EIB to Loan €100M for Renewable Energy Projects in Pakistan
December 3, 2009 // Published as a news service by IHS
The lending operation is structured as a framework scheme, under which the EIB will support a series of investments in the renewable energy sector, thereby contributing to climate change mitigation, a core objective of the European Union (EU) mandate for lending in Asia.
IHS Climate Change & Clean Energy Services Solar Photovoltaic Standards Wind Energy StandardsThe investments will be part of the multi-year program to develop the renewable energy sector in Pakistan set up by the country's government, for a total amount of $2.2 billion.
The program has also the financial support of the ADB ($510 million) and is backed by technical assistance from ADB, the World Bank and bilateral development agencies (USAID and Germany's GTZ).
EIB-ADB collaboration in the project will make it possible to exploit synergies between the two financial institutions and minimize the transaction costs to the borrower.
Under the co-financing agreement signed between the EIB and ADB on Nov. 24, the EIB will be delegating to the ADB a series of tasks concerning loan administration and project monitoring. This innovative approach is in line with the principles of the 2005 Paris declaration on aid effectiveness, as well as with the 2008 Accra Agenda for Action, which call for a reduction in the fragmentation of aid by improving the complementarity of donors' efforts and the division of labor among donors.
Carlos da Silva Costa, EIB vice president, said that this operation "is definitely a timely and visible contribution to the European Union policy aimed at consolidating democracy in Pakistan and supporting social and economic development in the country. It also constitutes the first mutual reliance arrangement between the ADB and EIB. This is indeed a trail-blazing approach and I hope it is the first of many such operations, bearing testimony to the excellent cooperation."
This is the EIB's fifth lending operation in Pakistan, where it started operations in 1993. It is also the third operation with Pakistan's Ministry of Finance.
Background
The European Investment Bank is the EU's long-term financing institution, aimed at promoting EU objectives. Set up in 1957, the EIB operates in the 27 EU member states and more than 130 other countries in Asia and Latin America, Central and Eastern Europe, the Balkans, the Mediterranean region, Africa, the Caribbean and the Pacific. Lending operations outside the EU are part of the EU's cooperation policy with third countries.
Since 1993, the EIB has carried out four successive lending mandates for Asia and Latin America. Under the current mandate (ALA IV), covering the period 2007-2013, the EIB is authorized to lend up to €3.8 billion for financing operations that contribute to climate change mitigation or support the EU presence in those regions through foreign direct investment or the transfer of technology and know-how. The €3.8 billion regional ceiling is broken down into indicative sub-ceilings of €1 billion for Asia and €2.8 billion for Latin America.
Source: European Commission (EC).