COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 09 09.1996 
COM(96) 429 Final 
REPORT FROM THE COMMISSION TO THE COUNCIL 
AND THE EUROPEAN PARLIAMENT 
on the implementation and rate of use 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 
(1995-96) 

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 third year of activity 
5. General comments on operations and assessment of the European Investment Bank's 
action under its mandate in Latin America and Asia 
Annex 1 Lists of countries in Latin America and Asia which have concluded 
cooperation agreements with the Community and framework agreements 
with the European Investment Bank 
Annex 2 Summary table of the European Investment Bank's operations in 
Latin America and Asia during the period of its mandate 
(23.2.1993-22.2.1996) 
Annex 3 Summary table providing a sectoral and geographical breakdown of all 
commitments 
Annex 4 Summary table showing the contributions of the various funding sources to 
the projects financed by the European Investment Bank. 
1 Introduction 
This annual report on the activities of the European Investment Bank (LIB) in a 
number of Latin American and Asian countries has been drawn up in accordance with 
Council Decision 93/115/EEC of 15 February 1993 (OJ No L 45 of 23 February 1993). 
It relates to the third and final year of implementation of the Bank's first mandate and 
covers the period from 23 February 1995 to 22 February 1996. The report on the 
second year was sent to the Council and the European Parliament in October 1995 
(COM(95) 507 final of 30 October 1995). 
As well as giving a factual account of operations during the third year of activity, this 
report assesses experience gained from the beginning. The assessment relates to a total 
commitment of ECU 750 million (as against ECU 500 million for 1993 and 1994) in 
respect of 21 projects (13 in 1993/94) in 13 different countries (10 in 1993/94). 
2. Legal framework 
The legal and institutional framework of the Bank's mandate in Latin America and Asia 
is laid down in the following decisions and documents: 
- Council Decision of 19 May 1992 calling on the Bank to take action in those 
countries of Latin America and Asia which, on the date of that decision, had 
concluded cooperation agreements with the Community1. This decision covers a 
period of three years and provides for an annual budget of ECU 250 million. It 
specifies that the loans will be used for projects of mutual interest that satisfy the 
Bank's usual criteria; 
- Council Decision 93/115/EEC of IS February 1993 (published in the Official 
Journal of 23 February 1993) granting a Community guarantee to operations 
financed in this context; 
- Decision by the EIB Board of Governors of 22 February 1993 authorizing the 
Bank to undertake these activities up to an aggregate amount of ECU 250 million 
per year for a period of three years on condition that the loans granted are fully 
guaranteed by the Community; 
There are 30 such countries (17 in Latin America and 13 in Asia). See lists in Annex 1. Since the 
Council Decision of 19 May 1992, a further cooperation agreement has been signed with Vietnam. 
- Contract of guarantee signal by the Community and the lilli on I ;IIKI 
17 November 1993. This document refers to the above texts and stipulates that the 
guarantee will apply for a period of three years ending on 23 February 1996. 
In addition to these texts constituting the legal basis for its mandate, the Bank, in 
accordance with the practice adopted for other geographical areas, signs with the 
countries in which it operates a "framework agreement" laying down the legal, tax and 
financial framework for its activities in the country in question. 
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 1992 and 1993 decisions concerning action by the Bank itself. 
The Bank's activities in Latin America and Asia continued to attract increasing interest 
among the countries concerned (Latin American, Asian and European Union countries) 
and among European firms and economic operators during the third year of operations. 
The complementary role which the Bank can play in these regions is increasingly 
confirmed by experience. The international financial community also continues to view 
the EIB's action as a useful adjunct to its own operations. After three years and at the 
end of its initial mandate, the Bank has thus clearly established its position as a lender in 
Latin American and Asian countries. These points are developed in detail in section 5 
below. 
4. Results of the third year of activity 
During the third year of activity ending on 22 February 1996, the Bank's Board of 
Directors approved the following seven operations totalling ECU 250 million. A 
further ECU 12 million operation was undertaken under the global authorization of 
ECU 20 million granted in the first year. 
A summary table giving more details about project commitments and signings up to the 
end of the third year of activity is set out in Annex 2. 
Country Sector Amount committed2 
(ECU m) Mutual interest 
LATIN AMERICA 
Argentina water treatment 70 
waste treatment 
Colombia transport 38 
Paraguay 
ASIA 
China water treatment 17 
energy 55 
Pakistan 
(Pakistan-*) 
Thailand energy 
(energy) 
transport 24 
(12) 
IS Argentine-European project relating to the 
management of a public service concession and 
involving public service companies from three EU 
countries; guarantee provided by a consortium of 
EU commercial banks; improvement of the 
environment 
Argentine-European borrower; joint financing with 
an EU development finance institution; 
improvement of the environment; transfer of 
European technology 
concession granted to a consortium led by EU 
enterprises; contribution to regional cooperation 
and integration (declared aims of the cooperation 
agreement between the EU and the Andean Pact 
countries) 
improvement of the environment; preparation of 
the project by a European consultant 
protection of live environment; participation of 
European consultants in the preparation of the 
project; joint financing with a European public 
enterprise 
transfer of European technology; participation of 
European consultants; widespread participation of 
European civil engineering companies 
(joint venture with a European company; 
improvement of the environment; preparation by 
European consultants) 
improvement of the environment natural 
gasthrough the use of gas as a replacement for 
petroleum products; contrifeutton to a sector/project 
with a substantial European involvement in gas 
exploration and use 
ECU 22 million of the loan for the gas transmission and distribution project in Indonesia - approved by the Bank's 
Board of Directors on 31 January 1995 - are included in the third year's accounts (see the Commission's half-yearly 
report (COM(96) 72 final of 1 March 1996) to the Council and the European Parliament covering the period from 
23 February 1995 to 22 August 1995). 
This Pakistani private project was provided for under the global authorization set in place in the first year. 
b 
5 General comments on operations and assessment of the Bank's action under its 
mandate in Latin America and Asia 
5.1 Like the previous year, demand substantially exceeded the funds available in the 
third year. As in the first two years of the mandate, therefore, funds up to the 
annual ceiling of ECU 250 million were committed. Owing to the high 
absorption capacity of the eligible countries, the ECU 750 million of the mandate 
have been completely committed (see Annex 2). 
5.2 In accordance with the Bank's mandate, 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 in the third year continued 
to satisfy one or more of the following criteria: regional integration, improvement of 
the environment, transfer of European technology, joint ventures bringing together 
European and local firms, the granting of concessions to private enterprises for 
investing in and running public services, and the preparation of projects by European 
consultants (see point 4 above). 
5.3 The most interesting aspect is the build-up of projects involving European 
private partners: during the third year, the percentage of private projects approved 
by the Bank increased to 50% (compared with 42% in 1994 and 20% in 1993). This 
proportion could increase further if consideration is given to those projects that have 
already been proposed and that could be submitted under the new mandate. This 
trend is important and places the Bank's mandate in Latin American and Asian 
countries in a special context. It is clear that: 
• through this type of financing the EIB can support European enterprises in their 
investment in the "emerging countries", which make up the majority of the 
Latin American and Asian countries. For these enterprises, the markets of the 
"emerging countries" offer potential for substantial growth; 
• this type of assistance is particularly valued by those same enterprises since, while 
still within the market framework, it is well suited to funding the privatized public 
services projects which are proliferating in these areas and in which European 
enterprises are very actively involved (energy, telecommunications, water, etc.). 
5.4 The average size of operations fell from ECU 36 million in the second year to 
ECU 33 million in the third year4. The average size of all operations undertaken in 
the three years of the Bank's first mandate is ECU 36 million (if operations funded 
under the ECU 20 million globai authorization are included) or ECU 38 million (if 
loans under the global authorization are excluded). Loan sizes of this order of 
magnitude have ensured satisfactory geographical distribution of the 
ECU 750 million ceiling and are compatible with the Bank's objective of keeping the 
cost of its operations within reasonable limits. 
Average contributions if the two projects financed under the global authorization of 
ECU 20 million, which is intended more for small and medium-sized investment projects, is 
disregarded. 
6 
S 5 The sectoral breakdown of operations in the Ihird year shows activity lo he 
concentrated in the energy and environmental sectors. This is consistent with the 
objectives of the cooperation agreements signed between the Latin American and 
Asian countries and the European Union, which frequently stress the specific 
importance of cooperation in the energy and environmental protection fields. 
third year 
(second year) energy 
48% 
(24%) transport 
15% 
(21%) telecommunications 
-
(30%) environment 
37% 
(16%) industry 
-
(9%) 
The sectoral breakdown of the total commitments of ECU 750 million under the first 
mandate is set out in Annex 3. 
5.6 As far as the geographical breakdown is concerned, the Bank has kept up its 
endeavours to maintain, wherever possible, a fair balance between the two regions 
concerned and between individual countries. The geographical breakdown between 
the two regions thus varied only slightly in the final year of the mandate: 52% for 
Latin America (57%) and 48% for Asia (43%). Three of the seven operations 
undertaken in the third year concerned countries which had not received EIB loans 
in the previous years (China, Colombia and Paraguay). Operations focused on a 
limited number of countries5, with preference being given to those countries for 
which the type of finance proposed best meets the needs of borrowers. Some 
priority was also given to areas or countries which are strengthening their ties with 
the Community (Mercosur, Chile, ASEAN group, southern Asia, etc.). 
The geographical breakdown of the commitments totalling ECU 750 million made 
under the mandate is set out in Annex 3. 
5.7 Excellent cooperation continued with multilateral and bilateral financial 
institutions in the Latin American and Asian countries. Four of the seven 
operations undertaken in the third year are being financed jointly with one or two 
multilateral institutions (Asian Development Bank, World Bank) or with a bilateral 
financial institution (see Annex 2). The activities of the Bank and the other 
multilateral institutions complement each other at project level (public projects and 
also private projects, in which these bodies are becoming increasingly involved). 
The studies produced by the above institutions furthermore constitute a valuable 
source of general, geographical and sectoral information. 
Over the three years, operations were approved in 13 of the 30 countries theoretically eligible (see 
Annexes 2 and 3). Mexico is a special case: a project was identified and finance approved by the 
Board of Directors, but approval was withdrawn following Mexico's decision not to go ahead with 
the project. 
The summary table showing the contributions of the various funding sources to the 
projects financed by the EIB is set out in Annex 4. 
5.8 The Bank's cooperation with the European banking sector has been reinforced 
in respect of both guarantees and direct joint financing. The EIB and the European 
commercial banks complement each other in that the latter rarely provide the same 
type of resource as the EEB, particularly as regards duration and period of grace. 
The combination of complementary financial instruments constitutes an added 
benefit. 
5° In the third year, new framework agreements establishing the general legal bases 
for carrying our projects in both the public and the private sector were concluded 
between the EIB and six countries (Bolivia, China, Colombia, Mexico, Indonesia 
and Uruguay). A hall list of the 16 framework agreements concluded up to the end 
of the third year is given in Annex 1. 
Annex 
LATIN AMERICA AND ASIA 
List of countries which had concluded a cooperation agreement with the 
European Community when the EIB was given its Latin American and Asian 
mandate. A new agreement has since been signed with Vietnam. 
ASIA LATIN AMERICA 
ASEAN group (Brunei, Indonesia, 
Malaysia, Philippines, Singapore, 
Thailand) 
Bangladesh 
China 
India 
Macao 
Mongolia 
Pakistan 
Sri Lanka Andean group (Bolivia, Colombia, 
Ecuador, Peru, Venezuela) 
Central American countries 
(Costa Rica, Guatemala, Honduras, 
Nicaragua, Panama, Salvador) 
Argentina 
Brazil 
Chile 
Mexico 
Paraguay 
Uruguay 
List of countries which have concluded a framework agreement with the EIB 
(situation at 22 February 1996) 
ASIA LATIN AMERICA 
China 
India 
Indonesia 
Pakistan 
Philippines 
Thailand 06.12.95 
17/25.11.93 
20.06.95 
25/28.02.94 
15.09.94 
10/17.01.94 Argentina 
Brazil 
Bolivia 
Chile 
Colombia 
Costa Rica 
Mexico 
Paraguay 
Peru 
Uruguay 03.10.94 
19.12.94 
12.10.95 
07.10.94 
13.03.95 
30.11.93 
09.03.95 
19.09.94 
02.10.94 
21.04.95 
Framework agreements under negotiation: Panama, Sri Lanka. 
Annex 2 
SUMMARY TABLE OF THE EEB'S OPERATIONS IN LATIN AMERICA AND ASIA 
between 23 February 1993 and 22 February 1996 (Council Decision 93/115/EEC) 
1. LATIN AMERICA 
Country 
Argentina 
Brazil 
Chile 
Colombia 
Costa Rica 
Paraguay 
Peru Project 
Mercosur highway 
BAN natural gas 
Aguas Argentinas 
AJLINCO 
CESAN 
CTC - Compania de 
Teléfonos de Chile 
Bogota 
ICE Costa Rica 
Asuncion sewerage 
Pan American Highway Sector 
Transport (public) 
Distribution of natural gas 
(private) 
Treatment of water (private) 
Treatment of waste 
Sanitation (public) 
Telecommunications (private) 
Transport (private) 
Energy (public) 
Treatment of water (public) 
Transport (public) 
TOTAL for Latin America EEB loan 
amount 
(in ECU 
million) 
45(*) 
46 
70 
6 
40C) 
75 
38(*) 
44 
17 
27 
408 (54%) Total cost 
ofprojea 
(in ECU 
million) 
134 
152.8 
197 
13 
113 
731 
97 
354 
60 
154 
2 005.8 Comments 
Joint financing with the Inter-American 
Development Bank (IDB) 
Private project - public service concession 
Private project - public service concession 
Joint financing with a European development 
institution 
Joint financing with the World Bank (IBRD) 
Private project - public service concession 
Guarantees from European banks 
Joint financing with the IDB 
Joint financing with the IBRD 
Joint financing with the IBRD 
(*) not yet signed. 
10 
2. ASIA 
Country 
China 
India 
Indonesia 
Pakistan 
Philippines 
Thailand Project 
Ping Hu oil and gas 
development 
Powergrid 
Gas transmission (Sumatra) 
CLIP AN 
KESC 
Ghazi-Barotha Hydropower 
Sai Hydro 
Davao Airport 
DUCC Cement 
Erawan gas pipeline 
Erawan parallel gas pipeline -
Phase II Sector 
Energy (public) 
Energy (public) 
Gas transmission (public) 
Financial sector (private) 
Energy (public) 
Energy (public) 
Energy (private) 
Transport (public) 
Industry (private) 
Natural gas transmission 
(public) 
Natural gas transmission 
(public) 
TOTAL FOR ASIA 
GRAND TOTAL (Latin America and Asia) EIB loan 
amount 
(in ECU 
million) 
55 
55 
46 
8<*> 
36 
24 
12(*) 
25 
23 
40 
18 
342 (46%) 
750 (100%) Total cost 
of project 
(in ECU 
million) 
770.2 
173.8 
474 
480 
1 668.5 
26 
86 
107.7 
547.8 
97.7 
4 431.7 
6 437.5 Comments 
Joint financing with the Asian Development 
Bank (AsDB) and the French Government 
Joint financing with the IBRD 
Joint financing with the AsDB 
Private project - European-Indonesian —•: 
venture 
Joint financing with the AsDB 
Joint financing with the IBRD, the AsDB and 
a European development institution 
Private project -joint venture with a Eurrpean 
company 
Joint financing with the AsDB 
Private project - industrial joint venture 
Joint financing with the EBRD and the AiDB 
(*) not yet signed. 
11 
Annex 3 
SUMMARY TABLE PROVIDING A SECTORAL AND GEOGRAPHICAL BREAKDOWN OF COMMITMENTS 
Country 
Argentina 
Brazil 
Chile 
Colombia 
Costa Rica 
Paraguay 
Peru 
TOTAL 
FOR LATIN AMERICA 
China 
India 
Indonesia 
Pakistan 
Phihppines 
Thailand 
TOTAL FOR ASIA 
TOTAL Number of 
projects 
4 
1 
1 
1 
1 
1 
1 
10 
1 
1 
2 
3 
2 
2 
11 
21 Sector 
Energy 
46 
44 
90 
55 
55 
46 
72 
58 
286 
376(50.1%) Transport 
45 
38 
27 
110 
25 
25 
135 (18%) Telecommunications 
75 
75 
75 (10%) Environment 
76 
40 
17 
133 
133 (17.7%) Industry 
23 
23 
23(3.1%) Financial 
8 
8 
8(1.1%) TOTAL 
(in ECU 
million) 
167 (22.3%) 
40 (5.3%) 
75 (10.0%) 
38 (5.1%) 
44 (5.8%) 
17 (2.3%) 
27 (3.6%) 
408 (54.4%) 
55 (7.3%) 
55 (7.3%) 
54 (7.2%) 
72 (9.6%) 
48 (6.4%) 
58 (7.8%) 
342 (45.6%) 
750 (100%) 
12 
Annex 4 
SUMMARY TABLE SHOWING THE CONTRIBUTIONS OF THE VARIOUS FUNDING 
SOURCES TO THE PROJECTS FINANCED BY THE EIB 
(in ECU million) 
EB 
750 
11.7% Multilateral financial institutions 
IBRD 
539 
8.4% IDB 
377 
5.8% AsDB 
800 
12.4% Other (1) 
3 972 
61.7% Total 
6 438 
100% 
1 Governments, public organizations and other financial sources, including own funds of borrower and/or promoter. 
13 

COM(96) 429 final 
DOCUMENTS 
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Catalogue number : CB-CO-96-429-EN-C 
ISBN 92-78-08019-5 
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