COMMISSION STAFF WORKING DOCUMENT Accompanying the document Report from the Commission to the European Parliament and to the Council on 2013 EIB external activity with EU budgetary guarantee and on the application of Decision No 1080/2011/EU of 25 October 2011 covering the EIB financing operations signed during the period from 2007 to June 2014
Date: 2014-10-30
Institutions: European Commission
Subjects: EIB loan, adaptation to climate change, development aid, economic development, financial management, investment protection, social development, third country













EUR-Lex - 52014SC0333 - EN











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52014SC0333

COMMISSION STAFF WORKING DOCUMENT Accompanying the document Report from the Commission to the European Parliament and to the Council on 2013 EIB external activity with EU budgetary guarantee and on the application of Decision No 1080/2011/EU of 25 October 2011 covering the EIB financing operations signed during the period from 2007 to June 2014 /* SWD/2014/0333 final */









1.           Introduction and overview
This Staff Working
Document (SWD) reviews the implementation of the current EIB external mandate
at regional and country level in 2013 as well as the contribution of EIB
financing operations to the fulfilment of external policy objectives, taking
into account the operational objectives of the EIB.
The tables below summarise the overall EIB
external lending activity for the period of the mandate: overall signatures
(Table 1), the signatures and available headroom under the mandate (Table 2), the
signatures and available headroom under EIB own risk facilities (Table 3).
Table 1:
Overview of overall EIB lending signatures outside the EU (all resources)
 NB: Implementation of the Mandate started in August 2007; volumes in 2007 partly comprise the end tail of the former mandate. Volumes in 2007-2012 include EUR 2bn signed under the Pre-Accession Facility in Croatia before its accession to the EU. 
Table 2: EIB lending signatures under the Mandate
Notes:
In Pre-Accession, the amount cancelled comprises the net impact of contractual
increases and decreases which occurred after the year of signature.
Table 3: EIB lending signatures under EIB
own risk facilities
 EUR m || 2007 || 2008 || 2009 || 2010 || 2011 || 2012 || 2013 || Gross total 
  Pre-Accession || 1.176 || 1.444 || 1.450 || 1.796 || 2.358 || 2.285 || 1.998 || 12.507 
  Mediterranean || 185 || 33 || 56 || 516 || 39 || 11 ||                -   || 840 
  Eastern Neighb, Russia ||                 -   ||                 -    ||                -   ||                -   || 101 ||                -   || 119 || 220 
  Asia, Latin America || 500 ||                 -   || 200 || 579 || 861 || 250 || 242 || 2.632 
  South Africa ||                 -   ||                 -   ||                -   ||                -   || 50 ||                -   ||                -   || 50 
  Total || 1.861 || 1.477 || 1.707 || 2.891 || 3.409 || 2.546 || 2.359 || 16.250 
2.           Overall
contribution to EU policy objectives
The objective of EIB operations under the Mandate
is to support relevant external policy objectives of the EU. In particular, the
Decision provides for some specific policy goals to be addressed through EIB
external operations in all regions covered by the EU
budgetary guarantee:  
(i)         Climate change mitigation and
adaptation; 
(ii)        Development of social and
economic infrastructure;
(iii)       Local private sector development,
in particular support to SMEs.
Additional underlying objectives include
the contribution to the general principles guiding external action, as referred
to in Article 21 TEU and regional integration among partner countries,
including economic integration between pre-accession countries, neighbourhood
countries and the Union.
2.1.      Climate change mitigation and
adaptation
As regards climate action, 2013 overall EIB
signatures amounted to EUR 2.1 bn, representing 31% of total EIB financing in
the regions covered by the Decision (38% of signatures under the EU guarantee,
either under the general or the Climate Change Mandate envelopes). This
proportion is above the EIB’s global target of 25% of overall lending. This is
more than in 2012 (signatures amounted to EUR 1.6bn representing 24% of total
EIB financing in the regions). 
The EIB’s support to investment projects in
this area has been growing in line with the its general objectives both inside
and outside the EU. The release of the EUR 2bn envelope of the Climate Change
Mandate in 2011 as part of the Decision has clearly helped to widen the EIB’s
support to climate action. At the end of 2013, the volume of operations signed
equalled 83% of the Climate Change Mandate, and the balance was already fully
earmarked for additional operations in pipeline. 
Many of the world’s least carbon efficient
economies are situated in the ALA regions. Therefore, climate action lending
remained strong in Asia with almost 90% of signatures contributing to climate
action; it reached close to 50% in Latin America and Central Asia. In South
Africa where climate-friendly energy projects have significant potential, 2
climate projects were signed in 2013 which equal 88% of the new financing
volume in this country.  In the Mediterranean, around half of the financing
signed in 2013 supported climate action. Substantial amounts of climate action
finance were also mobilised for projects in the Pre-Accession and Eastern
Neighbourhood regions, but the overall proportion is less there in the light of
strong other lending priorities, notably private sector development. 
Chart 1: Climate action by sector
The energy sector accounted for the largest
part in terms of climate financing volume (EUR 1.3bn) and number of projects
(16), reflecting especially the strong demand for investments in energy
efficiency and renewable energy. Other projects which contributed to the EIB’s
climate action objective were in the sustainable transport (EUR 357m) and urban
development (EUR 177m) or “natural resources” (EUR 120m) sectors including
Turkey’s afforestation and erosion control project. An additional EUR 146m in
credit lines were extended through financial intermediaries for on-lending to
small and medium sized climate change and energy efficiency projects in
Kazakhstan and in Sri Lanka.The EIB applies its carbon footprint methodology to
all sectors, not only climate projects. Greenhouse gas (GHG) emissions are
estimated and reported for projects where emissions are expected to be
significant, i.e. above defined thresholds, thus capturing approximately 95% of
emissions from EIB's investment projects .
Projects aimed at improving the efficiency
of energy generation also lead to CO2 savings, as is the case in the Bangladesh
Power Energy Efficiency operation, which it is estimated will produce 419 kt of
CO2-eq savings per year (zero CO2 absolute emissions, as electricity production
derives from using waste heat).
Transport projects can also generate
decreases in CO2 emissions, where they incentivise shifting to more
environmentally friendly means of transport (typically, from road-based to
metro or railway). In the 2013 portfolio, for example the Istanbul-Ankara
Railway Tranche B project is estimated to produce 91 ktons CO2 savings (185
ktons CO2 absolute emissions).
In 2013, 13 projects signed in the regions
covered by the Mandate had estimated emissions above the Absolute or Relative
emissions thresholds and were included in the 2013 Carbon Footprint Exercise.
They represent total EIB signatures of EUR 1.25bn. The related total absolute
GHG emissions are estimated as 0.33 Mt CO2-eq/year, with an overall saving from
the same financing estimated at 0.67 Mt CO2-eq/year.
2.2.        Development of social and
economic infrastructure
In 2013, the EIB signed a total of 46
operations worth EUR 3.6bn in order to help developing social and economic
infrastructure in various sectors. This includes 9 intermediated operations (credit
lines) where the actual sector distribution is not known in advance. As in
previous years, the largest share was in the energy (18 projects) and transport
(10 projects) sectors. The rest was distributed as illustrated below. 
Chart 2:
Projects signed in 2013 contributing to economic and social infrastructure by
sector
Notes:
Projects may contribute to more than one sector. Share of the number of
projects by sector. Total signed amounts in EUR million indicated in brackets.
2.3.        Local private sector
development, support to SMEs 
The EIB supports local private sector
development in different ways, most commonly by extending credit lines to
financial intermediaries (mainly banks) for on-lending to small and medium
enterprises. Overall, in 2013, of the 51 operations that contributed to local
private sector development, 36 were loans to intermediaries providing EUR 3.3bn
worth of credit lines for on-lending to SMEs. Another 12% of these operations
were direct loans to larger private companies, and 9 operations represent
investments in private equity funds and microfinance institutions (MFIs).
Chart 3:
Operations contributing to local private sector development by type of
operation
2.4.        Contribution to underlying
objective – Regional integration 
Projects in a number of sectors are
expected to contribute to regional integration. In 2013, of the 17 projects
(EUR 1.1bn) contributing to regional integration, 6 are direct operations in
the transport sector. These are mainly cross-border roads, such as the Armenia
North-South Road Corridor connecting Georgia, Armenia and Iran, and regional
air navigation networks, such as the air traffic control upgrade in Egypt which
is part of the implementation of a Euro-Mediterranean Common Aviation Area.
Four projects contribute through the energy sector, such as the Central America
Climate Change Framework Loan contributing to regional electricity supply
through the transmission lines of the Central American electrical
interconnection system.
This dimension was strongest in the
Pre-Accession and Eastern Neighbourhood region where roughly three quarters of
the total lending volume in support of regional integration is concentrated.
Chart 4:
Projects contributing to regional integration by sector
Notes:
Projects may contribute to more than one sector or region so total number of
projects may exceed 17. Amounts are pro-rated by region and sector.
3.           Actual
and Expected Results of EIB operations: Results Measurement Framework (REM)
3.1.        The REM framework 
The REM framework
provides an assessment of the EIB financing operations throughout their
lifecycle. It helps to select sound projects which are in line with EU
priorities based on concrete results, and where the EIB involvement will add
value. At appraisal, results indicators are identified, with baselines and
targets that capture expected economic, social, and environmental outcomes of
the operation. Achievement against these specified performance benchmarks is
monitored throughout the project life and reported at two major milestones: at
project completion and 3 years after project completion ("post completion")
for direct operations; at the end of the investment period and at the end of
life of private equity funds; and at the end of the allocation period for
intermediated lending.
Pillar ratings are
based on a four-point scale (4-excellent, 3-good, 2-acceptable, 1-marginal)[1]. Ratings are based on a series of objectively measurable indicators
and guidelines, while a process of quality control ensures that all ratings are
checked for consistency across operations.
Projects are rated
according to three "Pillars":
(i)         Pillar
1 rates the expected contribution to the EU and the countries' priorities and
eligibility under EIB mandate objectives.
(ii)        Pillar
2 rates the quality and soundness of the operation, based on the expected
results.
(iii)       Pillar
3 rates expected EIB financial and non-financial additionality.
Distribution of
ratings by pillar:
Chart 5: REM
ratings by pillar for all 2013 signed operations
As the
distribution of Pillar 1 ratings shows, more than half of the operations
signed in 2013 are expected to make an excellent contribution to mandate
objectives, meaning that they are not only fully in line with the EIB mandate
objectives, but they also are expected to make a high contribution to both the
countries' own development objectives and the EU priorities for the country
and/or region. Those projects that will make a "good" contribution
are in line with mandate objectives and should make a high contribution to
either the country's own development objectives or those of the EU and a
moderate contribution to the other.
Pillar 2 measures the expected results, the quality, and the soundness of
projects. 9% of operations signed received an excellent rating. This includes
direct operations with an economic rate of return (ERR) greater than 15%, or
intermediated operations (credit lines) which would make an exceptional
contribution to increasing access to finance as well as developing the
financial sector, in a relatively low risk environment. More than 86% of
operations are expected to be "good". These would be direct operations
with an average ERR of 10% to 15%, or intermediated operations which contribute
strongly to increasing access to finance and financial sector development yet
in a high risk environment with less likelihood of results. Only 5% of
projects, mainly intermediated loans, were rated with lower expectations, as
"acceptable".
Pillar 3 measures the EIB's expected additionality. About 21% of operations
signed in 2013 are expected to have high additionality - typically, extending
the longest maturity of debt available to the borrower from the market by more
than 100%; matching economic life of the assets to be financed by at least 80%;
taking a lead role in project preparation, structuring and/or implementation
support. Another 62% are considered to have good expectations, providing
significant additionality - typically, combining significant financial
additionality with significant technical and sector contribution or standards
and assurance. The 17% of signed operations that were rated as expecting
moderate additionality were typically standard products where limited
contribution to project design, structuring or implementation was necessary.
Chart 6: REM conceptual framework
REM indicators
have been harmonised - to the extent possible - with those of other
International Financial Institutions and EU development agencies to simplify
client reporting requirements for co-financed operations. The Bank is engaged
in a number of working groups that bring together International Financial Institutions,
European Development Finance Institutions and EU development agencies aiming to
improve coordination and harmonization of results indicators.
3.2.        Expected results by sector
all resources
Table 4 presents the sectoral distribution
of all EIB financing operations signed in 2013.
Credit lines to financial institutions for
private sector development were the most prominent activity by volume of
operations signed in 2013, in particular in the Pre-Accession region and the
Eastern Neighbourhood. These were followed by energy - in particular in the ALA
regions - transport and urban development. The breakdown by sector and region
is provided below.
Table 4:
Sectoral breakdown of external operations signed in 2013 under the Mandate and
at EIB own risks
 EUR mn || Pre-Accession || Mediterran-ean || Eastern Neighbour-hood Russia || Asia and Latin America || South Africa || Total 
 Energy || 199 || 253 || 105 || 867 || 110 || 1.534 
 Transport || 460 || 50 || 438 ||             -   ||   || 948 
 Water, sewerage || 6 || 77 || 64 || 60 ||   || 207 
 Credit lines || 1.450 || 80 || 1.193 || 283 ||   || 3.006 
 Agriculture, fisheries, forestry || 150 ||   || 6 || 21 ||   || 177 
 Industry ||   || 20 ||   || 9 ||   || 29 
 Financial Services || 192 ||   ||   ||             -   ||   || 192 
 Telecommunications || 300 ||   ||   ||             -   ||   || 300 
 Urban development || 200 || 50 ||   ||             -   || 150 || 400 
 Total || 2.958 || 530 || 1.805 || 1.240 || 260 || 6.793 
Nota Bene: In
addition to the above volumes, equity and microfinance operations amounting to
EUR 53m were signed on third party resources in the Mediterranean.
3.2.1 – Results from EIB support to the economic
and social infratructure sector
Table 5 summarises the REM standard indicators and values of
relevance for the expected outputs and outcomes of EIB loans for economic and
social infrastructure signed in 2013. These key indicators summarize how EIB
projects are expected to provide access to basic services such as electricity,
water and sanitation to millions of people. Social services such as health
care, education and housing are also targeted by EIB financing. Access to
secure transport and mobile services will not only improve the living
conditions of population, but will provide for basic infrastructures necessary
for the economic development of the countries. The infrastructure projects
providing for these basic services are equally reflected in the table.
Table 5: Expected outputs for key
indicators on operations signed in 2013 – economic and social infrastructure
development
 Outputs - Infrastructures and services || Quantity || Units 
 Energy production capacity || 2.600 || MW 
 Length of transmission or distribution lines || 2.800 || km 
 Length of rail track constructed || 480 || km 
 Water supply capacity || 423.000 || m3 
 Sewerage treatment plant capacity || 673.500 || Person - Equivalent 
 New housing units || 19.000 || Households 
 New / improved school area || 544.000 || m2 
 New / reconstructed hospital area || 357.000 || m2 
 Homes connected to fixed broadband networks (xDSL) || 1,38 || million Households 
 Newly planted or rehabilitated forest area || 210.000 || Ha 
 Outcomes - Population reached through access to new or improved services || Quantity  || Units 
 Households potentially served by new electricity generation capacity || 4,84 || million Households 
 Population benefitting from improved municipal transport || 2,15 || million People 
 Additional vehicles transiting on new or improved roads and motorways || 32.000 || vehicles per day 
 Increase in air traffic movements || 284.000 || flights per year 
 Households benefitting from new or improved access to water supply || 328.400 || Households 
 Households benefitting from new or improved access to sanitation facilities || 134.700 || Households 
 Population accommodated in new housing units || 66.000 || People 
 Students in new or renovated schools || 158.000 || Students 
 Additional patients treated in new or renovated care facilities || 740.500 || Patients 
 Additional fixed broadband lines activated (xDSL and cable) || 906.000 || Lines 
 Additional mobile subscribers || 3,80 || million People 
The following sections go into more detail
of the expected results analysis, starting with operations to support private
sector development, the largest field of activities in 2013.
3.2.2 – Results from EIB support to SMEs
and mid-caps sectors
In 2013, the EIB signed 24 operations
providing credit lines worth EUR 2.8bn to banks for on-lending to SMEs and
mid-caps. In addition, it signed 5 operations investing a total of EUR 40m in
private equity funds which target SMEs. The EIB also signed 3 operations
providing credit lines through financial intermediaries for on-lending to small
and medium sized projects aimed at social and economic infrastructure
development.

 Expected impact of credit lines
     through financial intermediaries

Overall, the credit lines signed in 2013
are expected to have a significant impact on increasing access to finance. The
EUR 2.8bn in credit lines to financial intermediaries for on-lending to SMEs
are expected to generate about 49,000 loans for a total amount of EUR 6.5bn.
Average size loans range from EUR 98,000 and EUR 119,000 in Asia and Eastern
Neighbourhood to EUR 144,000 in the Pre-Accession region up to EUR 1.7m in a
loan for mid-caps in Egypt. 
EIB credit lines are also expected to have
a significant impact on increasing access to longer term funding, which is
critical for SMEs to cover long term investment needs. SME Credit lines signed
in 2013 had an average maturity of 6.4 years, which was considerably longer
than the longest maturity available to local SMEs as partner banks largely
price SME loans from short-term client deposits.
Table 6:
SMEs - expected outcomes by region
 Operation type || Number of operations || EIB credit lines signed 2013 (EUR m) || Loans to - SMEs (EUR m) || Loans to - SMEs (#) || Average Loan Size (EUR m) || Average tenor of loans weighted by loan size (in years) 
 Credit lines for SMEs and mid-caps ||   ||   ||   ||   ||   ||   
  Pre-Accession || 12 || 1.200 || 3.410 || 23.698 || 0,1 || 4,4 
  Mediterranean  || 1 || 80 || 160 || 95 || 1,7 || 4,0 
  Eastern Neighbours, Russia  || 8 || 1.193 || 2.370 || 19.947 || 0,1 || 8,5 
  Asia and Latin America || 3 || 283 || 526 || 5.355 || 0,1 || 7,4 
 Total || 24 || 2.756 || 6.466 || 49.095 || 0,1 || 6,4 
 Credit lines for social and economic infrastructure ||   ||   ||   ||   ||   ||   
  Pre-Accession || 3 || 450 || 700 || 181 || 3,9 || 4,5 

 Expected results of credit lines for SMEs and midcaps 

About
83% of the loans financed through EIB's credit lines (44% of the lending
volume) are expected to go to micro enterprises. According to the EU
definition, micro enterprises are those with less than 10 employees while small
enterprises have 10 to 50 employees. Average loan size increases in line with
firm size, from an average of EUR 70,000 for micro-enterprises to around EUR 2m
for medium enterprises.
Table 7: Credit lines for SMEs - expected
outcomes by enterprise size
 Enterprise Size || Number of operations (#) || Loans to final beneficiaries (#) || Loans to final beneficiaries (EUR m) || Average loan size (EUR m) || Jobs sustained through intermediaries (#) 
 Credit lines for SMEs and midcaps ||   ||   ||   ||   ||   
 Micro || 13 || 40.689 || 2.830 || 0,1 || 304.196 
 Small || 12 || 7.946 || 2.366 || 0,3 || 191.852 
 Medium || 11 || 455 || 1.070 || 2,4 || 57.666 
 Large || 1 || 5 || 200 || 40,0 || 18.000 
 Total: || 37 || 49.095 || 6.466 || 0,1 || 571.714 
 Credit lines for social and economic infrastructure ||   ||   ||   ||   ||   
 Micro || 1 || 116 || 300 || 2,6 || 1.100 
 Medium || 1 || 65 || 400 || 6,2 || 9.685 
 Total: || 2 || 181 || 700 || 3,9 || 10.785 
Notes:
Some operations finance both SMEs and mid-caps, therefore the total number of
credit lines for SMEs exceeds 24. One credit line for social & economic
infrastructure did not contain jobs data and is therefore excluded.

 Expected results of microfinance
     institutions loans

In 2013, the EIB continued also to support
microfinance institutions (MFIs) directly, in the form of 3 loans to
microfinance institutions, and 2 equity participations, one in a microfinance
institution (ACAD Microfinance Palestine) and one in a special fund investing
in a number of microfinance institutions which are selected by its management
(European Fund for South East Europe - EFSE III). The total volume signed in
2013 is EUR 51m. The MFIs are expected to provide approximately 98,600 loans to
micro-entrepreneurs of which roughly two thirds are expected to be women. Loans
are expected to be in the range of EUR 500 to EUR 1800 on average, depending on
the institution and region. The following 4 operations (excluding the EFSE
microfinance investment vehicle) are expected to support roughly 59,000
existing jobs in micro-enterprises and 1,653 jobs in microfinance institutions.
Table 8: Expected results of microfinance
institutions loans
 Project Name || EIB Amount signed in 2013 || Loans to final beneficiaries || Average loan size || Direct employment in EIB intermediary || Direct employment in final beneficiaries (including self-employed) 
   || (EUR m) || (EUR m) || (#) || (women %) || (EUR) || (# FTE) || (# FTE) 
 ENDA INTER-ARABE III || 4,0 || 16,0 || 32.000 || 70 || 500 ||   || 21.333 
 ACAD MICROFINANCE PALESTINE || 0,8 || 31 || 17.500 || 70 || 1.790 || 55 || 10.345 
 FONDEP II || 4,0 || 28 || 31.111 || 60 || 900 || 1.200 || 15.556 
 AL MAJMOUA II || 4,0 || 18 || 18.000 || 50 || 1.000 || 398 || 12.000 
 Total: || 12,8 || 93,3 || 98.611 || 63 || 946 || 1.653 || 59.234 

 Expected results of Private Equity
     funds - support for SMEs

Apart from microfinance, the EIB uses
private equity funds also to support SMEs. The EIB committed in 2013 to invest
in 5 private equity funds, aimed at supporting SME development. The expected
impact of the investments is significant in terms of leverage, as the EIB leveraged
about 5 times its contribution. The funds are expected to invest in
approximately 61 mid-sized companies, which are estimated to employ some 10,000
people. The average investment in the SMEs will range from EUR 400,000 to EUR
10m. In addition to providing much needed start-up and growth capital to SMEs,
these funds will also support the growth and competitiveness of the SMEs by
providing strategic and managerial advice and transferring know-how and good
industry standards in terms of transparency, reporting, accounting and
administration. Moreover, the majority of these funds target local companies
that have potential to become regional leaders, thereby fostering greater
integration within the Mediterranean region.
Table 9: Expected results of Private Equity
funds - support for SMEs
 Project Name || EIB commitment || Fund Size || Number of investee companies || Net creation of direct permanent employment || Direct employment in investees || Average Investment (EUR M) || Leverage (X) 
 CAPITAL NORTH AFRICA VENTURE FUND II || 20 || 100 || 10 ||   || 2.900 || 8,0 || 5,0 
 BADIA IMPACT FUND || 8 || 20 || 21 ||   || 638 || 0,5 || 2,5 
 FUND FOR THE MEDITERRANEAN REGION II || 20 || 120 || 10 ||   || 2.000 || 10,0 || 6,0 
 EUROMENA III FUND || 20 || 115 || 7 || 1.500 ||   || 1,6 || 5,8 
 CAPMEZZANINE FUND II || 15 || 71 || 13 || 900 || 2.300 || 0,4 || 4,7 
 Totals: || 83 || 426 || 61 || 2.400 || 7.838 || 3,4 || 5,1 

 Expected employment impact - Jobs
     sustained through intermediated operations

In 2013, the EIB signed 31 intermediated
operations with banks and microfinance institutions, which are expected to
sustain roughly 643,385 existing jobs in micro, small, medium and large
enterprises. In addition, participation in 8 equity funds is expected to create
or sustain approximately 17,299 jobs, bringing the total jobs expected to be
sustained through this year's intermediated operations to 660,684.
Operations with banks and microfinance
institutions will mainly support jobs in micro (57%) and small (30%)
enterprises. Micro enterprises include a range of sizes from the self-employed
benefiting from loans from microfinance institutions (1,653 jobs) to enterprises
with up to 10 employees benefiting from credit lines to banks (304,196 jobs).
Small enterprises with 10 to 50 employees will employ roughly 192,000 people.
Chart 7:
Jobs by enterprise size (credit lines and microfinance institutions)
The highest share of jobs sustained (47%)
will be in Pre-Accession countries. About 24% will be in enterprises in the
Eastern Neighbourhood, 18% in Asia/Latin America and 11% in the Mediterranean
region. In the Pre-Accession and Eastern Neighbourhood region, the vast majority
of jobs will be in micro- enterprises, with a considerable share also in small
enterprises. In the ALA region, jobs will be exclusively in small enterprises
(10-50 employees) while in the Mediterranean, the vast majority will be in
micro- (self- employed) enterprises.
Chart 8: Jobs by region and Enterprise Size

 Expected employment impact - Jobs
     sustained through economic and social infrastructure operations

Infrastructure investments generally have
high employment multipliers, which work through several channels—direct,
indirect, and induced, and often generate many more indirect and induced jobs
than direct jobs. For example, providing a reliable electricity supply allows
enterprises to produce more and hence create additional employment. There is
direct employment created in the short term during the construction period or
permanent employment generated in infrastructure service enterprises as a
result of the projects financed by the EIB.
The EIB estimates employment during
construction of the infrastructures which it finances, the latter expressed in
person-years equivalent. Estimating the specific impact of an infrastructure
investment in terms of indirect and induced employment in the local economy is
not done for each of the projects, due to the complexity of assumptions which
would be necessary.
Of the projects signed in 2013, 31 are
direct financings for which direct employment creation data have been
estimated. These projects are mainly in the social and economic infrastructure
area. They are expected to create approximately 1,800 new permanent full time
jobs and around 160,000 person-years equivalent in terms of temporary
employment during construction.
Chart 9: Employment supported during operation and
during construction, by sector
In terms of temporary employment, the main
sectors contributing in 2013 are transport, natural resources and water and
sewerage, requiring approximately 100,950, 17,500 and 14,281 person-years
respectively, or 81 per cent of the total.
The main contributors to temporary
employment during construction in the transport sector are Istanbul¬Ankara
High-Speed Rail Link project with 30,000 person-years or 30% of the sector and
the North South Road Corridor project in Armenia with 21,000 person-years or
21%. In terms of full-time jobs created, these are more evenly spread among
sectors, being transport, urban development and energy those with major job
creation.

 Highlights

Compared to the previous year, the volume
of local private sector support more than doubled. Most of this increase in
signatures relates to activities in Russia, where now, signing of the potential
operations will be subject to the relevant EU sanctions.
Three credit lines were signed in Ukraine
and Kazakhstan, for a total of EUR 440m. The operations in Kazakhstan are
geared in part towards supporting climate action, in line with the EIB's
lending priorities in Asia. Climate action was also a strong focus for an
"SME and Green Energy Global Loan" signed in Sri Lanka which uses the
Central Bank as channel, in the absence of intermediaries which would be
acceptable by EIB's credit risk standards. In the Mediterranean region one
credit line was signed with NBE a leading Egyptian bank, which is state-owned but
operates on a purely commercial basis. NBE has established a specialised
business entity employing approximately 1,000 staff in order to provide SME
clients with a full range of banking services. EIB's support is part of the
Deauville Partnership and also implements the Bank's commitments towards the
EU-Egypt task force.
Some of the EIB's credit lines will also
help to increase access to finance in underserved markets. For example, part of
the EUR 100m loan to MBDP bank in FYROM will provide much needed financing to
SMEs in rural areas and particularly in the agricultural sector by co-financing
investments eligible under EU's Instrument for Pre-accession Assistance for
Rural Development (IPARD). They will also be extended to some shallow markets,
such as Sri Lanka, Kazakhstan, Ukraine, Moldova, and some Western Balkans
countries where credit to the private sector does not exceed 40% of GDP,
thereby making a contribution to financial sector development. The contribution
to financial sector development in countries with relatively less developed
financial sectors also comes by promoting competition in those markets. This is
achieved through partnerships with second tier institutions outside the group
of blue chip commercial banks, such as for example TSKB and TKB in Turkey
(private and state development banks), which account for only 1.6% and 1% of
the Turkish corporate lending market respectively. The EIB also supports the
development of financial sectors by supporting the introduction of new products
such as mobile banking as is the case of the loan to NBE bank in Egypt. The EIB
also uses innovative ways for avoiding that intermediaries and final
beneficiaries get exposed to currency risk; this is achieved through local
market swap instruments in Turkey, where loans in local currency were signed
with 3 Turkish banks.
3.2.3. Results from EIB support to the energy
sector
The EIB aims to support the development of
sustainable, secure and affordable energy systems. It therefore prioritises
renewable energy generation, the switch to clean energy production and energy
efficiency.
In 2013, the EIB financed 18 projects in
the energy sector (EUR 1.5bn signed for total investment cost of EUR 5bn), of
which 10 direct lending operations and 8 multi-project facilities including 2
equity participations.
The following chart illustrates the key
outputs and outcomes expected from energy projects that benefit from EIB
financing signed in 2013.
Chart
10: Expected outputs and outcomes of Energy projects signed in 2013
Because many of the key challenges in the
energy sector are institutional and policy-related, such as inappropriate
regulation, the use of fossil fuel subsidies or weak private sector participation,
the EIB's involvement at the country's institutional and policy level is often
necessary, generally in close coordination and cooperation with the respective
EU Delegation and  other IFIs present. To increase its added value, the EIB
also mobilise technical assistance and EU investment grants, the latter
principally as incentives to encourage investments in energy efficiency and
smaller renewable energy projects. The EIB also continues to explore options
for alternative financing structures as well as new financial instruments to
extend the reach and enhance the efficacy of the its financial interventions.
Highlights
Eight of the directly financed projects
target energy generation. Jointly, these projects will create 1 789 MW
of installed energy generation capacity and are expected to result in in 6 139
GWh/year additional energy generation. Renewable energy sources will account
for 989 MW capacity and 3 319 GWh/year. Wind is the main source of renewable
energy financed, followed by hydropower.
Chart 11: Distribution of energy generation by source
Highlights from the expected results of
these projects include the Tafila Wind Farms project in Jordan which will
generate electricity at a cost significantly lower than the current economic
cost of alternative power generation and is expected to reduce imports of
fossil fuels by EUR 200m/year. The Nepal Tanahu hydropower project will operate
as a peaking power plant (6 to 9 hours per day) from December until March,
supplying base-load power for the rest of the year, while the Keyal Khwar
hydropower project in Pakistan will displace alternative investments in
conventional fossil fuel-fired generation. Both hydropower projects include
rural electrification and community development programmes to benefit
households affected by the projects. The Bangladesh Power Energy Efficiency
project will significantly improve the efficiency of two gas-fired plants
through the use of waste heat. 
Table 10: 2013 signed direct-financed
energy generation and efficiency projects - highlights
 Operation || Country || Focus || Additional capacity || Additional generation 
 (MW)  (GWh/year) 
 Ka Xu Concentrated Solar Power || South Africa || Solar || 100 || 325 
 Las Pailas Geothermal || Costa Rica || Geothermal || 55 ||   
 ONEE Project Eolien || Morocco || Wind || 450 || 1236 
 Tafila Wind Farms || Jordan || Wind || 117 || 354 
 Nepal Tanahu Hydropower || Nepal || hydropower || 140 || 586 
 Keyal Khwar Hydropower || Pakistan || hydropower || 127 || 428 
 Bangladesh Power Energy Efficiency || Bangladesh || Gas; energy efficiency || 160 || 420 
Two energy transmission projects
were signed in 2013: the Sao Paolo Power Distribution - Elektro project in
Brazil and the Yacyreta Transmission Line in Paraguay. The Elektro project will
enable the promoter, owned by a major EU energy utility, to reduce losses, and
improve the quality and the reliability of supply, thus meeting growing demand
in existing distribution areas and reaching hitherto unserved areas. Together
these projects will construct or upgrade 2 806km of power lines and transport
an additional 4 775 GWh/year electricity.
The EIB also provided finance through eight
multi-project facilities as a way of supporting mainly small and medium-sized
energy projects. This includes the Central American Climate Change Framework
Loan II for investments in renewable energy by private companies and public
utilities and the Green for Growth Fund II, as well as in Turkey the Energy
Efficiency Co-financing Facility and the Yapi Kredi Climate Change Facility II.
Another two facilities are focused on India: the SREI Infrastructure Finance
Limited framework loan and the EXIM Bank of India Climate Change Framework Loan
II. The latter will contribute to the financing of small hydro
(run-of-the-river), wind power, solar, geothermal, sustainable biomass for
electricity and heat projects, as well as energy efficiency projects in
cogeneration, district heating and industrial modernisation. It is expected to
lead to an additional renewable energy capacity of 200 MW and 440 GWh/year of
additional electricity production.
The Global Energy Efficiency and Renewable
Energy Fund (GEEREF) is an innovative fund of funds mainly sponsored by the
Commission, Germany and Norway, and advised by the EIB and EIF, catalysing
private sector capital into clean energy projects in emerging countries and
economies in transition. During 2013, GEEREF attracted new capital from private
investors (totalling EUR 9.2m), with fund-raising continuing. Also the EIB
signed a EUR 10m capital contribution from its own resources. At end of 2013,
GEEREF commitments represented EUR 74m, on a portfolio of 7 funds.
3.2.4. Results
from EIB support to the transport sector
Efficient mobility infrastructure and
services are indispensable for any well-functioning society and are necessary
elements of any viable longer term economic strategy. Improved transport
infrastructure decreases transport costs (through vehicle operating or
maintenance costs savings), and reduces the number of accidents. It supports
the development of trade and markets, economic growth as well as regional
integration. It also provides the means for emerging markets to integrate into
the global economy. 
From a social perspective, transport
supports individual mobility so that all people can benefit from access to
essential public services. It can also lead to beneficial modal shifts, reduced
energy consumption and improved safety. In 2013, the EIB signed ten transport
sector projects, lending EUR 948m towards total project costs of EUR 6.4bn.
These cover the road, rail, air transport and urban transportation sub-sectors.
Key challenges in the sector include
effective planning and prioritization, institutional strengthening, ensuring
appropriate maintenance of infrastructure, as well as financial sustainability.
EIB involvement in the sector ensures that projects meet international
environmental standards, social implications of project interventions
adequately addressed, and good procurement practices followed.
Chart 12:
Expected outputs and outcomes from 2013 transport projects
Highlights
Five road projects, supported by EUR 500m
EIB lending, will improve national road and motorway networks in 5 Eastern
Neighbourhood and Pre-accession countries, enhancing regional integration and
economic growth:
•           The Armenia North-South Road
Corridor project will improve 145 km of the corridor between the capital city
of Yerevan and Bavra, enhancing an important trading route for the landlocked
country.
•           The Georgia East-West Highway
project will upgrade 183 km of the East-West highway. It addresses one of the
Georgian Government's top priorities, namely the development of Georgia's
competitiveness as a transit country. The corridor also forms part of the
Extended TEN-T network in Eastern Neighbour countries.
•           The Banja Luka - Doboj Motorway
project in Bosnia and Herzegovina will construct a motorway between the two
cities in Republika Srpska in Bosnia & Herzegovina. It will contribute to a
significant reduction of travel times between Banja Luka and Sarajevo, the
capital of the Federation of Bosnia Herzegovina (FBiH). The project will
contribute to trade and business improvements and support private sector
development within Republika Srpska and FBiH, and also in Croatia, and Serbia
given the motorways proximity with the pan-European Corridor Vc linking
Hungary, Bosnia Herzegovina and Croatia.
•           The Moldova Roads III project
will rehabilitate or upgrade key priority road sections throughout the country,
improving transport conditions and rationalising transit traffic.
•           The Road Rehabilitation and
Safety project in Serbia will enhance the efficiency, effectiveness and safety
of 1 100 km of trunk roads throughout the country that serve international,
inter-city and local traffic demand. It will scale up the use of efficient road
asset management practices, the institutionalisation of safe road design
principles and road safety audits, while strengthening institutional capacity.
One railway project, the Istanbul-Ankara
Railways Tranche B project in Turkey represents a second tranche (EUR 200m) of
the financing of a 478 km double track electrified High Speed Line (HSL)
between the two cities.
Two air navigation upgrade projects in
Egypt and Ukraine (EUR 91m EIB lending) will involve modernisation of
communications, navigation and surveillance systems to comply with ICAO and
European requirements, improve safety and support increased air traffic. In
Egypt the project forms an integrated part of the EUROMED Aviation Project, the
country's roadmap towards a European-Mediterranean Common Aviation Area. In
Ukraine, most of the air navigation infrastructure is outdated, incompatible with
current European systems and standards, and increasingly becoming
unserviceable. The project will assist the country in forming a Common Aviation
Area with the EU and facilitate its operational compliance with the Single
European Sky (SES) programme.
In urban transportation, the Yerevan Metro
Rehabilitation project in Armenia will remedy the metro systems complex
problems with water ingression which would otherwise force closure for safety
reasons. The Dnipropetrovsk Metro project in Ukraine will extend the existing
metro line through a 4 km double-track underground tunnel connecting the main
railway station to the city centre and three new stations. It will shift
travellers from buses and cars and therefore relieve traffic congestion in the
city, reducing traffic accidents and GHG emissions. The two metro projects
(total EIB financing: EUR 157m) will provide improved municipal transport
services for 2.15m people.
3.2.5. Results from EIB support to the water
and sanitation sector
Rapid urbanisation and changing consumption
patterns set considerable challenges for water supply and sanitation. The EIB's
support to developing vital infrastructure in this sector is very important in
the move towards meeting the Millennium Development Goals.
Chart 13: Expected outputs and outcomes
from 2013 water and sewerage projects
Challenges in the sector include
mobilisation of sufficient financial resources on a concessionary and longer
maturity basis given budgetary constraints at local levels, enhancement of the
operational and financial performance of municipal utilities to ensure their
sustainability, defining realistic service levels based on user preferences and
ability to pay, regulatory reforms, proper phasing of investments, the implementation
of physical water loss reductions measures, as well as environmental
considerations.
Highlights 
One project financed by the EIB in Central
America will extend access to water and sanitation services benefitting
lower-income populations. The Water Supply and Sanitation Programme in
Nicaragua targets 19 medium-sized towns, in an area accounting for almost 10%
of the country's population.
Two projects will focus on increasing the
reliability of the local water and sanitation systems through the rehabilitation
and construction of additional infrastructure. The Water and Sanitation
Infrastructure Modernisation project in Georgia will finance 49 investment
schemes involving the construction, extension and rehabilitation of water
supply and some sewerage infrastructure in urban centres throughout the
country. It will achieve water savings, reduce health hazards and the
uncontrolled discharge of untreated waste water. The Chisinau Water Supply and
Sanitation project in Moldova consists of the rehabilitation of water supply,
sewerage and waste water treatment facilities. It will reduce water losses,
improve energy efficiency and the environment and public health in a city of
800,000 inhabitants.
One project, the Lake Bizerte Integrated
Depollution project in Tunisia, will address industrial pollution and solid
waste in addition to sanitation. It will considerably reduce pollution,
including from industrial sources, in the Lake Bizerte region. It also involves
the rehabilitation of some 140,000 m3 of existing landfill and dumpsites. This
project is part of the Horizon 2020 Initiative to depollute the Mediterranean
Sea through the Mediterranean Hotspots Investment Programme (MeHSIP).
3.2.6.   Results from EIB support to the
health and education sector
EIB loans support not only economic
infrastructure such as transport and energy, but also social infrastructure,
such as health and education facilities. In 2013, only one direct operation in
these sectors was signed, the Istanbul Earthquake Risk Mitigation II project
for Turkey. The EIB financing will contribute to the reconstruction of three
hospitals and the strengthening or reconstruction of around 10 health centres,
80 schools and 20 other public buildings.
Output indicators for improved services in
these sectors include a total construction floor area in the largest two of the
three hospitals reconstructed under the project of 357,000 m2 including 517 new
and 1,325 improved bed positions. Investment in schools will lead to 250,000 m2
of newly constructed and 294,000 m2 of improved school areas.
Expected outcomes include the number of
patients treated in the hospitals which will increase by 35,000 for inpatients,
5,500 for day patients, and 700,000 for outpatients. The project will also lead
to decreases in the rate of bed occupancy; the volume of surgical interventions
per operating theatre and the average length of stay of patients, from 5 to 4
days. Places available in newly constructed schools will reach 66,000 pupils
and in retrofitted schools 92,000 pupils.
3.2.7.   Results from EIB support to the
telecommunications sector
Telecommunications infrastructure plays a
key role in encouraging investment and helping local enterprises remain
competitive. It can enhance regional integration and economic opportunities in
poorer regions. By financing this sector, the EIB helps to promote competition
and lower transaction costs. Key sector challenges include rapidly evolving
technology, convergence between telecommunications and other internet-based
digital services, ensuring predictable regulation in areas such as licensing,
pricing and interconnection rules, and separating ownership, operation and
regulatory functions.
In 2013, the EIB financed two projects in
the telecommunications sector in Turkey (EUR 300m signed for total investment
cost of EUR 1.7bn). These projects will significantly increase the number of
people having access to telecommunications broadband services and improve the
quality of internet connection in Turkey. This will be achieved through
investments in different types of technologies and at different levels of
telephone networks. Investment in the upgrade and extension of second and third
generation mobile networks will bring access to broadband internet through
mobile technology to additional areas, and increase the speed of connection.
Expected outcomes of the projects will lead
to increases in the quality and capacity of telecommunications networks, and to
additional customers having activated fixed or mobile broadband services. An
increase in broadband subscribers of 3,804,000 people is expected, as well as
800,000 additional DSL lines will be activated.
3.2.8.   Results from EIB support to the
housing and urban development sector
One operation (EUR 150m signed for total
investment cost of EUR 469m) will provide affordable and social housing in
South Africa. The operation is expected to lead to the construction,
refurbishment and creation through building conversion of around 23,800 housing
units throughout South Africa. The operation will result in a total population
of 66,000 accommodated.
3.2.9.   Results from EIB support to natural
resources/agriculture and forestry sectors
Three operations in the natural resources
sector (total EIB financing of EUR 177m for total investment cost of up to EUR
651m) are primarily focused on interventions aiming at environmental protection
and climate change mitigation and adaptation, while also developing rural
economies, in particular through new forestry plantations, improvement in
forest health and conservation, reducing erosion, as well as the development of
domestic wood processing industry and increased production of bioenergy from
sustainable resources. It is estimated that the projects will contribute to
afforestation of up to 100,000 ha, existing forest rehabilitation on some
110,000 ha, and erosion control activities on 155,600 ha. Additional support to
agriculture projects was provided via credit lines. EUR 214 million was
allocated via credit lines to 1100 sub-projects in 2013 including operations in
ACP.
As expected outcomes, the projects
co-financed by the EIB will contribute to increases in productive forest area
by 500,000 ha, in additional area of protected forest by 1,470,000 ha, in
Forest Stewardship Council- certified forest by 1.8 million ha, and will in addition
support significant CO2 sequestration and hence climate mitigation.
3.3. EIB Additionality
3.3.1.   Concept and overall features
As the bank of the EU, fulfilling a public
mission, the EIB is not expected to merely duplicate what the market is already
able to provide. Its interventions provide more support than just standard
loans. For example, EIB's loans may be of longer tenor than is usual in the
market, or may be combined with technical advice where project promoters lack
of experience or institutional capacity. The EIB may also use higher risk
instruments. Furthermore, its role goes beyond lending and includes the ability
to attract finance from other development institutions or private players,
blending loans with grants and providing advisory services.
The REM framework measures this
"additionality" (Pillar 3), the difference between the EIB
contribution to an investment project and standard market finance, in three
dimensions: the adequacy of financial resources for the needs of projects; EIB's
technical contribution; and the impact in terms of raising standards and
facilitating contributions from other sources. The overall EIB additionality is
rated on a scale of 1-Low, 2-Moderate, 3-Significant and 4-High, taking into
account the three dimensions above.
In 2013, all operations were expected to
bring advantage to borrowers compared to market finance. None was rated low in
terms of additionality; 17 % (11 operations) ranked moderate, almost two third
(41 operations) ranked significant, and 21 % (14 operations) featured high
expected additionality.
The following chart shows the breakdown of
overall Pillar 3 ratings in 2013, as well as of the ratings of the three
dimensions of Pillar 3, which will be commented upon in more detail in the
following sections.
Chart
14: Pillar 3 rating
3.3.2.   Finance adapted to the needs of
projects
A large majority of EIB's financing
operations is expected to provide significant (55 %) or even high (33 %)
advantage to borrowers in terms of financial instruments. The operations rated
significant extend the loan tenor considerably beyond standard market practice;
some are combined with grant funding notably from the EU's regional blending
mechanisms. Operations in the group rated high also offer local currency
funding and are more often blended with grants, or provide innovative features.
•           Advantage of long tenor
In 2013, the average tenor of EIB's
financing operations signed in the regions covered by the Mandate was 14.6
years, varying from 10.3 years in credit lines for SME and mid-cap projects, to
18.7 years for infrastructure projects. Loan tenor on the local financial
markets is usually significantly below 10 years, suggesting that EIB's funding
tenors are often at least double the market average.
•           Innovative features
Twenty-three operations offer innovative
features which were rated significant or high, in particular private equity
funds, and a number of indirect lending operations through intermediary banks.
For example, the Halkbank Innovative Enterprises Global is the first financing
package in Turkey combining an EIB Loan with an EIF Guarantee within the
framework of the EIB Group Risk Sharing Instrument ("RSI") for
Innovative and Research oriented companies. Under another innovative operation,
the Denizbank Loan for SMEs II, the EIB will invest up to EUR 100m in a private
placement of senior notes secured by a portfolio of SME loans. 
•           Local currency loans
The EIB subscribed in 2013 to 11 private
equity funds, offering share capital denominated in local currency to private
enterprises incorporated locally. This includes the Global Energy Efficiency
and Renewable Energy Fund - GEEREF, a fund of funds.
A number of the EIB's credit lines for
private enterprises and microfinance offer loans with repayment terms denominated
in local currency. This is particularly important for enterprises which sell
their products on the domestic or regional markets and cannot rely on hard
currency income. In Turkey (for example the Denizbank Loan for SMEs II) the
local currency denomination for end-borrowers is achieved through swap
instruments available in the market. In the FEMIP region, the EIB (using funds
from EU budget) absorbs the local currency risk and prices it itself. The Bank
has direct access to local currency funds in the Republic of South Africa. A
credit line for Affordable and Social Housing, and the loan for the Ka Xu solar
plant, both signed in 2013, provide for the option of disbursing in rand.
3.3.3. Technical and Sector contribution
The EIB contributes to projects outside the
EU also through:
•           Involvement in project
preparation (for example, in the review of feasibility studies or environmental
and social impact assessments).
•           Support to project
implementation (may be provided through support or technical assistance to the
Project Implementation Unit)
•           Broader support to project
operations or to the sector more generally (activities which will have an
indirect positive impact on the project's operation, including contribution to
the strengthening of the sector which the project pertains to).
As part of the REM framework, where
relevant, projects are given a rating for each of these components, and an
overall technical contribution rating summarising the assessment of the
individual elements.
•           EIB accompanies projects
throughout their lifecycle
The EIB has provided technical contribution
to 45 operations, representing over 70% of the projects signed in the regions
covered by the mandate in 2013. EIB's technical support is intended to help
clients prepare and implement projects more efficiently and effectively. For a
large majority (71%) of the 45 projects involving technical contribution the
EIB's support extended to all three elements mentioned above: preparation,
implementation, sector capacity. This is especially true for the 14 projects
rated high or significant on technical contribution overall. The EIB's input on
each of the elements was also frequently scored as high or significant. For
project preparation support, this applies to 36% of the operations including
such contribution. The same applies to 46% for Sector support and 65% for
Implementation support.
EIB's technical contribution is also
valuable in the financial sector, for instance through representation in funds'
supervisory boards and board committees, thus effectively contributing to the
strategic guidance of the corresponding operations.
•           EIB mobilizes grants for
Technical Assistance
Technical assistance (TA) grants are
mobilized by the EIB for 16 of the projects signed in 2013. As shown below, all
regions (excluding South Africa) have benefitted in a similar manner from TA.
In terms of the specific regions, in the Eastern Neighbourhood there were 6
projects with TA (40% of the operations in the region) while in the
Pre-Accession, TA was provided in 5 countries (33% of the operations in the
region).
Chart 15:
Operations supported by TA mobilized by EIB by region
Notes:
A single project may have distinct components located in distinct countries,
and/or affecting different sectors. As a consequence, the total number of
operations in the two charts is slightly larger than the total number of
projects receiving technical assistance.
As shown in the following chart, in terms
of sectors, energy has benefitted from TA most often (5 projects), along with
operations in transport as well as water and sewerage sectors (4 and 3
respectively).
In Water and Sewerage, TA was mobilised for
most of the projects. In energy there are 5 projects with TA, although this is
low proportion of the projects signed in 2013 (26%) compared to other sectors.
Chart 16: Operations supported by TA mobilized by EIB
by sector
EIB mobilizes grants to support projects
and mitigate risks: TA is usually grant funded and EIB's positioning is often
instrumental in helping unlock financing from different sources, particularly
from the EU budget. These resources are then blended with EIB's (and other
financial institutions') loans to form the full financing package offered to
the beneficiary.
A typical form of technical assistance
targets financial intermediaries which receive assistance in terms of applying
eligibility criteria, product design and raising compliance standards.
Additionally, TA is often offered in support to microfinance operations.
As an example of provision of TA, the
conversion of two natural gas fired plants in Bangladesh with the aim of
increasing capacity and efficiency as part of the Bangladesh power energy
efficiency project will benefit from a EUR 5.7m grant from the EU Asia
Investment Facility. This grant will be used for project preparation and
implementation, and sector capacity-building.
3.3.4. Raising standards and mobilising
other sources of finance
A large majority of the operations signed
in 2013 are expected to generate a significant (44%) or even high (27%)
contribution to raising standards and to mobilising complementary finance from
other sources.
The partner countries' regulation regarding
the environmental and social impacts of investment projects is not uniform, and
may differ from the norms applicable in the EU, for example in respect of the
need for Environmental Impact Assessment or public consultation, or the level
of compensation of affected people. In this context, the EIB ensures that its
own standards are applied, which in turn reflect the "EU acquis". One
major source of standards is the EIB's Statement of Environmental and Social
Principles and Standards. Promoters are requested to comply with the provisions
in this Statement. In another area, procurement, the EIB also contributes to
raising standards, in particular for projects in the public sector, by
requesting that goods and works for a project be sourced on the basis of open
competition. This helps reducing project costs to the benefit, ultimately, of
the clients of public services such as the supply of drinking water or
electricity. More than two thirds of all operations signed in 2013 are expected
to contribute significantly or highly to raising standards.
The EIB's presence usually provides a
'stamp of approval' for a project - EIB's decision to finance a project sends a
signal that the project is viable. This is expected to make it easier for other
projects in the same sector and country, or for projects using similar
technology, to be designed and financed. It may also encourage other financiers
to participate - sometimes, EIB's participation is absolutely critical for a
project to receive sufficient funding. 22 operations, one third of the total
signed in 2013 scored "high" in terms of the demonstration effect of
EIB's involvement.
The EIB has been very active in
facilitating the successful closing of financing packages. In 28 projects (42
%) the EIB had either a strong (significant or high) role in structuring the
package, or in facilitating or leading the co-financing relationship with other
financiers. The leverage between EIB's contribution and co-financing from other
external sources (leaving aside promoters' own funds) is roughly 2.1. The EIB
typically has an even stronger multiplier effect in closing private equity
funds as it often encourages other investors to join. In the Mediterranean
region, the EIB (using resources from EU budget) has started co-investing in
equity funds together with the Spanish Government.
3.4.        Actual results based on
selected case studies
During the first couple of years, the REM
framework will not produce actual results until they can be measured for the
projects approved under the new framework. During this time, the reporting on
actual results will be based on selected case studies. 6 case studies are
presented here to provide examples of actual results achieved by implemented
projects. As they were approved before the introduction of the REM framework,
no REM assessments were carried out at the approval stage. 
3.4.1 - ProCredit Holding Loan for SMEs
In Georgia, registered micro, small and
medium-sized enterprises employ 40.9% of all registered tax payers and generate
roughly 22% of the total value added. The sector proved resilient during the
2009 crisis, safeguarding employment and preserving reasonable returns on
activity, and is strategically important for the development of the private
sector in the country. 
However, available SME funding is typified
by short-term bank loans (2 years or less) for working capital. This makes it
hard to finance many investment projects that could enhance the productivity
and diversification of the sector. 
As part of the ProCredit Holding Loan for
SME and Priority Projects, the EIB provided EUR 15m long-term funding in 2011.
The loan maturity of 10 years, combined with attractive interest rates, has
allowed ProCredit Georgia to extend the loan maturities it offers to SME
clients, and to offer lower interest rates than would have been possible
through commercial financing. This has enabled ProCredit Georgia to reach more
SME clients, and has helped entrepreneurs to match loans with the economic
lifetime of the underlining investments. With the EIB funds, ProCredit Georgia
was able to reach 130 first time borrowers, as well as 220 clients in rural
areas, supporting agriculture and rural development. In total, the lending
helped to sustain 3427 jobs in the beneficiary SMEs. 
Table 11: Project overview: ProCredit Loan
for SMEs (Georgia)
 Outputs || Outcomes || Impacts 
 ·       593 SME investment projects ·       Average loan size EUR 26 500   ·       Average loan maturity offered: 5 years || ·       Loan maturities offered to SMEs increased by almost 1 year (or 20%) on average ·       Maturities of up to 10 years offered for certain investment projects ·       3,427 jobs sustained in supported enterprises || ·       Enhanced competition among banks in the SMEs segment ·       Increased productivity in the SME sector, promoting economic inclusion ·       Improved access to finance for remote regions and agriculture 
3.4.2 - Turkey: Supporting Afforestation
and Erosion Control
Turkey’s National Climate Change Strategy
for the period 2010-2020 identifies the key importance of a number of climate
change mitigation and adaption measures. The project financed in 2011 by the
EIB through a EUR 150 m loan for a total project cost of EUR 378 m, focused on
investments within the Ministry of Environment and Forestry’s (MoEF)
multi-annual Afforestation and Erosion Control Mobilization Action Plan.
Specifically, it supported afforestation, rehabilitation of degraded forest, erosion
control, and forest fire-fighting equipment and measures over a 3-year period.
It is estimated that the rehabilitation and afforestation measures will result
in the sequestration of at least 218,000 tonnes of CO2 annually.
Table 12: Project Results Summary –
Supporting Afforestation and Erosion Control
 Outputs || Outcomes || Impacts 
 ·         Rehabilitation of 109,000 ha of degraded forest ·         New afforestation of 75,000 ha ·         Erosion control on a further 206,000 ha ·         Provision of forest infrastructure and firefighting equipment || ·         Major CO2 eq. sequestration ·         Reduction in response time to forest fires in first-degree fire-sensitive areas from 20 to 18 minutes by end 2013 ·         Employment during implementation estimated at 13,000 person-years over the 3-year period. || ·         Contribution to climate change mitigation through afforestation and improvement in forest health and conservation ·         Contribution to climate change adaptation through reduced erosion ·         Reviving and diversifying rural economies  in forest villages populated by low-income inhabitants ·         Supporting the development of domestic wood processing industry from sustainable resources ·         Increased production of bioenergy from sustainable resources 
3.4.3 - Lao People’s Democratic
Republic: Electricity Generation from Sustainable Resources from Nam Theun 2
hydroelectric project
This project aims at exploiting Lao's large
hydropower resources to generate electricity for export to Thailand as well as
supplying power to the local grid. The environmental and social impact of the
project is being addressed through important environmental and social
mitigation and compensating measures, including improvement of living standards
and economic development for the local population affected.
EIB financing signed in 2005 was EUR 45
million, for a total project cost of EUR 998 million. By providing a loan in
support of the Nam Theun 2 hydroelectric project, EIB has allowed Lao PDR to
part-finance its equity share in the NT2 Power Company (NTPC). EIB’s financial
support has thus contributed to making possible a build-own-operate-transfer
(BOOT) long-term concession arrangement for the project which was able to
attract significant private sector investment and expertise for this large
scale infrastructure project.
Table 13: Project Results Summary –
Nam Theun 2 hydroelectric project
 Outputs || Outcomes || Impacts 
 ·         New electricity generation capacity from renewable resources of 1070 MW ·         260 km of power lines constructed, including a 40 km distribution line to the Nakai Villages Resettlement Area ·         3 main substations built || ·         6,360 GWh/yr of electricity generated in 2011 ·         Over 3 million households which could be supplied with energy generated by the project in 2011 ·         Relatively low cost of energy generated taking into account environmental externalities: USD 37/MWh versus USD 122/MWh for combined-cycle power plant ·         Exports of energy totalling 5,956 GWh in 2011, with a value of more than USD || ·         Climate change mitigation by provision of power generation from renewable source ·         Strengthening the government’s fiscal position through significant revenues ·         Promoting regional integration though energy trade ·         Demonstration of viability of private foreign direct investment and BOOT schemes in Lao PDR 
3.4.4 - Improving urban transport in
Turkey - Bursa’s Light Rail Transit System
Bursa, the fourth largest city in Turkey at
approximately 1,700,000 inhabitants, has experienced rapid growth in population
and income, generating an increased demand for transport. The project signed in
2008 aimed at extending Bursa’s Light Rail Transit System (LRTS), which
provides a faster, safer, and more environmental friendly alternative to
road-based transport. The Bank also financed an extension to the LRTS’ eastern
line in 2002.
Total project cost is EUR 230m while EIB
finances EUR 100m. The project extended by 6.6 km the light rail line,
connecting the city centre with a large residential area (Emirkoop), location
of over 40,000 homes, and the Uludag University, with a population of 43,000
students at the time of project approval. The project supports modal shift to a
faster and more environmental friendly mode of transport with expected savings
in pollution and GHG emissions.
Table 14: Project Result Summary - Bursa’s Light Rail Transit
System
 Outputs || Outcomes || Impacts 
 ·         6.6 km of rail track constructed ·         6 new stations built ·         30 new  trams purchased, with 227 passengers capacity each || ·         65 million trips on the LRTS in the first year of operation of the western extension ·         Of these, 20 million trips would have occurred on buses without the project ·         The modal shift from bus to rail has generated time savings of value estimated at about EUR 3 to 4m  || ·         Improved quality of life in Bursa through time savings and reduced environmental impact of transport ·         Improved safety for passengers travelling on rail rather than buses ·         The shift from bus to rail supported decongestion 
3.4.5 - Tunisia Solid Waste
This
project signed in 2000 presented a strategic opportunity to advance the
implementation of Tunisia’s solid waste management programme. The national
programme aimed to set up environmentally-friendly regional solid waste
management systems nationwide.
Modern
solid waste disposal systems were implemented in nine regions of Tunisia, which
host 30% of the country’s population. Financing was provided by EIB (EUR 25
million, contributing to a total of EUR 58.9 m. In 2010, an estimated 700,000
tonnes of solid waste were disposed of in the new sanitary landfills, from a
total production of 925,000 tonnes in the regions covered by the project.
Significant reductions in GHG emissions have resulted from the operation of the
projects and the promoter has been able to benefit from carbon credits
generated by the projects.
Table 15: Project Result Summary -
Tunisia Solid Waste
 Outputs || Outcomes || Impacts 
 ·         +9 new sanitary landfills with a capacity of 10.7 million m3 including gases and leachate treatment ·         41 transfer stations built ·         New equipment procured for transport between transfer stations and landfills || ·         Approximately 700,000 households  served by new sanitary landfills ·         700,000 tonnes of solid waste disposed in new sanitary landfills in 2010 and increasing ·         Significant GHG emissions reduction ·         Creation of new operating agency || ·         Creation of modern solid waste sector ·         Attraction of private sector operators ·         Improved quality of environment and lower health risks ·         Enhanced attractiveness for tourism 
4.           Contribution of EIB
lending activity per geographical region
This section provides more detailed
information at regional, country and project level of operations signed in
2013.
4.1.        Pre-Accession
Countries
4.1.1.     Activity by Country
Table 16: Summary of lending signatures under EU
guarantee by Country (number of operations and volume)
By
the end of 2013, EIB had reached 99% of the Pre-Accession Mandate regional
ceiling (net of cancellations) with EUR 99m remaining as headroom available for
signatures in 2014 before the entry into force of the next mandate. Total
cumulative lending between 2007-2013 equates EUR 9.6bn (of which EUR 500m under
the Climate Change Mandate). 
Considering
the Mandate ceiling constraint, the lower lending volumes in recent years have
been partly compensated by increasing volumes at EIB’s own risk under the
Pre-Accession Facility (PAF), with approximately EUR 1.9bn per year for a
cumulative total of 11.9bn financed over 2007-2013. Croatia received some 1.8bn
of this amount in 2007-2012, helping the country to meet the EU accession
criteria and harmonise with economic developments in the EU. On 1 July 2013,
Croatia became the 28th EU Member State. 
In
2013, EIB lending under Mandate in the region amounted to EUR 960m (of which
EUR 350m under the CCM), an increase of 17% compared to the prior year but
significantly lower than the past average of EUR 1.5bn per year over the
current mandate period. 6 public sector projects were signed under the Mandate
of which 3 in transport, a priority sector across the region underpinning the
growing economies and the need for more sustainable transport systems. Turkey
continues to be the largest beneficiary of the EIB's lending activity in the
region both under the Mandate and the PAF, reflecting the country’s relative
weight in terms of population and GDP among the Pre-Accession Countries, with
continued support for loans to SMEs, transport, telecommunications and energy
sectors. 
Additional
EUR 2.0bn was signed under the PAF (including the very first signature in
Kosovo[2]),
representing 68% of EIB total financing in the region in 2013. The majority of
this support (13 of the 20 signatures) was for private sector beneficiaries in
the form of credit lines - a key focus for the region as highlighted in the
framework of the Joint IFI Action Plan with the EIB joining forces with the
EBRD and the World Bank Group to stimulate growth in Central and South Eastern
Europe. 
A
new action plan was designed in the context of the “Vienna 2 Initiative” and
builds upon the success of the earlier Joint IFI Action Plan of 2009-2010.
Support of growth has been reflected in actions to ensure that enterprises,
particularly small and medium-sized enterprises (SMEs), have access to the
credit they need. The region’s financial systems are being strengthened and the
basis for domestic capital markets is being laid, with the aim of allowing more
reliance on domestic savings, while IFI lending to improve competitiveness,
increase energy efficiency and raise productivity is helping develop strong
export sectors. 
In
the Western Balkans, the EIB’s work is closely coordinated within the Western
Balkans Investment Framework (WBIF) – which provides an operational framework
for blending grants with loans to fund strategic investments – providing a
vehicle for coordination and mobilisation of funding and a platform for
coordinating policy dialogue between the IFIs involved (EIB, EBRD, CEB, World
Bank) the European Commission and bi-lateral donors.
4.1.2.     Activity by Objective
Table 17: Summary of signatures under
mandate by region-specific key lending objectives
*
The above numbers cannot be added as a single operation may contribute to
several objectives
In 2013 two loans
totalling EUR 350m were signed under the Climate Change Mandate for urban
development and reforestation in Turkey.  
Strong support for the development of
social and economic infrastructure continued in 2013 with total signatures of
EUR 705m. The development of transport infrastructure is a prerequisite for
economic and social improvements which EIB financed with 3 large transport
infrastructure projects during 2013, totalling EUR 460m, in Turkey, Bosnia and
Herzegovina, and Serbia:
·        
Banja Luka-Doboj Motorway Project in Bosnia and
Herzegovina – a EUR 160m loan
co-financed with EBRD. The project involves the construction of a priority
motorway development in Republic Srpska, a core east-west link making a
significant contribution towards economic growth, trade facilitation and integration
of Banja Luka within BiH and within the Balkans. It is anticipated to have a
major impact on the competitiveness of the private sector as it directly
improves accessibility to markets and services. A key outcome will be the
increased connectivity among the regional capitals (Banja, Luka, Sarajevo,
Zagreb and Belgrade). 
·        
Road Rehabilitation and Safety project in Serbia – a EUR 100m project for the rehabilitation
and safety improvements of 1100 km of trunk roads throughout Serbia. It also
includes measures of institutional strengthening in respect of road safety
management, investment planning and maintenance management. The project is
co-financed with the World Bank and the Serbian Government and
parallel-financed with the EBRD. It is expected to promote regional and
national economic growth, facilitate trade, support private sector development
and ultimately contribute to economic and social cohesion in the region. It is
consistent with the national sector strategy, which identifies the rehabilitation
of the national road network and the improvement of road safety as important
priorities.
·        
Istanbul-Ankara Railway Tranche B in Turkey – a
EUR 200 m loan as the second tranche of the first High Speed Line (HSL) project
in Turkey under climate change mandate with a contribution of EUR 120 m from EC
support under the IPA Transport Programme. The project concerns the
construction of 478km double track electrified HSL between the country’s
political capital Ankara and the commercial capital Istanbul. The project is
strongly supportive to key strategic objectives of EU policy. Furthermore, the
project will increase efficiency and reliability of railway services and
promote a sustainable mode of transport. The project will significantly
decrease travel time between Istanbul and Ankara, provide comfortable and safe
public transport, increase the rail share in national passenger transport and
thus contribute to a more sustainable transport system.
4.1.3.   Activity by Sector
A
total amount of EUR 21.5bn have been signed under Mandate and EIB own-risk
facilities in the Pre- Accession region in the period 2007-2013. See chart
below. 
Chart 17: Signature in Pre-Accession countries by
sector between 2007-2013   
Given
the continued slow growth, high unemployment and weak credit conditions in some
countries, credit lines for SMEs are a key focus for the EIB financing in
Pre-Accession countries. Credit lines for SMEs and mid-caps remained by far the
highest supported sector with a total cumulative amount of EUR 9.6bn signed
under the Mandate and Facility representing 45% of the total volume over the
period 2007-2013.
Furthermore,
EIB continues to support the economic convergence process needed for future EU
membership. Transport continues to be a high priority and key sector for EIB’s
intervention in the region with 20% of cumulative financing underpinning the
importance of regional integration. Similarly, the energy sector has also been
a key focus for EIB’s financing activity in the region under the Mandate. By
the end of 2013, EIB had financed a total cumulative amount of EUR 2.1bn
emphasising its commitment to the EU energy policy in supporting investments
that strengthen the electricity grids, transmission capacity, energy efficiency
and renewable energy. 
Access
to efficient telecommunication services is an important driver of economic
growth. In a direct effort to reduce the digital divide and support the Europe
2020 Strategy to foster Smart Growth, EIB financed in 2013 under the
Pre-Accession Facility 3 projects focused on broadband upgrade and expansion in
Turkey. 
4.2.        Mediterranean Partner
Countries
4.2.1.     Activity by Country
Table 18: Summary of lending signatures under EU
guarantee by Country (number of operations and volume)
The Southern
Neighbourhood is going through an unprecedented phase of transformation.
Despite the challenging operating environment, EIB financing in Mediterranean
countries was EUR 530m, in support of 7 projects during 2013. The concentration
of projects was approximately equal between the Maghreb and the Mashreq / Near
East regions. By the end of 2013 EIB had achieved 86% of the Mediterranean
regional mandate ceiling. 
In addition to
continued lending under mandate, private equity and microfinance operations on third
party resources amounted to an additional EUR 53m in 2013, comprising of 6
operations (EUR 29m) signed under the FEMIP (ENPI) Risk Capital envelope and 3
operations (EUR 24m) under the risk capital envelope funded by the Kingdom of
Spain.  
Notably, during
2013, EIB signed the first microfinance loan in Palestine of USD 1m, a project
supporting the transformation of the Arab Center for Agriculture Development
(ACAD) from an NGO to a sustainable financial company. In addition, 10
technical assistance contracts were signed in 2013, of which 6 under the
Technical Assistance Support Fund and 4 under the FEMIP Trust Fund. 
From Syrian
Government, defaults on interest payments and loans repayments continued in
2013 – see below 4.2.4. 
4.2.2.     Activity by Objective
Table 19: Summary of signatures under mandate by
region-specific key lending objectives
*
The above numbers cannot be added as a single operation may contribute to
several objectives
EIB support for social and economic infrastructure accounted for 85%
of the overall EIB signatures in the Mediterranean region in 2013. 6 projects
were signed supporting the development of social and economic infrastructure,
including a EUR 50m loan to the Caisse des Prêts et de Soutien des
Collectivités Locales (CPSCL) to support lending to Tunisian local authorities
under the 2014-2018 Multiannual Investment Programme. 
To
address the growing energy needs of the region, the EIB has financed 2 large
infrastructure projects, for a total of EUR 253m, in Morocco and Jordan.
Renewable energy currently accounts for a very small share of the total energy
provision in the region, but its role is expected to increase substantially in
the short to medium term. Potential for developing renewable energy projects,
in particular solar and wind is significant. Both energy projects signed during
2013 concern the construction of wind farms and thus also contribute to the
climate objective:

 Office National de l'électricité
     et de l'eau (ONEE) –Wind project in Morocco – a EUR 200m loan for the construction of three wind farms
     included in the Moroccan Wind Programme. This project was co-financed by
     KfW and the African Development Bank and has received a grant from the
     Neighbourhood Investment Facility (NIF).The wind farms will require the reinforcement
     and construction of connection lines to the national grid. This project is
     aligned with the comprehensive energy strategy launched by the Moroccan
     government in 2008, prioritising the development of renewable energy to
     cover the increasing electricity demand with low carbon power generation. 
 Tafila wind farm in Jordan – a EUR 53 m loan co-financed by the International Finance
     Corporation. The project supports the development, construction and
     operation costs of a wind farm as well as the associated electrical
     facilities. The project supports the Mediterranean Solar plan objectives
     and is the first large on-shore wind farm in Jordan and will contribute to
     defining the framework for the future development of this sector in
     Jordan. 

4.2.3.     Activity by Sector
A
total amount of EUR 9.9bn have been signed under Mandate and EIB own-risk
facilities in the Mediterranean region during the period 2007-2013.
Approximately 91% of EIB financing activities in the region were under the
Mandate. See chart below.
Chart 18: Signatures in Mediterranean
Partner countries between 2007-2013
Job creation remains the priority of policy makers across the
Mediterranean region. The EIB will continue to support these efforts by
promoting private sector led growth, by supporting the local industry,
improving access to finance for SMEs and by investing in much needed economic
and social infrastructure.
Building
on the existing credit lines already signed across the region, EIB signed its
first credit line in the current mandate period in Egypt with the National Bank
of Egypt (NBE) for financing small and medium sized projects in productive
sectors (EUR 80m). This loan aims to increase much needed liquidity to final
SME beneficiaries, extend tenors beyond the limits of what NBE can currently
offer and improve the possibility of extending foreign currency loans, which
would support external trade.
Energy, transport and environmental (mainly water) infrastructure
remain a high priority for the EIB and a key focus for the region with a
cumulative total of EUR 6.8bn, accounting for 69% of the total lending in the
region between 2007-2013.
4.2.4    Defaults of guaranteed
loans to Syria
In the wake of the deteriorating situation in Syria, the Foreign
Affairs Council, the European Parliament and the European Council took certain
decisions in 2011 towards the country. In particular, they prohibited
disbursements by the EIB in connection with existing loan agreements. This
decision was thereafter consolidated in Council Decision 2011/782/CFSP, Council
Regulation (EU) No 36/2012 and Council Decision 2013/255/CFSP. 
Whereas in previous years Syria had fully and timely serviced its
loans to the EIB, since November 2011 the bank is facing arrears on loans to
projects in Syria[3].
As a consequence, and in line with the Guarantee Agreement between the EU and
the EIB, the EIB made 4 calls on the EU guarantee in 2012 for a total amount of
about EUR 42 million. During 2013, 9 supplementary calls were made, for a total
amount of 64.8 EUR million. An amount of EUR 2.1 million was recovered in 2012.

End of 2013, the total outstanding capital of guaranteed loans
related to Syria amounts to approximately EUR 551 million with the last loan
maturity in 2030. When the EU has made a payment under the EU Guarantee, it
subrogates into the rights and remedies of the EIB. Recovery proceedings are to
be undertaken by the EIB in respect of the subrogated sums, in accordance with
the Recovery Agreement between the EU and the EIB.
4.3.        Eastern
Europe, the Southern Caucasus and Russia
4.3.1.     Activity by Country
Table 20: Summary of lending signatures under EU
guarantee by Country (number of operations and volume)
2013
has been an exceptional year for the region whereby signature volumes under
Mandate increased by approximately 80% compared to the prior year, with 16
projects signed representing a total volume of EUR 1.7bn. As a result, the
Mandate regional ceiling was reached. Financing in the Southern Caucasus
(Armenia and Georgia) is growing steadily. Looking forward, the new Framework
Agreement signed with the Republic of Azerbaijan will allow further
geographical diversification of EIB financing.
Most
of the increase in signatures under the mandate relates to activities in Russia
– the EIB opened its office and six new operations were signed in 2013. However,
political events forced the EIB to postpone three operations in Ukraine and
Russia, which would otherwise have been concluded over the mandate period. Signing of further potential operations in Russia will be subject
to the relevant EU sanctions. The Commission will monitor and evaluate the
likelihood of further activation (and possible need for replenishment) of the
Guarantee Fund – see also 4.2.4 on defaults of guaranteed loans to Syria.
4.3.2.     Activity by Objective
Table 21: Summary of signatures under
mandate by region-specific key lending objectives
*
The above numbers cannot be added as a single operation may contribute to several
objectives
The
high volume of operations signed during 2013 ensured all mandate objectives
were well supported.  Financing with focus on SME support was signed in all Eastern
Neighbourhood countries. A large proportion of infrastructure projects across
the region have been carried out in cooperation with the EBRD and the Asian
Development Bank (ADB). More than 70% of operations supporting the social and
economic infrastructure development in 2013 focused on transport, with 4
projects improving connections with European transport networks.
EIB
carefully built up their position in Russia leading to signing a high share of
new loans in 2013. They incurred considerable efforts and costs over the time
before loan signatures could be achieved. EIB could not foresee the political
developments accelerating in 2014, culminating in the recent EU sanctions.
EIB
signed the first 2 projects in the region under the Climate Change Mandate.
Complementary to the on-going climate lending activities, a EUR 1.6m Technical
Assistance agreement supporting flood protection in Moldova has also been
signed during 2013. 
The
following projects describe the response to the demand for improved strategic
infrastructure within the region with parallel support to climate change and regional
integration objectives: 
·        
North – South road corridor in Armenia – a EUR
60m transport project in cooperation with the ADB. The project is aimed at
improving the North-South Road Corridor (NSRC) in Armenia as part of an overall
larger programme extending also to Georgia. Improving regional integration and
connectivity is of importance for boosting economic development and trade in
the region. This is the second operation by the EIB in the road sector in
Armenia. 

 Dnipropetrovsk Metro Completion in Ukraine - a EUR 152m loan signed under the Climate Change
     Mandate and co-financed in equal proportion by EBRD, for the extension of
     the metro line in Dnipropetrovsk city. The project consists of the
     extension of an underground metro tube and the construction of 3 new
     stations. The objective of this project is to improve the provision of
     public transport in the city as part of an overall strategy to achieve
     sustainable and clean urban transport having a positive environmental impact.

4.3.3.     Activity by Sector
The
total volume signed under Mandate and EIB own-risk facilities in the region
over the current mandate period amounted to EUR 4,549m. Credit lines for SMEs
and Mid-Caps account for 42% of the overall EIB signatures in the region over
the period 2007-2013, more than half of which relates to signatures in 2013.
The SME sector studies funded jointly by the Eastern Partnership Technical
Assistance Trust Fund (EPTATF) and EIB identified widespread gaps in medium and
long term financing for SMEs which the EIB can help to address. 
Improved
transport connections, Pan-European energy markets and environmental projects
of common interest are other priorities for the region. Significant support for
these sectors is illustrated in the chart below, with transport and energy
financing accounting for 49% of the overall lending across the period. 
Chart 19: Signatures in Eastern Europe,
Southern Caucasus and Russia by sector between 2007-2013
4.4.        Asia and Latin America
4.4.1.     Activity by Country
Table 22: Summary of lending signatures
under EU guarantee by Country (number of operations and volume)
·       *
Following a change in the foreign exchange rate valuation methodology (to the
exchange rate at the end of the month preceding the signature date), the
counter-value of the USD 500m loan signed in Panama in 2009 has been revised to
EUR 359m (instead of EUR 397m reported previously).
The
EIB opened its office in Domenican Republic in 2013. By the end of 2013, EIB
had achieved 83% of the Asia and Latin America (ALA) regional mandate ceiling with
Asia reaching 91% and Latin America 80% of their sub-ceilings. In 2013, lending
volumes under Mandate more than doubled compared to the prior year with a peak
of 11 operations signed. This significant increase partly reflects resumed
activity in several countries across the two regions as well as pioneering new
signatures in Costa Rica, Bangladesh, Nepal, Sri Lanka and Kazakhstan,
contributing to the gradual increase of the number of countries benefiting from
EIB financing. 
Notably,
2 loans were signed with financial intermediaries in Kazakhstan, partly under
the Climate Change Mandate (EUR 127m) as well as the general mandate (EUR 93m).
Kazakhstan’s economy continues to feature a high level of concentration and
insufficient sectorial diversification. Both operations signed will support
climate change and the SMEs development objectives and constitute a significant
step in extending EIB support to Central Asia. Technical assistance will be
provided to help the intermediaries to familiarise with the EIB procedures and
eligibility criteria, concerning in particular procurement and environment as
well as climate change measurement methodologies. These are the first
signatures in Kazakhstan since the signing of the Framework Agreement in April
2010. 
In
September 2013, a new Framework Agreement was signed with Kyrgyz Republic.
Negotiations were started with Myanmar and Bhutan, paving the way for the
signature of the Framework Agreements in 2014. In addition to the operations
signed in 2013 under the Mandate, EUR 242m was signed under the own-risk Energy
Sustainability Facility (ESF) comprising two climate change framework loans in
Central America (regional operation) and in India as well as participations in
2 multi-regional climate funds. 
4.4.2.     Activity by Objective 
Table 23: Summary of signatures under
mandate by region-specific key lending objectives
*
The above numbers cannot be added as a single operation may contribute to
several objectives
The
high volume of operations in 2013 ensured all objectives were well supported.
Notably, 8 of the 11 operations financed in 2013 support the climate change
mitigation and adaptation objective compared to 2 operations in 2012. Overall,
67% of total ALA signatures in 2013 contributed to climate action. 
Following
an initial signature in 2012, 5 new operations (totalling EUR 413m) have been
signed under the Climate Change Mandate in 2013. As a result, total signatures
in ALA came close to the regional ceiling of EUR 600m under this mandate at the
end of 2013. 
Of
the 11 EIB financed projects across the mandate objectives, the following are
given as examples: 
·        
SME and Green Energy Framework loan in Sri Lanka
– EUR 90m loan to the Government of Sri Lanka to support a series of
investments in the field of climate change and the development of the local
private sector through SME finance. The facility will target the financing of
smaller scale projects in the private and public sectors to combat climate
change mitigation through renewable energy and energy efficiency projects
across the country. This line of credit will be channelled primarily through
three participating financial institutions allowing a wide geographic spread
and diversification in all eligible sectors throughout Sri Lanka. 
·        
Water Supply and Sanitation Programme in the
Republic of Nicaragua – EUR 60m to support an investment programme addressing
the deficit in access to drinking water and sanitation in 19 medium-sized towns.
At present it is estimated that less than 39% of the population across Nicaragua
is connected to waste water and sewerage treatment infrastructure. The
programme is co-financed with the Central American Bank for Economic
Integration (CABEI) and the Spanish Agency for International Development
Cooperation (AECID) and benefits from a large EUR 50.7m grant contribution from
the Latin America Investment Facility (under AECID lead). 
·        
Las Pailas Geothermal Project in Costa Rica – EUR 52m operation co-financed with Japan
International Cooperation Agency (JICA) and Inter-American Development Bank
(IADB). The project comprises the expansion of an electricity generating
capacity at an existing geothermal power plant in Costa Rica. It aims at
meeting the growing electricity demand in Costa Rica and regionally. The Las
Pailas operation represents the first signature in Costa Rica under the current
mandate. 
4.4.3.     Activity by Sector
The
total volume signed under Mandate and EIB own-risk facilities in ALA over the
2007-2013 period amounted to EUR 6857m of which 62% under Mandate and 38% under
Facilities. 
The sector focus has been predominately
energy with EUR 1.8bn signed in Asia and EUR 1.6bn in Latin America.
Telecommunication, transport and industry accounted for 51% of the total
signatures in Latin America, compared to Asia where the distribution of
signatures is spread more evenly across forestry, transport, industry and
credit lines.  
Chart 20: Signatures in Asia and Latin America by
sector between 2007-2013
4.5.        South
Africa
4.5.1.     Signatures 
Table 24:
Summary of signatures under mandate by region-specific key lending objectives
By
the end of 2013, EUR 1008m has been signed. With loan cancellations netted out,
the mandate commitment level stood at 97% leaving a small amount of EUR 25m
available for signature under the current South Africa sub-ceiling.  In 2013
two loans for a total amount of EUR 260m were signed in support of renewable
energy and urban development. 

 Ka Xu Concentrated Solar Power
     Plan project – a first EUR
     110m tranche of EUR 210m EIB financing foreseen for the development,
     construction and operation of a concentrated solar thermal power plant
     (CSP). The project will generate electricity from solar energy, stimulate
     the emerging renewable energy industry in South Africa and contribute to
     improving the environmental impact of power generation and security of
     energy supply in the country. Furthermore the project will improve the
     reliability of power supply, an essential requirement for sustained
     economic development by inviting independent power producers to invest in
     renewable energy production. 
 Affordable and Social Housing II – following the successful
     implementation of the first affordable and social housing operation signed
     in 2008, a second EUR 150m facility was made available to two public and
     two private sector intermediaries for the financing of affordable and
     social housing and associated urban infrastructure, including social
     amenities. The intermediaries’ indicative pipeline anticipates a delivery
     of around 23,800 housing units throughout South Africa. The operation is
     expected to lead to considerable positive environmental and social impacts
     contributing to the achievement of the UN Millennium development goals and
     support the use of renewable energy and energy efficiency measures. 

4.5.2.   Activity by Objective
Table 25: Summary of signatures
under the Mandate by objective
·      
  * The above numbers cannot be added as a
single operation may contribute to several objectives
Social
and economic infrastructure development and climate change mitigation and
adaptation remain key focus areas for EIB financing in South Africa. The EIB
also continued to support the development of the local private sector and
projects. Both operations signed in 2013 contributed to all 3 mandate
objectives. 
4.5.3.   Activity by Sector
As illustrated by the below graph, EIB
financing in South Africa has predominately focussed on urban development and
infrastructure (energy, water/sewerage and transport) as well as the promotion
of local private sector development. All loans were signed under the Mandate
with exception of a EUR 50m loan to finance small and medium-scale renewable
energy and energy efficiency projects signed in 2011 under the EIB own risk
Energy Sustainability Facility.
Chart 21: Signatures in South
Africa by sector between 2007-2013
5.           List of loans signed in
the regions covered by the Decision in 2013
List of loans signed in the Pre-Accession Countries under the Mandate in
2013
 Country || Project Description || Loan Amount (EUR m) || EU Guarantee 
 Bosnia and Herzegovina || Construction of a 2x2 72 km toll motorway from Banja Luka to Doboj in Republika Srpska || 160 || Comprehensive 
 Serbia || Rehabilitation and safety improvements of part of the national road network in Serbia || 100 || Comprehensive 
 Serbia || Financing of small and medium-scale projects carried out by SMEs and midcaps || 150 || Comprehensive 
 Turkey || Construction of electrified high-speed line between Ankara and Istanbul || 200 || Comprehensive 
 Turkey || Earthquake risk mitigation programme in Istanbul || 200 || Comprehensive 
 Turkey || Support to forest rehabilitation, afforestation and erosion control activities in Turkey during the period 2014-15 || 150 || Comprehensive 
 Total ||   || 960 ||   
List of loans signed under the Pre-Accession Facility in 2013:
 Country || Project Description || Loan Amount (EUR m) 
 Albania ; Bosnia and Herzegovina ; FYROM ; Montenegro ; Serbia || Financing to micro and small scale enterprises, rural and housing loans through qualified financial intermediaries || 38 
 Albania ; Bosnia and Herzegovina ; FYROM ; Montenegro ; Serbia ; Turkey || Equity participation in a fund focusing on small-scale energy efficiency projects in South-East Europe || 10 
 Bosnia and Herzegovina || Financing of small and medium-scale projects carried out by SMEs || 40 
 FYROM || Financing of SME projects and industrial investment in knowledge economy, energy, environmental protection and services. || 100 
 Kosovo || Financing of small and medium-scale projects carried out by SMEs || 10 
 Serbia || Financing of small and medium-scale projects carried out by SMEs and mid-caps || 45 
 Serbia || Financing of small and medium-scale projects carried out by SMEs and mid-caps || 5 
 Turkey || Financing of small and medium-scale projects carried out by SMEs || 50 
 Turkey || Financing of small and medium-scale projects carried out by SMEs || 50 
 Turkey || Upgrading and expansion of mobile telecommunications networks in Romania and Turkey through rollout of reinforced mobile broadband services || 100 
 Turkey || Financing of hotel refurbishment, energy efficiency and sustainable tourism projects || 100 
 Turkey || Framework Loan to finance renewable energy and energy efficiency projects in Turkey || 99 
 Turkey || Financing of small and medium-scale projects carried out by export-oriented SMEs and mid-caps || 100 
 Turkey || Support long-term lending to SMEs and midcaps || 100 
 Turkey || Financing of small and medium-scale projects carried out by SMEs || 100 
 Turkey || Framework Loan to finance renewable energy and energy efficiency projects in Turkey || 50 
 Turkey || Financing of innovative enterprises in several sectors in Turkey || 100 
List of loans signed under the Pre-Accession Facility in 2013 
 Country || Project Description || Loan Amount (EUR m) 
 Turkey || Roll-out of advanced fixed broadband telecommunication services in Eastern regions of Turkey || 100 
 Turkey || Financing of hotel refurbishment, energy efficiency and sustainable tourism projects || 100 
 Turkey || Financing of small and medium-scale projects carried out by SMEs and midcaps || 150 
 Turkey || Financing of projects carried out by SMEs and midcaps, with a window for environment and healthcare projects || 150 
 Turkey || Financing of small and medium-scale projects carried out by SMEs and midcaps || 150 
 Turkey || Financing of limited size investments carried out by municipalities and  public sector companies || 100 
 Turkey || Roll-out of advanced fixed broadband telecommunication services in Eastern regions of Turkey || 100 
 Turkey || Financing of small and medium-scale projects carried out by SMEs || 50 
 Total ||   || 1,998 
List of loans signed in the Mediterranean countries under the Mandate in
2013:
 Country || Project Description || Loan Amount (EUR m) || EU Guarantee 
 Egypt || Upgrading of air traffic control facilities through installation of state-of-the-art communications, navigation and surveillance systems || 50 || Comprehensive 
 Egypt || Construction and refurbishment of water and sanitation infrastructure in governorates of Qena, Sohag, Assiut and Minya (Upper Egypt) || 57 || Comprehensive 
 Egypt || Line of credit to the National Bank of Egypt (NBE) for the financing of small and medium sized projects in productive and related sectors in Egypt. || 80 || Political risk 
 Jordan || Development, construction and operation of a 117 MW wind farm as well as the associated electrical facilities in the Tafila Governorate in Jordan || 53 || Political risk 
 Morocco || Construction of three wind farms (Tanger II, Midelt and Jbel Lahdid) included in the second phase of the Moroccan Wind Programme || 200 || Comprehensive 
 Tunisia || Global loan to Caisse des Prêts et de Soutien des Collectivités Locales (CPSCL) to support its lending to Tunisian local authorities under the 2014-2018 Multiannual Investment Programme || 50 || Comprehensive 
 Tunisia || Priority investments to reduce pollution in the Lake Bizerte region || 40 || Comprehensive 
 Total ||   || 530 ||   
List of loans signed in
Eastern Europe, Southern Caucasus and Russia under the Mandate in 2013:
 Country || Project Description || Loan Amount (EUR m) || EU Guarantee 
 Armenia || Rehabilitation and upgrading of a national road section along the North - South corridor || 60 || Comprehensive 
 Armenia || Rehabilitation and renovation of metro system || 5 || Comprehensive 
 Georgia || Upgrading of western section of East-West highway from Zestaponi to Batumi-South (10 km from Turkish border) || 30 || Comprehensive 
 Georgia || Construction, refurbishment and upgrading of municipal water facilities || 40 || Comprehensive 
 Republic of Moldova || Rehabilitation of the Chisinau water supply and wastewater collection and treatment facilities || 24 || Comprehensive 
 Republic of Moldova || Financing of small and medium-scale projects carried out by SMEs and midcaps || 20 || Political risk 
 Republic of Moldova || Rehabilitation and upgrading of key national roads sections, mainly on extended trans European corridors going through the country || 150 || Comprehensive 
 Russian Federation || Financing of small and medium-scale projects carried out by SMEs and midcaps || 40 || Political risk 
 Russian Federation || Financing of small and medium-scale projects carried out by SMEs and midcaps || 300 || Political risk 
 Russian Federation || Loan to finance projects promoted by SMEs and Mid-Caps in Russia through funding VEB's participation in an International Fund to Support Entrepreneurship in Russia set up by VEB and KfW || 113 || Comprehensive 
 Russian Federation || Financing of small and medium-scale projects carried out by SMEs and midcaps || 200 || Comprehensive 
 Russian Federation || Construction of a new gas-turbine CHP plant (with 140 MW of electric and 420 GCal/h of heat output) in the city of Vladivostok to replace production from existing coal fired plants || 91 || Comprehensive 
 Russian Federation || Financing of small and medium-scale projects carried out by SMEs and midcaps || 200 || Political risk 
 Ukraine || Upgrading and modernisation of Ukraine's air traffic control facilities || 41 || Comprehensive 
 Ukraine || Extension of Dnipropetrovsk metro line and construction of three new stations || 152 || Comprehensive 
 Ukraine || Financing of small and medium-scale projects carried out by SMEs and midcaps || 220 || Comprehensive 
 Total ||   || 1,686 ||   
List of loans signed in Asia, Central Asia and Latin America under the
Mandate in 2013:
 Country || Project Description || Loan Amount (EUR m) || EU Guarantee 
 Bangladesh || Conversion of 3 natural gas-fired open-cycle power units to combined-cycle mode of operation by the addition of heat recovery boilers and steam turbines || 82 || Comprehensive 
 Brazil || Upgrading and expansion of electricity distribution networks in state of São Paulo and part of Mato Grosso do Sul || 115 || Political risk 
 Costa Rica || Extension of a geothermal power plant in Costa Rica || 52 || Comprehensive 
 India || Framework Loan supporting renewable energy and energy efficiency investment projects that contribute to climate change mitigation || 150 || Comprehensive 
 Kazakhstan || Financing of small and medium-scale projects carried out by SMEs and midcaps || 120 || Comprehensive 
 Kazakhstan || Financing of small and medium-scale projects carried out by SMEs and midcaps || 100 || Political risk 
 Nepal || Construction and operation of a 140 MW storage hydroelectric power scheme and its interconnection to the national grid. || 54 || Comprehensive 
 Nicaragua || Improvement and expansion of the provisioning of drinking water as well as sanitation in secondary cities in Nicaragua || 60 || Comprehensive 
 Pakistan || Keyal Khwar Hydropower comprises a medium-sized (122 MW) run-of-river hydropower plant with a small 1.5 ha reservoir for daily regulation || 100 || Comprehensive 
 Paraguay || Construction of 500 kV, 360 km high voltage transmission line Villa Haynes-Ayolas-Yacyretá, upgrading the three substations related to this line and a loss reduction component in the distribution network || 75 || Comprehensive 
 Sri Lanka || Global loan to finance SMEs (about 70% of the GL)  and renewable energy and energy efficiency investments (about 30% of the total) in Sri Lanka || 90 || Comprehensive 
 Total ||   || 997 ||   
List of loans signed in
Asia and Latin America under the Energy Sustainability Facility in 2013:
 Country || Project Description || Loan Amount (EUR m) 
 Brazil ; Indonesia || Participation in investment fund targeting sustainable biomass and forestry projects || 6 
 India || Framework loan for financing renewable energy and energy efficiency projects contributing to climate change mitigation in India || 40 
 Regional - Asia ; Regional - Latin America || Innovative pilot fund for forest-based carbon and other environmentally certified credits || 15 
 Regional - Asia ; Regional - Latin America || Equity participation in a fund of funds focusing on energy efficiency and renewable energy projects in developing countries and economies in transition.  || 6 
 Regional - Central America || Framework loan supporting renewable energy and energy efficiency projects in Central America focused on hydropower, wind, geothermal and photovoltaic. || 175 
 Total ||   || 242 
List of loans signed in the Republic of South Africa under the Mandate in
2013:
 Country || Project Description || Loan Amount (EUR m) || EU Guarantee 
 South Africa || Framework loan to several financial intermediaries for the funding of affordable and social housing projects and associated urban infrastructure, including social amenities, throughout South Africa || 150 || Political risk 
 South Africa || Construction and operation of a greenfield concentrated solar power (CSP) plant with 100 MW of installed power generating capacity || 110 || Political risk 
 Total ||   || 260 ||   
6.           COOPERATION WITH THE COMMISSION 
A list of the existing frameworks within
which the EIB and the Commission cooperated in 2013 with a view to
strengthening the coherence of overall EU support in the regions covered by the
Decision is included in this SWD, together with a summary table on the
financing volumes signed by the EIB upon its management of EU budget resources.
Some of the main activities coordinated between the two institutions in 2013
are outlined below.
The EC-EIB MoU of May 2008 has been updated
and extended to EEAS, and was signed in September 2013. 
Three new framework agreements were signed
in 2013 with Azerbaijan, Kosovo[4] and the Kyrgyz Republic paving the way for EIB operations in these
countries.
Negotiations between the Commission/EEAS,
the Council and the European Parliament on the new External Lending Mandate for
2014 - 2020 were concluded at the end of 2013. The Decision was adopted by the
European Parliament and the Council on 16 April 2014[5]. The new Mandate reinforces the alignment and complementarity
between EIB operations and EU policy objectives. The same high level objectives
were maintained and the overall size of the mandate as well as the regional
ceilings were maintained at relatively similar levels than the 2007-2013
Mandate.
The EIB and EEAS have taken forward the
principle of co-location of EIB offices within EU Delegations. All new EIB
external offices are being located in Delegations, with an effort to relocate
existing offices where possible.  
Throughout 2013, geographical coordination
meetings have taken place between the EIB, the Commission and EEAS in all
regions covered by the Decision, with the aim of identifying concrete
activities to enhance synergies among institutions. 
The EIB continued its active involvement in
the EU High Level meetings. In 2013, this notably involved the preparation of
the Eastern Partnership Summit and Business. In Egypt and Ukraine, the EIB
liaised closely with the EC/EEAS on the evolving situation in both countries.
In 2013, the EIB organised in collaboration with the Observatoire Méditerranéen
de l'Energie and the Union for the Mediterranean the thirteenth edition of the
FEMIP Conferences. 
The EIB continued to actively participate
in the regional loan-grant blending mechanisms. It also closely cooperated with
the Commission in the group of experts tasked studying the establishment of the
EU Platform for Blending in External Cooperation (EUBEC). The Platform was
established at the end of 2012 and the EIB took the lead in the working group
responsible for developing a results measurement framework under the Platform,
taking inspiration from the EIB's REM framework.
7.           COOPERATION
WITH INTERNATIONAL FINANCING INSTITUTIONS 
Cooperation with other International
Financial Institutions (IFIs) is an integral part of the EIB activities,
ranging from dialogue on institutional matters, horizontal topics and thematic
issues, and mutual consultation, to enhanced forms of operational co-financing
and work sharing. A large portion of the dialogue between IFIs takes place
within specialised working groups meeting periodically to share best practices
or to address specific issues. One such group has been working on results
harmonisation among FIs active in the private sector, and a similar working
group was set up in 2013 on results harmonisation for public sector projects.
In addition, ad-hoc working groups are established to address specific issues,
for instance the G-20 and G-8 often call on the World bank and MDBs for input.
The EIB participates in other dialogue initiatives such as the Heads of MDBs
meeting (January 2014) which was organised by the EIB.
In 2013, co-financing with other IFIs or
European bilateral institutions represented 47% of EIB total signatures with
the EU guarantee. The list of co-financed operations signed in the regions
covered by the Mandate in 2013 is included in this SWD. 
Cooperation with the EBRD continued to take
place under the framework of the EC-EIB-EBRD Memorandum of Understanding, as
updated in November 2012. The MoU sets out a framework for cooperation outside
the EU which seeks to enhance the combined impact of the two Banks’ respective
operations, in the interest of beneficiary countries and of the respective
Banks’ shareholders. 
Under the Mutual Reliance Initiative (MRI)
between AfD, EIB and KfW, operational guidelines were finalised in 2013,
building on the experience of a 3-year pilot phase in the Southern Neighbourhood
and in sub-Saharan Africa. The MRI provides a framework under which, when co-financing
projects, one of the three partners takes the role of lead financier, relying
on its standards and procedures as long as the minimum requirements of the
other partners are met. In 2013, the initiative was extended to other
geographical regions outside the EU. The active MRI portfolio counts some 30
operations. 
The EIB has cooperated throughout 2013 with
other lenders under the G8 Deauville Partnership to ensure that synergies are
optimised in support of democratic and economic transition in the southern
neighbourhood region. 
The European Bank Coordination Initiative
"Vienna Initiative" seeks to safeguard the stability of the financial
sector in Central, Eastern and South-Eastern Europe (CESEE). The creation and
development of the Vienna Initiative have been driven by the EIB, the European
Commission, the EBRD, the IMF and the World Bank. It is a forum in which
international private and public sector actors take coordinated decisions. The
Initiative was re-launched in January 2012 in response to renewed risks for the
region from the Euroarea crisis. The Initiative Full Forum met in Brussels in
October 2013. It assessed recent trends in deleveraging, credit provision, and
non-performing loans (NPLs) in the banking sectors of CESEE. It discussed the impact
of the recently proposed Single Resolution Mechanism for a European banking
union on CESEE. 
8.           List of EC-EIB
initiatives / partnerships in the regions covered by the Decision
Cooperation between the EIB and the
Commission is daily and pervasive throughout much of the EIB activities. A
substantial part of operational cooperation and coordination between the
Commission and the EIB, involving also other IFIs and European Bilateral
Financing Institutions, takes place within the various regional blending
mechanisms set up by the Commission including the Western Balkans Investment
Framework (WBIF), Neighbourhood Investment Facility (NIF), Asia Investment
Facility (AIF), Latin America Investment Facility (LAIF) and Investment
Facility for Central Asia (IFCA). 
The WBIF Steering Committee
allocated grants provided by the participating blending partners (the EU
budget, the IFIs and 18 bilateral contributors) for a total amount of EUR 336m
in support of 178 operations during the period 2008-2013. These operations are
co-financed with loans for a total of EUR 7.4bn, of which EUR 3.1bn are signed.
EIB has provided 54% of the signed loans. Considering that the WBIF blends
grants from different sources, by including the IPA budgetary funds managed by
the EU delegations, the EU grants directly linked to EIB-led or co-led WBIF
projects amounted to EUR 229m over the period 2008-2013, of which approximately
half blended from the budgets managed by the EU delegations. The other half
funded by EU budget (EUR 115m) was combined with EUR 28m grants from the IFIs
and the bilateral donors reaching a total of EUR 143m, representing 43% of the
total grants allocated by the WBIF. These grants benefitted projects as
follows: regional projects (45% of the grants), Bosnia and Herzegovina (25%),
Serbia (13%), Montenegro (8%), Albania (5%), Croatia (3%) and FYROM (1%).
The EIB remains among the largest
financiers in terms of volumes lent for NIF projects: it has co-financed
half of the projects (52 out of 92) approved by the NIF Board since the
inception of the Facility with total EIB financing of EUR 4.44bn of which EUR
1.54bn for projects where the EIB was the Lead Financier. The grants for
projects with EIB in the Lead were distributed as follows: regional projects
and projects in Egypt (22% each), Morocco (17%), Georgia (14%), Armenia (10%),
Tunisia (7%), Lebanon (6%), Jordan and Moldova (1% each).
The IFCA Operational Board approved
grants for a total amount of EUR 66.5m in support of 11 operations during the
period 2007-2013. Two grants totalling EUR 4.3m were blended with EIB financed
projects, representing 4% of the total IFCA approved amounts. These grants are
allocated to EIB operations in Kazakhstan in support of the Energy and Private
sectors, with EIB's associated loans amounting to EUR 162m.
The LAIF Operational Board approved
grants for a total amount of EUR 196.6m in support of 24 operations in
2010-2013. EIB financed 3 projects blended with LAIF grants for an amount of
EUR 25m, representing 13% of the total grants. These grants were provided in
support of operations located in Nicaragua, Bolivia, and Paraguay, with EIB's
associated loans totalling EUR 168m.
The AIF Operational Board approved
grants for a total amount of EUR 37m in 2012-2013. To date, one EIB loan of EUR
80m was blended with a TA grant in support of an energy project in Bangladesh.
This EUR 5.7m grant accounted for 16% of the total AIF approved amount.
Pre-Accession Countries
-        2 Energy Efficiency Finance
Facilities (EE FF) were launched in 2006 and 2007 to tackle the Climate Change
issue. They aim at stimulating the energy efficiency and renewable energy
investments in all types of building and in the industry sector by making
appropriate financing available. The EE FF combines IFI credit lines extended
to financial intermediaries with incentives to improve the cost effectiveness
of equipment and make the energy investment more attractive, and fees to the
benefit of local financial intermediaries to encourage them to lend for the
purpose of energy efficiency financing, combined with technical assistance paid
from the Facility. At the end of 2013, the total grant contribution made
available by the EC amounted to EUR 19.5m and the EIB lending commitment is at
least EUR 78m. 
-        Since 2001, the Commission and the
EIB are co-operating under the SME Finance Facility (SME FF), merging the grant
support with the EIB lending to help developing the SME lending capacities of
Participating Financial Institutions in the eligible countries. In July 2011,
an Energy Efficiency window was introduced under the SME FF programme. Total
grants available under this EE window amount to EUR 25m and the EIB lending
commitment is EUR 75m. At end 2013, the EIB’s total grant available for the SME
FF under the PHARE Programme was EUR 47m, and the EIB has committed to provide
debt financing of at least EUR 470m.
-        Since 2003, the Municipal Finance
Facility (MFF) aims to encourage local financial intermediaries to extend loans
to municipalities. The mechanism of the programme is similar to the SME FF. In
July 2011, an Energy Efficiency window was introduced under the MFF programme.
Total grants available amount to EUR 3m and the EIB lending commitment is EUR
15m. At end 2013, the EIB’s total grant available for the MFF under the PHARE
Programme was EUR 54m, and the EIB has committed to provide debt financing of
at least EUR 432m.
Mediterranean countries
-        The EIB manages in the context of
FEMIP and on behalf of the EU, a budgetary envelope of EUR 32m per year under
the inter-regional ENPI programme for risk capital investments and technical
assistance.  In 2013, six risk capital operations were signed for a total
amount of EUR 28.8m while an additional EUR 9.2m were signed for six technical
assistance operations.
-        The FEMIP Trust Fund (FTF), a replenished
financial envelope of EUR 40m funded by contributions of 17 Member States and
the Commission, provides resources to upstream technical assistance and
studies, targeted equity operations designed to support innovative private
sector companies and concrete initiatives for Mediterranean partner countries
committed to the transition to democracy. Since its creation in 2004, the FEMIP
Trust Fund has given solid added value to the EIB's activities in the region.
It has been operating as a think tank by financing research in new areas likely
to help to develop the private sector in the region. 
Global
-        The Global Energy Efficiency and
Renewable Energy Fund (GEEREF) is an innovative fund of funds sponsored by the
Commission, Germany and Norway, and advised by the EIB and EIF, to provide
clean energy to emerging countries and economies in transition. At end of 2013,
GEEREF commitments represented EUR 74m, on a portfolio of 7 funds.
Table 26: Annual
signatures on EU budget resources under EIB management in the regions covered
by the Mandate in 2007-2013
9.           Co-Operation
with European Ombudsman 
The Memorandum of
Understanding signed between the EIB
and the European Ombudsman (EO) in 2008 sets
the basis for the two stages of the EIB
Complaints Mechanism - the
internal (EIB-CM) and the external (EO) -
approved by the EIB Board
of Directors in 2010 after extensive public consultation. It achieves
a common understanding of purpose and consistency of application across its
internal and external parts, with a specific focus on:
•       The existence of an effective internal
Complaints Mechanism (the EIB-CM) that deals with complaints lodged by external
parties to the EIB across all the business units of the Bank;
•       Concerning complaints related to operations
outside the EU, including the External Mandates, the European
Ombudsman commits to use its own initiative power systematically in order to
handle complaints when the complainant is not a citizen or resident of the
European Union;
•      
The scope of the EO's
review, with the recognition of the EIB-CM as the required prior approach.
Table below
shows the evolution of the number
of complaints handled by the EIB-CM in the past 5 years. The
nature of the complaints refers to environmental, social as well as governance
allegations related to the projects financed by the Bank.
 Table 27: Project related complaints lodged with the internal part (EIB-CM) of the EIB Complaints Mechanism 2009-2013 2009 || 2010 || 2011 || 2012 || 2013 || 5 years 
 EU Member States || 5 || 13 || 13 || 11 || 11 || 53 
 Non-EU, of which || 8 || 7 || 9 || 10 || 6 || 40 
 in External Mandate Countries || 6 || 3 || 8 || 8 || 5 || 30 
 in ACP, OCTs || 2 || 4 || 1 || 2 || 1 || 10 
 Total || 13 || 20 || 22 || 21 || 17 || 93 
As the above
table shows, the number of project-related complaints remained relatively
stable since 2010 with a slight decrease in 2013. New cases
in the External Mandate regions are located in Albania, Georgia, Serbia,
Tunisia and Gaza West Bank. Beyond the scope of the above table, the EIB-CM
received 23 new procurement-related complaints in 2013, of which 17 are
related to the regions covered by the External Mandate.
The outcome of the
complaints handling process varied from "allegations not grounded" to
"areas for improvement recommended". During 2013, the
EIB-CM closed two cases concerning the Municipal and Regional Infrastructure
Loan in Serbia. While one case was closed with recommendations, the other was
closed with a mediation process facilitated by the EIB-CM. The EIB-CM also led
a mission to Panama of Internal Accountability Mechanisms of the DFIs involved
in the Panama Canal Expansion Project to discuss several allegations with the
promoter, the Canal of Panama Authority. The EIB also did
extensive work in analyzing the allegations concerning the Cairo Metro Line
project in Egypt, including a fact-finding and stakeholder consultation
mission.
At 31.12.2013, the EIB-CM was handling 23 registered
project related complaints, of which 10
in the regions covered by the
External Mandate. In addition to the Panama and Cairo cases mentioned above, it
is worth mentioning:
•        
By-pass Project, in Serbia - alleged
non-compliance with national law and with EIB social
standards;
•        
Electricity Network
Upgrading in Gaza West Bank: alleged potential health and environmental
impacts.
Project related
complaints escalated to external part (EO) of the EIB Complaints Mechanism in 2013
During 2013,
only 2 complaints
were escalated to the Ombudsman. One of the cases relates to access to
information in Ukraine. This is the first escalation case accepted by the EO
from a non-EU complainant.
10.         List of 2013 operations co-financed with other IFIs and
the Commission
 Mandate/ Facility || Country || Contract Name || Project cost (EURm) || EIB loan signed in 2013 (EURm) || MultilateralFinancing Institutions || European Bilateral Institutions || EU budget contribution 
 ALA Mandate || Costa Rica || LAS PAILAS GEOTHERMAL PROJECT || 246,65 || 51,79 || X ||   ||   
 ALA Mandate || Nicaragua || WATER SUPPLY AND SANITATION PROGRAMME || 283,00 || 59,72 || X ||   || LAIF 
 ALA Mandate || Pakistan || KEYAL KHWAR HYDROPOWER PROJECT || 222,00 || 100,00 || X ||   ||   
 ALA Mandate || Paraguay || TRANSMISSION LINE YACYRETA (PARAGUAY) || 222,97 || 74,90 || X ||   || LAIF 
 ALA Mandate, Climate Change Mandate || Kazakhstan || EIB LOAN TO DBK FOR SMES AND MIDCAPS || 200,00 || 120,00 ||   ||   || IFCA 
 ALA Mandate, Climate Change Mandate || Kazakhstan || SBERBANK KZ LOAN FOR SMES AND MIDCAPS || 100,00 || 100,00 ||   ||   || IFCA 
 Climate Change Mandate || Bangladesh || BANGLADESH POWER ENERGY EFFICIENCY || 165,00 || 82,00 || X ||   || AIF 
 Climate Change Mandate || Nepal || NEPAL TANAHU HYDROPOWER PROJECT || 390,38 || 53,85 || X ||   ||   
 Climate Change Mandate || Russian Federation || VLADIVOSTOK CHP PROJECT || 255,80 || 91,23 || X ||   ||   
 Climate Change Mandate || Turkey || AFFORESTATION AND EROSION CONTROL II || 353,75 || 150,00 || X ||   ||   
 Climate Change Mandate || Turkey || ISTANBUL ANKARA RAILWAY TRANCHE B B || 3.648,17 || 200,00 ||   ||   || IPA 
 Climate Change Mandate || Ukraine || DNIPROPETROVSK METRO COMPLETION || 305,00 || 152,00 || X ||   || EPTATF 
 ENP EE/SCA/RUS. Mandate || Armenia || ARMENIA NORTH - SOUTH ROAD CORRIDOR || 380,62 || 60,00 || X ||   || NIF 
 ENP EE/SCA/RUS. Mandate || Armenia || YEREVAN METRO REHABILITATION PHASE II || 15,00 || 5,00 ||   ||   || NIF 
 ENP EE/SCA/RUS. Mandate || Georgia || WATER INFRASTRUCTURE MODERNISATION II || 80,00 || 40,00 || X ||   || NIF 
 ENP EE/SCA/RUS. Mandate || Georgia || GEORGIA EAST - WEST HIGHWAY || 592,14 || 30,00 || X ||   || NIF 
 ENP EE/SCA/RUS. Mandate || Moldova, Republic of || CHISINAU WATER || 61,80 || 24,00 || X ||   || NIF 
 ENP EE/SCA/RUS. Mandate || Moldova, Republic of || MOLDOVA ROADS III || 300,00 || 150,00 || X ||   || NIF , EPTATF 
 ENP EE/SCA/RUS. Mandate || Ukraine || AIR NAVIGATION UPGRADE UKRAINE || 118,56 || 41,18 || X ||   ||   
 ENP MED. 1/2/2007-31/12/2013 || Egypt || IWSP II (UPPER EGYPT) || 303,00 || 57,00 || X || X || NIF and EC Grant 
 ENP MED. Mandate || Jordan || TAFILA WIND FARM || 210,51 || 52,96 || X ||   ||   
 ENP MED. Mandate || Morocco || ONEE - PROJET EOLIEN || 704,00 || 200,00 || X || X || NIF 
 ENP MED. Mandate || Tunisia || CPSCL TUNISIE 2013 || 190,00 || 50,00 ||   || X ||   
 ENP MED. Mandate || Tunisia || DEPOLLUTION INTEGREE DU LAC DE BIZERTE || 80,00 || 40,00 || X ||   || NIF 
 Pre-Accession Mandate || Bosnia and Herzegovina || BANJA LUKA-DOBOJ MOTORWAY || 565,04 || 160,00 || X ||   ||   
 Pre-Accession Mandate || Serbia || ROAD REHABILITATION AND SAFETY || 390,00 || 100,00 || X ||   ||   
 Pre-Accession Mandate || Turkey || ISTANBUL EARTHQUAKE RISK MITIGATION II || 660,00 || 200,00 || X ||   ||   
 RSA Mandate || South Africa || KA XU CSP PROJECT || 569,00 || 110,00 || X ||   ||   
 Energy Sustainability Facility || Regional - Central America || CENTRAL AMERICA CLIMATE CHANGE FL II || 400,00 || 175,00 || X ||   ||   
 Energy Sustainability Facility || Regional - Latin America ; Regional - Asia || ALTHELIA CLIMATE FUND || 150,00 || 15,00 || X ||   ||   
 Femip - RiskCap.&TA || GAZA-WEST BANK || ACAD MICROFINANCE PALESTINE || 10,60 || 0,76 ||   ||   || Support to FEMIP 
 Pre-Acc. Facility || Albania, Bosnia and Herzegovina, FYROM, Montenegro, Serbia || EFSE III || 865,26 || 38,25 || X || X || EIF 
 Pre-Acc. Facility ; Energy Sustainability Facility || Albania, Armenia, Azerbaijan, Bosnia and Herzegovina, FYROM, Georgia, Moldova, Republic of, Montenegro, Serbia, Turkey, Ukraine || GREEN FOR GROWTH FUND II || 190,00 || 22,50 || X || X ||   
 Pre-Acc. Facility || Turkey || BROADBAND ROLL-OUT EASTERN REGIONS || 459,10 || 100,00 || X ||   ||   
 Pre-Acc. Facility || Turkey || DENIZBANK LOAN FOR SMES II || 200,00 || 99,95 || X ||   ||   
 Pre-Acc. Facility || Turkey || ENERGY EFFICIENCY COFINANCING FACILITY || 300,00 || 50,00 || X ||   ||   
 Pre-Acc. Facility || Turkey || GREATER ANATOLIA SME LOAN II C || 400,00 || 50,00 ||   ||   || IPA 
 Pre-Acc. Facility || Turkey || GREATER ANATOLIA SME LOAN EXTENSION B || 400,00 || 50,00 ||   ||   || IPA 
 Spanish Initiative - RC Med || Regional - North Africa || CAPITAL NORTH AFRICA VENTURE FUND II / B || 100,00 || 10,00 || X ||   ||   
 Spanish Initiative - RC Med || Regional - North Africa || FUND FOR THE MEDITERRANEAN REGION II B || 120,00 || 10,00 || X ||   ||   
[1] Pillar 3 ratings for additionality are slightly different: 4-high,
3-significant, 2-moderate, 1-low.  
[2] This
designation is without prejudice to the positions expressed by the EU Member
States on Kosovo’s status and is in line with UN Security Council Resolution
No. 1244/1999 and the International Court of Justice Opinion on Kosovo’s
declaration of independence.
[3] See Report from the Commission to the European Parliament and the
Council on the  Guarantee Fund and its management in 2013 COM(2014) 463 and its
SWD (2014) 241.
[4]               This designation is without
prejudice to the positions expressed by the EU Member States on Kosovo’s status
and is in line with UN Security Council Resolution No. 1244/1999 and the
International Court of Justice Opinion on Kosovo’s declaration of independence 

[5] OJ L 135, 8.5.2014,
p.1