (CAF) is a multilateral institution governed by public international law whose principal shareholders are the member countries of 
the Andean Pact, the republics of Colombia, Bolivia, Ecuador, Peru and Venezuela (collectively over 97% of ownership). 
3 Situation at 4 November 1997. 
-10 
Mutual interest of operations under the interim ALA mandate Annex 2 
Project Country Mutual interest 
Vidrio St-Gobain Mexico • the project is a joint venture in which a European enterprise has a large stake; 
• it helps to strengthen Mexico as a bi. Jgehead for European companies wishing to become established on the American market; 
• the guarantee will be provided by the European group which is the majority shareholder; 
• the project comprises a substantial element of technology transfer. 
Ghazy Barotha Pakistan The project comprises a substantial element of transfer of European technology and know-how. The concept and development of 
Hydropower-Sec the project were carried out by a joint venture consisting mainly of Pakistani and European consultants who will also be responsible 
ond Portion for supervising the performance of the contract. All the civil engineering contracts, representing some USD 700 million in value, 
have been won by European entrepreneurs. The project also represents a major increase in the country's capacity for producing 
renewable energy from national resources. In a wider context, the project will contribute to the attainment of some of the 
objectives of the cooperation agreement concluded between the EC and Pakistan, which relates in particular to cooperation in the 
energy field. 
Bathangas Power Philippines The borrower, First Philippine Gas Corporation, is a wholly-owned subsidiary of First Gas Holdings Corporation, itself a joint 
Plant venture established by British and Philippine companies. The Malampaya gas deposit, which will probably supply the power plant 
with fuel, is exploited jointly by Shell and the Occidental Petroleum Company, while the turn-key construction contract for the 
power plant has been awarded to a large European group. In a wider context, having regard in particular to the important role it 
plays in the introduction of natural gas to the Philippines, the project will favour the attainment of certain objectives included in the 
EU-ASEAN cooperation agreement, which mentions in particular cooperation in the fields of energy and environmental 
improvement. 
Pirelli Optical Brazil • the promoter is the subsidiary of a European enterprise; 
Fibre • the project will help to improve the promoter's position on a promising market; 
• the project comprises a substantial element of technology transfer; 
• the guarantee will be provided by a European bank; 
• the project will contribute to the modernisation of the fibre optic cable sector in Brazil and will assist in the modernisation of the 
country's telecommunications networks (national and international). 
11 
Project Country 
Corporacion 
Andina de 
Fomento (CAF) 
global loan Five 
member 
countries of 
the Andean 
Pact 
Mercedes 
A-Class 
Mercosul Benz Brazil Mutual interest 
The proposed projects are of mutual interest and are likely to strengthen cooperation between the EU and the Andean group, 
through private investment in the eligible sectors. The global loan will enable CAF to grant loans of up to 15 years, a new feature 
in the region which should favour its European customers. It should also partly fill the gap between the EC International 
Investment Partners instrument (ECIP) managed by the Commission, the credits for which are limited to ECU 1 million, and the 
minimum amount of EIB direct loans. It will permit the financing of beneficial medium-size European Union/Latin America 
initiatives, which have so far been ineligible for a direct Bank loan because of their size. 
• the project is essential in order to strengthen the position of the promoter, which is the subsidiary of a large European enterprise, 
on one of the leading emergent markets; 
• it comprises a substantial element of technology transfer (equipment during the construction phase and imports of components 
during the production phase); 
• it will help to modernise the Brazilian automobile industry. 
- 12-
List of countries which have concluded a 
framework agreement with the EIB 
(situation at 15 September 1997) Annex 3 
1) Agreements signed and presently valid for all the mandates 
ASIA LATIN AMERTCA 
China 
Indonesia 06.12.95 
20.06.95 First Extension 
signature 
Argentina 03.10.94 16.03.97 
Brazil 19.12.94 
Bolivia 12.10.95 
Colombia 13.03.95 
El Salvador 27.02.97 
Honduras 27.02.97 
Mexico 09.03.95 
Panama 10.04.96 
Paraguay 19.09.94 
Peru 02.10.94 
Uruguay 21.04.95 
2) Agreements signed for the ECU 750 million mandate (ongoing negotiations 
for extension to new mandate) 
ASIA LATIN AMERICA 
India 
Pakistan 
Philippines 
Thailand 17/25.11.93 
25/28.02.94 
15.09.94 
10/17.01.94 Chile 
Costa Rica 07.10.94 
30.11.93 
3) New framework agreements under negotiation : Sri Lanka, 
Bangladesh, Vietnam, Venezuela, Ecuador, Guatemala, Nicaragua. Mongolia, 
13 
REPORT FROM THE COMMISSION 
TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT 
on the implementation of European Investment Bank loans for projects in central and 
eastern European countries: Poland, Hungary, the Czech Republic, the Slovak 
Republic, Romania, Bulgaria, Latvia, Estonia, Lithuania and Albania (1996/1997) 
- 14 
LIST OF CONTENTS 
1. Introduction 
2. Legal framework 
3. Activities of the European Investment Bank in central and eastern Europe in 1996 
4. The Bank's objectives and priorities 
5. Cooperation with other institutions 
Annex 1: Summary table of the financing provided on the basis of the Council 
Decisions of 15 March 1993 (93/166/EEC) and 13 December 1993 
(93/696/EC). Breakdown by country and sector 
Annex 2: Summary table of the financing provided on the basis of the Council 
Decisions of 15 March 1993 (93/166/EEC) and 13 December 1993 
(93/696/EC). List of projects by country 
- 15 
1. Introduction 
The present annual report on the activities of the European Investment Bank (EIB) 
in central and eastern Europe has been drawn up in accordance with Council 
Decision 93/696/EC of 13 December 1993 (OJ L 321 of 23 December 1993). It 
relates to the third and final year of implementation of the Council Decision and 
covers the period from 1 January 1996 until June 1997, end of the mandate. 
The previous annual report dealing with the Bank's mandate in central and eastern 
Europe was transmitted to Council and Parliament in October 1996 (COM(96)501). 
2. Legal framework 
The legal and institutional framework of the mandate given to the EIB in central 
and eastern Europe is laid down in the following decisions and documents: 
- Council Decision 93/696/EC of 13 December 1993 (OJL321 of 
23 December 1993) granting a Community guarantee to the Bank against 
losses under loans for projects in central and eastern European countries. The 
guarantee is restricted to an overall loan ceiling of ECU 3 000 million over a 
period of three years, beginning on the date the Council Decision took effect 
(23 December 1993) subject to an automatic extension of six months if, at the 
end of the three years, the loans granted by the Bank did not attain the overall 
amount referred to above. 
The guarantee covers in full any payments not received by the Bank but due 
under loans granted, in accordance with the usual criteria, in respect of 
investment projects carried out in the countries specified in the Decision. 
(The loan guarantee ceiling includes the provisions laid down in respect of 
investments in Estonia, Latvia and Lithuania in Council Decision 93/166/EEC 
of 15Marchl993). 
- Decision by the EIB Board of Governors of 2 May 1994 authorising the 
Bank to lend on the basis of the Council Decision of 13 December 1993. 
- Contract of guarantee signed by the Community and the EIB on 22 July 
and 12 August 1994. This contract supersedes the guarantee contract relating 
to the Council Decision of 15 March 1993 mentioned above. 
-16-
3. Activities of the EIB in central and eastern Europe in 1996 
3.1 In 1996 the EIB signed 21 loan contracts in central and eastern Europe for an 
aggregate amount of ECU 1 086 million, compared with ECU 973 million in 1995 
andECU921 million in 1994. 
3.2 At 31 December 1996, the end of the three-year period of the Council mandate, 
total loan contracts signed by the bank on the basis of the 1993-1996 mandate 
amounted to ECU 2 980 million, just below the guarantee ceiling of 
ECU 3 000 million granted by Council Decision 93/696/EC. In March 1997, in 
accordance with Article 1 of the Decision which automatically extends the 
guarantee period by six months, the Bank signed a final loan for ECU 20 million, 
thus attaining the ceiling granted. 
Details of the breakdown per country and sector of the 1993-1996 financial 
package as well as the list of projects are given in Annexes 1 and 2 respectively. 
In 1996, loans in Poland, the Czech Republic and Hungary accounted for almost 
71% of the EIB lending in the region during 1996. The Bank also signed loans in 
support of projects in all the other central and eastern European countries, except 
Bulgaria (see table 1). 
Table 1. Geographical distribution of EIB lending in 1996/1997 
Council Decision 93/696/EC 
Country 
Poland 
Czech Republic 
Hungary 
Romania1 
Slovak Republic 
Lithuania 
Latvia 
Estonia 
Albania 
TOTAL Number of loans 
3 
2 
2 
3 
2 
5 
3 
1 
1 
22 Contracts signed 
(ECU m) 
380 
255 
135 
110 
100 
72 
26 
16 
12 
1 106 (34.4%) 
(23.1%) 
(12.2%) 
(9.9%) 
(9.0%) 
(6.5%) 
(2.4%) 
(1.4%) 
(1.1%) 
(100%) 
The Bank's activity continues to support the development of the economies of 
central and eastern European countries as they prepare for their accession to the 
Community. 
Includes loan of ECU 20m signed in March 1997. 
-17-
As in previous years, financing in 1996 centred on funding strategic infrastructure 
and strengthening the physical links with the European Union: 
• Half the total financing, ECU 563 million (ECU 238 million in 1995), went 
to finance transport infrastructure projects, most of which form part of the 
priority transport corridors identified by the Pan-European Conference in 
Crete in 1994. In the field of road transport, these included the A4 
Wroclaw-Gliwice motorway in Poland, the M3 Budapest-Gyongyos 
motorway in Hungary and the Via Baltica in Lithuania; in the field of rail 
transport, they included the modernisation of the Warsaw-Ostrava-Vienna 
line in the Czech republic and the rehabilitation of several sections of the 
Tallinn-Narva railway in Estonia. 
• Loans for projects in the energy sector totalled ECU 363 million and 
accounted for one third of total financing in the region during 1996 
(ECU 290 million in 1995). Loans were signed in five countries in support 
of six projects relating to the construction, rehabilitation, modernisation, and 
expansion of power plants and gas transmission. 
• Loans signed in the telecommunications sector totalled ECU 115 million 
(ECU 130 million in 1995) and accounted for about 10% of the total 
financing during the year. Financing provided in the sector consisted of two 
loans for the extension and modernisation of the network (Poland) and the 
construction of a mobile telecommunications network (Lithuania). 
Table 2. Breakdown by country and sector of EIB loans signed in 1996/1997 
Council Decision 93/696/EC 
Country 
Poland 
Czech Rep. 
Hungary 
Romaniaz 
Slovak Rep. 
Lithuania 
Latvia 
Estonia 
Albania 
TOTAL Total loan 
contracts 
signed 
(ECU m) 
380 
255 
135 
110 
100 
72 
26 
16 
12 
1106 
(100%) Transport 
100 
200 
95 
110 
42 
16 
563 
(50.9%) of i 
Energy 
180 
55 
100 
10 
6 
12 
363 
(32.8%) ch 
Telecoms 
100 
15 
115 
(10.4%) Industry, 
other, 
mixed 
40 
5 
20 
65 
(5.9%) 
Includes loan of ECU 20m signed in March 1997. 
-18-
In addition to projects in infrastructure, support for the industrial sector during 
1996 amounted to ECU 65 million, of which ECU 50 million was provided by 
means of global loans for small and medium-sized enterprises. It should be borne 
in mind that EIB support for SMEs is channelled through appropriate financial 
intermediaries who have access to EIB funds either in the form of a global loan -
line of credit contracted between the Bank and a specific financial institution - or in 
the form of an APEXXoan - line of credit open to a number of qualified institutions 
within a particular country and usually channelled via the central bank. 
Table 3 below gives details of the loan contracts signed during the year. 
3.3 Monitoring 
The Bank monitors investment throughout the implementation of the project and up 
to the end of the loan period. Disbursements are spread over rather long periods, a 
situation which is usual for infrastructure loans with long maturity periods (12 to 
20 years) and is typical in the case of credit lines, where the disbursement takes 
place only after the decision to support the implementation of an individual 
investment has been taken. 
As to the servicing of the loans, repayments have been punctual. 
4. The Bank's objectives and priorities 
The Bank assists those central and eastern European countries whose long-term 
goal is to prepare themselves for EU membership, by helping them create the 
economic framework necessary to qualify. The examples of Greece, Portugal and 
Spain provide a historic parallel. In their case too, the EIB started its lending 
activity many yp^rs before those countries finally joined the Community and 
helped them to meet the conditions for adhesion. 
The EIB gives absolute priority to upgrading, modernising and developing the 
transport, telecommunications and energy sectors, with particular emphasis on the 
Trans-European Networks on the basis of the road and rail corridors defined by the 
Pan-European Conference of Transport Ministers as development priorities for the 
medium term. 
Environmental issues related to EIB projects are given priority in the framework of 
the gradual adaptation of the legislation of the countries concerned to that of the 
European Union. The Bank also supports SMEs and other industrial initiatives, in 
particular where they involve European Union partners either directly or through 
the Bank's global loan instrument. 
-19-
Table 3. EIB loans signed in 1996/1997 pursuant to the Council Decision of 
13 December 1993 (93/696/EC) 
COUNTRY 
Albania 
Czech 
Republic 
Estonia 
Hungary 
Latvia 
Lithuania PROJECT 
Power transmission 
CESKE DRAHY Rail corridor II 
SKO ENERGO 
FIN/VW-SKODA combined heat 
and power plant 
Railways 
M3 Toll motorway 
Financial sector- Global loan 
(Extension to the original loan of 
ECU 150m) 
Investment Bank of Latvia 
Global loan B 
Riga water and environment 
Daugava Hydropower 
Gas distribution 
Lithuanian Development Bank 
Global loan B 
Via Baltica 
Telecommunications (GSM) 
Railways DESCRIPTION 
Rehabilitation and upgrading of electricity 
grid 
Modernisation of Warsaw-Ostrava-Vienna 
railway line 
Replacement of VW/Skoda's lignite-fired 
combined heat and power plant in Mlada 
Boleslav by coal-fired plant of same type 
Rehabilitation of several sections of 
Tallinn-Narva main railway line 
Upgrading of M3 toll motorway linking 
Budapest to Gyongyos 
Financing for small and medium-scale 
ventures 
Financing of small and medium-scale 
ventures 
Upgrading and rehabilitation of water 
supply and sewerage systems in and 
around Riga 
Rehabilitation works and dam safety 
improvements at hydroelectric plants 
Construction of natural gas transmission 
and distribution pipelines 
Financing for small and medium-scale 
ventures 
Upgrading and rehabilitation of selected 
sections of Via Baltica road corridor 
Construction and operation of first phase 
of mobile telecommunications network 
Modernisation of railway infrastructure AMOUNT 
OF LOAN 
(ECU m) 
12 
200 
55 
16 
95 
40 
5 
15 
6 
10 
5 
20 
15 
22 TOTAL 
COUNTRY 
(ECU m) 
12 
255 
16 
135 
26 
72 
-20 
COUNTRY 
Poland 
Romania 
Slovak 
Republic PROJECT 
Polish Telecommunications II -
Tranche B 
Poland Highways - Tranche B 
PGNG II- Second gas 
Roads rehabilitation II 
Bucharest Metro modernisation 
Bucharest Metro modernisation 
- Tranche B 
SPP Gas transmission - B 
SE Thermal Power rehabilitation DESCRIPTION 
Extension and modernisation of 
telecommunications network 
Upgrading to motorway standard of A4 
between Bielany (Wroclaw) and 
Nogawczyce (Gliwice) via Prady (Opole) 
Conversion of depleted Wierzchowice gas 
field, in west of country, into underground 
storage facility 
Rehabilitation of sections of E81 and E60 
European road corridors 
Renewal of rolling stock and completion 
of network infrastructure on Bucharest 
metro 
Ditto. 
Modernisation and expansion of 
international gas transit network 
Rehabilitation of Vojany I coal-fired 
power station 
TOTAL AMOUNT 
OF LOAN 
(ECU m) 
100 
100 
180 
70 
20 
20 
30 
70 
1 106 TOTAL 
COUNTRY 
(ECU) 
380 
110 
100 
1 106 
Signed in March 1997. 
-21-
Following the signature of a final loan early in 1997, the Bank has now fully 
discharged its responsibilities under the lending authorisation based on Council 
Decision 93/696/EC. The Bank intends to continue to pursue its objectives in 
Central and Eastern Europe on the basis of its new lending authorisation decided by 
Council on 14 April 1997 (Council Decision 97/256/EC) and is already appraising 
potential investment projects in the countries concerned. 
5. Cooperation with other institutions 
The Bank's activities in the countries of central and eastern Europe are conducted 
within the framework of the EU programme to help those countries to prepare for 
accession to the Union, in particular by financing investment aimed at integrating 
the infrastructure (transport, telecommunications, energy, environment) of the 
countries concerned with that of the EU and by assisting SMEs. Whenever 
possible, co-financing is established with other institutions, in particular to meet the 
above objectives. The Bank's activities thus form part of a concerted approach that 
is being pursued in close cooperation with the Commission and, as appropriate, 
with the international financial institutions working in the area. 
The Bank cooperates closely with the Commission, in particular with the PHARE 
programme. In addition to frequent PHARE assistance during the pre-investment 
phase to ensure that the necessary studies and technical assistance are implemented 
in support of EIB projects, the Bank also cooperates with PHARE in co-financing 
infrastructure projects, to which up to 25% of PHARE resources may be allocated. 
During the reference period, the Bank and PHARE have co-fmanced a rail project 
in Estonia, a road project in Romania and rail and road projects in Lithuania. 
Of the international financial institutions, the EIB works closely with the EBRD, 
of which the EIB is a shareholder, and the World Bank. Together, they finance 
some of the projects that have been undertaken in the area, with a view to 
maximizing the impact of their activities to the benefit of the countries 
concerned. During the reference period, the Bank, together with the EBRD, has 
co-fmanced the infrastructure projects in Albania, the Czech Republic, Latvia, 
Lithuania and Romania listed in Table 3. The World Bank has also co-financed 
the project in Albania and is appraising projects for co-financing in Romania. 
The share of the different financing sources in projects financed by the EIB is 
shown below. 
- 22 -
Table 4. Share of PHARE and international financial institutions in projects 
financed by the EIB during 1996/1997 (Council Decision 93/696/EC) 
(ECU m) 
Country 
Albania 
Bulgaria 
Czech Rep. 
Estonia 
Hungary 
Latvia 
Lithuania 
Poland 
Romania5 
Slovak Rep. 
TOTAL EIB 
12 
0 
255 
16 
135 
26 
72 
380 
110 
100 
1 106 
(17.8%) EBRD 
10 
— 
40 
0 
0 
47 
38 
0 
54 
0 
189 
(3%) IBRD 
14 
— 
0 
0 
0 
0 
0 
0 
120 6 
0 
134 
(2.2%) Other4 
104 
— 
368 
11 
55 
19 
90 
3 732 
81 
320 
4 780 
(76.8%) PHARE 
0 
— 
0 
5 
0 
0 
5 
0 
5 
0 
15 
(0.2%) TOTAL 
140 
~ 
663 
32 
190 
92 
205 
4 112 
370 
420 
6 224 
(100%) 
States, public bodies or other domestic financial sources, including own funds of borrower/promoter. 
5 Includes loan of ECU 20m signed in March 1997. 
6 Under appraisal. 
23 
Financing provided on the basis of the Council Decisions of 
15 March 1993 (93/166/EEC) and 13 December 1993 (93/696/EC) 
Breakdown by country and sector Annex 1 
COUNTRY 
Poland 
Czech Rep. 
Hungary 
Romania 
Slovak Rep. 
Bulgaria 
Lithuania 
Estonia 
Albania 
Latvia 
TOTAL TOTAL 
853 
770 
475 
351 
215 
90 
101 
68 
46 
31 
3 000 
(100%) Transport 
265 
385 
95 
161 
15 
90 
66 
51 
29 
-
1 157 
(38.6%) SECTOR 
Telecoms 
250 
30 
150 
80 
20 
-
15 
-
— 
-
545 
(18.2%) Energy 
180 
355 
-
110 
130 
-
10 
7 
12 
6 
810 
(27%) Industry, 
other, mixed 
158 
-
230 
— 
50 
— 
10 
10 
5 
25 
488 
(16.3%) 
24 
EIB loans signed on the basis of the Council Decisions of 
15 March 1993 (93/166/EEC) and 13 December 1993 (93/696/EC) Annex 2 
COUNTRY 
Albania 
Bulgaria 
Czech 
Republic 
Estonia 
Hungary Year 
of 
signature 
1995 
1995 
1995 
1996 
1994 
1995 
1994 
1994 
1994 
1995 
1995 
1995 
1996 
1996 
1993 ' 
1994 
1994 
1994 
1995 
1996 
1994 
1994 
1995 
1995 
1996 
1996 PROJECT 
East-West road corridor 
Ferry terminal at the Port of Durres 
APEX global loan 
Power transmission 
Air traffic services - B 
Transit roads II 
Berlin-Vienna rail corridor 
Mero-IKL (D-CZ) pipeline 
Telecommunications 1 - B 
C'EZ I (power plant improvements)-A 
C'EZ I (power plant improvements)- B 
Roads 
C'Eske Drahy Rail Corridor II 
Sko Energo FIN/VW-Skoda combined 
heat and power plant 
Estonian Investment Bank global loan -
Tranche A 
Upgrading air traffic services 
Port of Muuga bulk terminal 
District heating rehabilitation 
Estonian Investment Bank global loan -
Tranche B 
Railways (Rehabilitation Tallinn-Narva 
line) 
Telecommunications II 
Municipal infrastructure global loan 
Financial sector global loan 
Telecommunications II - Tranche B 
M3 Toll motorway 
Financial sector global loan (Extension 
to 1995 ECU 150 million loan) Amount 
of loan 
(ECU m) 
24 
5 
5 
12 
30 
60 
125 
100 
30 
100 
100 
60 
200 
55 
5 
20 
15 
7 
5 
16 
100 
40 
150 
50 
95 
40 COUNTRY 
TOTAL 
(ECU m) 
46 
90 
770 
68 
475 
- T 
COUNTRY 
Latvia 
Lithuania 
Poland 
Romania Year 
of 
signature 
1993 ' 
1996 
1996 
1996 
1994 
1995 
1995 
1996 
1996 
1996 
1996 
1996 
1994 
1994 
1994 
1994 
1995 
1995 
1996 
1996 
1996 
1994 
1994 
1995 
1995 
1995 
1996 
1996 
1997 2 PROJECT 
Investment Bank of Latvia - Global 
loan 
Investment Bank of Latvia - Global 
Loan B 
Riga Water and Environment 
Daugava Hydropower 
Vilnius Airport 
Port of Klaipeda 
Lithuanian Development Bank - Global 
loan 
Gas distribution 
Lithuanian Development Bank - Global 
loan B 
Via Baltica 
Telecommunications (GSM) 
Railways (Modernisation) 
Telecommunications II 
Highways 
Warsaw sewerage treatment plant 
Export Development Bank glob^1 loan 
Financial sector global loan 
Railways III 
Polish Telecommunications II 
Tranche B (Extension and 
modernisation) 
Poland Highways - Tranche B 
PGNG II - Second Gas 
Romgaz rehabilitation and 
modernisation 
Air traffic services - B 
Telecommunications 
Heat and power rehabilitation 
Constanta port rehabilitation 
Roads Rehabilitation II 
Bucharest Metro modernisation 
Bucharest Metro modernisation-
Tranche B Amount 
of loan 
(ECU m) 
5 
5 
15 
6 
10 
14 
5 
10 
5 
20 
15 
22 
150 
125 
45 
13 
100 
40 
100 
100 
180 
50 
16 
80 
60 
35 
70 
20 
20 COUNTRY 
TOTAL 
(ECU m) 
31 
101 
853 
351 
- 26 -
COUNTRY 
Slovak 
Republic Year 
of 
signature 
1994 
1994 
1995 
1995 
1996 
1996 PROJECT 
Telecommunications 1 -B 
Air traffic services 
State Bank and global loan II 
SPP Gas transmission 
SPP Gas transmission - B 
SE Thermal Power - rehabilitation 
TOTAL Amount 
of loan 
(ECU m) 
20 
15 
50 
30 
30 
70 
3000 COUNTRY 
TOTAL 
(ECU m) 
215 
3000 
Signed on the basis of Council Decision 93/166/EEC. 
Signed on 27 March 1997. 
-27-
REPORT FROM THE COMMISSION 
TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT 
on the implementation of loans granted by 
the European Investment Bank in the 
Republic of South Africa 
(1995-96) 
28 
CONTENTS 
1. Introduction 
2. Results of the mandate for South Africa 
3. Assessment of the system's operation 
4. Coordination between the financial institutions operating in the country 
-29-
1. Introduction 
This report on the activities of the European Investment Bank (EIB) in South Africa has been 
drawn up in accordance with Council Decision 95/207/EC of 1 June 1995 (OJ No L 131 of 
15 June 1995) granting a full Community guarantee to the EIB against losses under loans for 
projects in South Africa. This guarantee is restricted to an overall loan ceiling of 
ECU 300 million over a period of two years beginning on the date on which the Decision 
takes effect. 
Since this report is the first of its kind, it exceptionally covers the period to 31 December 
1996. 
2. Results of the mandate for South Africa 
During the reference period, the EIB made from its own resources three loans totalling 
ECU 101 million in South Africa. A summary table giving details about signings (sector, 
loan amounts, etc.) is set out below. 
3. Assessment of the system's operation 
All the operations mentioned above have been carried out under a specially adapted financing 
system. In accordance with the Council Directives, they are to assist the transition to 
democratic rule initiated by South Africa and contribute to the successful completion of the 
country's reconstruction and development programme. For example, the loan to the 
Industrial Development Corporation (IDC) has been used to finance a total of 30 operations 
in the industry, agro-industry and tourism sectors, helping to create more than 1 500 jobs. 
The loan to the Development Bank of Southern Africa (DBSA) has been allocated to 27 
projects, most of which relate to water and wastewater treatment schemes. They thus were 
responding to the evident urgent needs in many of the country's regions. 
-30 
Table 1. EIB loans signed on the basis of the Council Decision of 
1 June 1995 (95/207/EC) 
Date of 
signature 
21.12.1995 
28.12.1995 
22.05.1996 Project 
Industrial 
Development 
Corporation 
Development 
Bank of 
Southern 
Africa 
ESKOM 
TOTAL Amount of 
loan 
(ECU million) 
15 
30 
56 
101 Description 
Global loan to finance small 
and medium-sized projects in 
the manufacturing, 
agri-foodstuffs, tourism, 
transport and mining sectors 
Global loans to finance 
infrastructure projects in the 
water and wastewater 
treatment sectors 
Partial financing of the 
upgrading and extension of 
the power grid in three 
regions of the country Comments 
The loan has been 
fully allocated 
and disbursed 
Two thirds of the 
loan have been 
disbursed; 
satisfactory 
progress is being 
made in carrying 
out various 
aspects of the 
project 
4. Coordination between the financial institutions operating in the country 
The Bank cooperates closely with the Commission and their financing activities complement 
each other. For example, the Commission provides assistance for water supply programmes 
whereas the EIB grants loans for water and wastewater treatment and purification; the 
Commission assists in guarantee programmes for small and medium-sized enterprises, 
-31 -
financed through the commercial banking sector, whereas the EIB finances loans through the 
commercial banks and SMEs through the Industrial Development Corporation. 
The EIB maintains close contact with the World Bank office, and discussions on specific 
projects have been initiated with national organisations, for example the Societe de 
Promotion et de la Participation pour la Cooperation Economique (PROPARCO) in France 
and the Commonwealth Development Corporation in the United Kingdom, both of which 
have a local office. 
-32 
REPORT FROM THE COMMISSION TO THE COUNCIL 
AND TO THE EUROPEAN PARLIAMENT 
on the rate of utilization of European Investment Bank 
loans for projects in the Republic of South Africa 
(from 1 January 1997 to 30 June 1997) 
1. Introduction 
Council Decision 95/207/EC of 1 June 1995 (OJ No L 131 of 15 June 1995) grants in 
full the Community guarantee to the European Investment Bank (EIB) against losses 
under loans for investment projects in the Republic of South Africa for a maximum 
loan ceiling of ECU 300 million over an indicative two-year period. 
It requires the Commission to draw up a six-monthly report on the rate of utilization 
of EIB loans signed under the guarantee. The present report covers the period from 
1 January to 30 June 1997. The previous report covered the period 1 January to 30 
June 1996 and was transmitted to Council on 6 December 1996 (COM(96)688). No 
loans were signed in the second half of 1996. 
2. Lending during the reference period 
2.1 During the first half of 1997 the EIB Board of Directors approved two loans out of 
own resources for a total of ECU 90 million in the Republic of South Africa. Loans 
were signed during the reference period except for ECU 15 million corresponding to 
the second tranche of one of the loans. Details of the operations are given in the table 
below. 
2.2 At 30 June 1997 the loan contracts signed by the Bank under the mandate amounted 
to ECU 176 million. Additionally, the loan for ECU 15 million mentioned above is 
expected to be signed shortly. 
-33-
Operations signed in the period 1 January to 30 June 1997 on the basis of 
Council Decision of 1 June 1995 (95/207/EC) 
Project name 
Central Energy Fund 
Commercial Bank 
Infrastructure- credit 
line 
Commercial Bank 
Infrastructure - credit 
line - Tranche B 
TOTAL Date of 
Signature 
30.06.1997 
06.03.1997 
(1) Amount signed 
(ECU mio) 
45 
30 
15 
90 Description 
Part-funding of the cost of exploiting 
adjacent gas deposits and the 
installation of associated compression 
facilities of Mossgas 
Global loan for the financing of 
medium-scale infrastructure projects 
Ditto 
(1) Signature expected shortly. 
-34-
REPORT FROM THE COMMISSION TO THE COUNCIL 
AND TO THE EUROPEAN PARLIAMENT 
on the rate of utilization of European Investment Bank loans for projects 
in central and eastern European countries (Poland, Hungary, 
the Czech Republic, the Slovak Republic, Romania, Bulgaria, Latvia, 
Estonia, Lithuania and Albania) 
(from 1 July 1996 to 30 June 1997) 
1. Introduction , 
Council Decision 93/696/EC of 13 December 1993 (OJ No L 321 of 
23 December 1993) grants in full the Community guarantee to the European Investment 
Bank (EIB) against losses under loans for projects in central and eastern Europe for a 
maximum loan ceiling of ECU 3 000 million over an indicative three-year period. The 
loan guarantee ceiling includes the provisions laid down in respect of investments in 
Estonia, Latvia and Lithuania by Council Decision 93/166/EEC of 15 March 1993. 
Council Decision 93/696/EC requires the Commission to draw up a six-monthly report 
on the situation regarding loans signed under the guarantee. The present report covers 
the period from 1 July 1996 to the end of the 1993-96 mandate. In December 1996, 
the end of the indicative three-year period referred to in the Decision, Bank lending had 
not attained the guarantee ceiling granted and therefore, in accordance with Article 1, 
the guarantee period was automatically extended by six months. 
2. Lending during the reference period 
2.1 During the second half of 1996 the Bank signed 18 loans financed out of own resources 
for a total of ECU 965 million in 8 countries of central and eastern Europe. 
At 31 December 1996, total loan contracts signed by the Bank amounted to ECU 2980 
million. In accordance with Article 1 of the Council Decision, which extends the 
guarantee period by six months, the Bank in March 1997 signed a final loan for 
ECU 20 million, thus attaining the guarantee ceiling of ECU 3 000 million. The Bank 
has now fully discharged its responsibilities under the lending authorisation based on 
Council Decision 93/696/EC. 
2.2 The list of operations signed during the period and the description of the projects are 
given in the table below. 
35 
Operations signed in 1996/1997 on the basis of the Council Decision of 13 December 1993 (93/696/EC) 
COUNTRY 
ALBANIA 
HUNGARY 
LATVIA 
LITHUANIA PROJECT NAME 
Power transmission 
Financial sector global loan 
Riga Water and Environment 
Daugava Hydropower 
Investment Bank of Latvia -
Global loan B 
Via Baltica 
Telecommunications (GSM) 
Lithuanian Development Bank 
Global loan - B 
Railways DATE OF 
SIGNATURE 
15.11.1996 
15.12.1996 
06.08.1996 
29.10.1996 
13.11.1996 
12.08.1996 
04.11.1996 
05.11.1996 
20.12.1996 AMOUNT 
SIGNED 
(ECU m) 
12 
40 
15 
6 
20 
15 
5 
22 DESCRIPTION 
Rehabilitation and improvement of 
transmission and distribution networks. the power 
For financing SMEs in industry, tourism and related 
services. 
Upgrading and rehabilitation of water and wastewater 
systems in and around the city of Riga. 
Rehabilitation works and dam safety improvements. 
For financing SMEs in industry, tourism and related 
services, and environmental protection and energy-
saving projects. 
Upgrading of selected sections of the Lithuanian 
component of the Via Baltica North-South corridor. 
Construction and operation of the first phase of a mobile 
(GSM) telecommunications system. 
For financing SMEs in industry, tourism and related 
services. 
Track renewal, modernisation of signalling and 
telecommunications network, and purchase of 
locomotives. 
-36-
COUNTRY 
POLAND 
SLOVAKIA 
CZECH 
REPUBLIC 
ROMANIA PROJECT NAME 
Poland Highways - Tranche B 
PGNG II-Second Gas 
Polish telecommunications II-
Tranche B 
SE Thermal Power rehabilitation 
SPP GAS Transmission - B 
C'Eske Drahy Rail Corridor II 
SKO Energo FIN/VW-Skoda 
Combined heat and power plant 
Roads Rehabilitation II 
Bucharest metro modernisation 
Bucharest metro modernisation -
Tranche B• DATE OF 
SIGNATURE 
19.07.1996 
30.09.1996 
16.12.1996 
08.11.1996 
21.11.1996 
04.12.1996 
05.12.1996 
25.10.1996 
20.12.1996 
27.03.1997 
TOTAL AMOUNT 
SIGNED 
(ECU m) 
100 
180 
100 
70 
30 
200 
55 
70 
20 
20 
985 DESCRIPTION 
Upgrading to motorway standards of the A4 highway 
between Bielany and Nogawczyce. 
Conversion of the Wierzchowice gas field into an 
underground storage facility. 
Expansion and modernisation of the Polish 
telecommunications network. 
Rehabilitation of the Vojany I coal-fired power station. 
Modernisation and extension of the Slovak international 
gas transit and domestic networks. 
Modernisation of the Warsaw-Ostrava-Vienna line 
(Corridor 2). 
Replacement of VW/Skoda's combined heat and power 
plant in the city of Mlada Boleslav. 
Rehabilitation of key sections of the European corridors 
E81 andE60. 
Renewal of rolling stock and network infrastructure 
completion. 
Ditto 
Signed in March 1997 
ISSN 0254-1475 
COM(98) 1 final 
DOCUMENTS 
EN 09 01 11 
Catalogue number : CB-CO-98-001-EN-C 
ISBN 92-78-30004-7 
Office for Official Publications of the European Communities 
L-2985 Luxembourg 
%