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International financial organizations sign new documemt about Nabucco project

06 September 2010 12:56 (UTC +04:00)

Baku â€“ APA-Economics. A mandate letter has been signed today by the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), IFC - a member of the World Bank Group -, the shareholders of Nabucco and NABUCCO Gas Pipeline International GmbH. The signing of the mandate letter by the three International Financial Institutions (IFIs) marks the start of the appraisal process of the Nabucco project, a required step towards a potential financing package of up to EUR 4 billion. The Nabucco gas pipeline project is the flagship project for meeting future EU gas demand and will diversify Europeâ€™s pool of supplier countries.

The potential financing package will consist of up to EUR 2 billion from the EIB, up to EUR 1.2 billion from the EBRD (up to EUR 600 million for EBRDâ€™s account and up to EUR 600 million to be syndicated to commercial banks) and up to around EUR 800 million from IFC (up to EUR 400 million for IFCâ€™s account and up to EUR 400 million to be syndicated to commercial banks).

The mandate letter formalises the conditions under which the three IFIs will conduct their appraisal of the Nabucco project, and provides an indication of the potential level of financing. It sets out the work that will be required before a final financing decision can be taken.

The involvement of the three IFIs is a demonstration of global and European support for the project and represents an important milestone in ensuring the overall financing of Nabucco. The early involvement of the IFIs will support Nabucco in meeting the highest standards in environmental and social risk evaluation and procurement. The appraisal of the project will include a thorough assessment of commercial, social and environmental aspects.

The Nabucco gas pipeline project addresses the EUâ€™s priority goal of achieving energy security via the diversification of gas routes and gas supplies. It will deliver additional volumes of gas from different sources through a new supply route to the EU member states and their neighbours. Nabucco provides a strategic solution by enabling the transport of gas from both the Caspian Region and the Middle East.

Following the successful conclusion of the appraisal, the financing will need to be approved by the relevant governing bodies of each IFI. Export credit agencies and international banks are expected to commence their appraisal of the Nabucco project soon after the IFIs. Commitments from potential lenders are expected to be sought in 2011.