Gunnar Muent Brussels, 24th June 2011 EIB Financing of Distribution Infrastructure for Gas-fuelled Transport EU-RUSSIA ENERGY DIALOGUE Gunnar Muent Brussels, 24th June 2011

European Investment Bank - background The European Investment Bank is the European Union‘s long-term financing institution. The Bank acts as an autonomous body set up to finance capital investments furthering European integration by promoting EU policies. EIB was created by the Treaty of Rome in 1958 EIB is a not-for-profit, policy driven institution EIB is 100% owned by the 27 EU member states EIB has subscribed capital of EUR 232.4 bn as of 2009 EIB is AAA/Aaa rated by rating agencies EIB funds itself on the capital markets: EUR 79.4 bn in 2009 EIB signed loans amounting to EUR 79.1bn in 2009 EIB is the largest multilateral financing institution

European Investment Bank - objectives Within the European Union Cohesion and convergence Small and medium-sized enterprises (SMEs) Environmental sustainability Knowledge Economy Trans-European Networks (TENs) Sustainable, competitive and secure energy Outside of the European Union Private sector development Infrastructure development Security of energy supply Support for EU presence in Asia and Latin America via Foreign Direct Investment (FDI) Under EU Mandates Pre-accession European Neighborhood Development

Projects financed by the Bank must be: economically justified Criteria Projects financed by the Bank must be: economically justified technically viable financially self-supporting and environmentally sound appropriate procurement procedures are required (International Competitive Bidding when appropriate) Projects financed by the Bank must be: economically justified technically viable financially self-supporting and environmentally sound Appropriate procurement procedures are required (International Competitive Bidding when appropriate)

EIB and EIF Financing Lifecycle Approach 1 Risk Capital 2 CIP Resources (SME) 3 RSFF (SME / MidCap) 4 Investment Loans Facility: High Growth Innovative SME Scheme (GIF), Ecotech Purpose: IP financing, technology transfer, seed financing, investment readiness Target Group: VC Funds, Business Angels EIF Product: Fund-of-Funds CIP Guarantee schemes Growth financing for SMEs Formal VC Funds, CLOs SME guarantees (loans, microcredit, equity/mezzanine, securitisation RSFF RDI financing SMEs/MidCaps, Banks, PE Investors (sub-investment grade) Loans (incl. Mezzanine), Funded Risk Sharing Facilities with Banks (Investors) Investment Loans RDI financing MidCaps/Large Corporates/Public Sector Entities (investment grade) Loans, Guarantees Bank Loans and Guarantees Formal VC Funds Seed/Early Stage VC Funds Business Angels Entrepreneur, friends, family Later Stage Counterparts Seed / Start-Up Phase Emerging Growth Phase Development Phase

Medium- and long term loans EIB products Medium- and long term loans Direct loans of EUR 25-100m; larger amounts are possible Intermediated loans: For smaller projects, indirect lending through credit lines to local financial intermediaries (sub-loans of between EUR 0.1 and EUR 12.5m) Equity for infrastructure funds under the EPF (up to EUR 150m) Readiness of cooperation with other financial institutions as financial intermediaries as guarantors, as partner in project identification and as financial arrangers The EIB’s core product are medium- and long term loans, corresponding to the technical and economical life of the projects. Especially for the financing of infrastructure projects the terms offered by the EIB by very far exceed what the market can offer. The EIB can also invest into the Equity of infrastructure funds under the EPF (up to EUR 150 M) Typical direct loans are in the order of EUR 25-100 million; larger amounts are possible For smaller projects, the EIB normally lends indirectly through credit facilities granted to local financial intermediaries (sub-loans of between EUR 0.1 and EUR 12.5 million) The EIB is extensively cooperating with other financial institutions as financial intermediaries (credit lines), as guarantors, as partner in project identification and as financial arrangers.

EIB Activities Outside the Union Supporting EU development and cooperation policies in Partner Countries EIB external mandates: Pre-accession countries: Candidate countries - Croatia, Turkey and Former Yugoslavia, Republic of Macedonia Potential candidate countries - Western Balkans European Neighbourhood: Mediterranean Neighbourhood (FEMIP) Eastern Europe, Southern Caucasus, Russia Development: Africa, Pacific and Caribbean (ACP) South Africa Asia and Latin America (ALA) ACP is a developmental mandate, whilst SA and ALA are mandates for the EIB to support Foreign Direct Investment and projects with mutual benefits for the EU. I will come to the Bank‘s activities in the Eastern Neigbourhood and Partner countries.

Operations under appraisal and awaiting signature: EUR 2bn Prospects for lending in Eastern Partners Amount of Mandates 2007- 2013 Eastern Neighbourhood Mandate: EUR 3.7bn Eastern Partner Facility: EUR 1.5bn Signed so far: EUR 1 bn Operations under appraisal and awaiting signature: EUR 2bn Strategy: Fully absorb Mandates within their period of validity Focus on: economic infrastructures environment Access to EU markets Strengthening physical links with the Union and FDI I would like to draw your attention to the fact that the validity period of the present mandates ends in 2013. Total amounts available are EUR 3.7 bn under the Eastern partner’s mandate and EUR 1.5bn under the Eastern Partners’ Facility So far about EUR 1bn have been signed. Operations under appraisal and awaiting signature amount to about EUR 2 bn Strategy for 2011-2013 consists in : Stepping up the implementation of the External Lending Mandate and to jump start the use of the EPF to support the EU’s cooperation policy with its Eastern Partners. Focusing investment projects that will help modernise economic infrastructures, improve the environment and promote the integration with the EU economy, including through better physical linkages and FDI.

Sectors and beneficiaries Eligible sectors: Energy Environment Transport Telecommunication Industry Beneficiaries: State / Central Government Regions Municipalities Utilities Private companies Project Finance Structures PPPs This slide summarizes the sectors the EIB can finance under the mandates as well the kind of borrowers and promoters it can support.

Low/Sub Investment Grade RSFF - A new Source of Risk Capital Banks EIB RSFF funds complement other sources of debt capital available for low/sub investment grade RDI intensive corporates EIB RSFF funds are highly attractive for potential beneficiaries because of: Highly attractive terms & conditions (AAA rating and non-for-profit pricing) Long maturities of up to 10 years or more Direct EIB participation of up to EUR 300m per transaction (depending on rating) Strong technology/industry expertise EIB does not sell assets on the secondary market (buy and hold strategy) No cross selling (just long-term lender) Signalling Effect: EIB as a quality stamp Debt and Mezzanine Debt Product Investors Final Beneficiaries Low/Sub Investment Grade EIB (RSFF) 2007 - 2013 EUR 1bn Approx. EUR 10bn Debt Financing Own Resources

Examples of what can be financed – LNG terminals Sagunto LNG plant - TEN Grain LNG Terminal – TEN Fluxys LNG Terminal – TEN Offshore LNG Toscana Gate LNG Terminal … EIB lending volume since 2000: EUR 3.6 bn

Examples of what can be financed – passenger cars CNG fuelled engine development: Major European OEMs Suppliers EIB lending volume: > EUR 200 m per year

Examples of what can be financed – marine engines RDI for LNG fuelled marine engines: Financing of investments of major European OEMs Suppliers EIB lending volume: > EUR 100 m per year

Examples of what can be financed - ships Purchase of LNG fuelled ships: first operations under appraisal …

Examples of what can be financed – LNG/CNG first operations under appraisal

EIB lending to investments in LNG/CNG technologies - track record What can be financed ? Infrastructure Acquisition of vehicles/ships RDI for Systems/Components Eligible investment costs Capex Opex & capex for R&D Capex & opex for innovation Eligibilities: Trans European Networks – TENs Protection of the Environment & Sustainable Communities Knowledge Economy – RDI Convergence

THANK YOU !! Gunnar Muent Head of Innovation & Competitiveness Department European Investment Bank g.muent@eib.org