Int'l financial institutions launch preparations to provide credit to Nabucco
Azerbaijan, Baku, Sept. 6 / Trend /
A mandate letter has been signed 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, Nabucco Gas Pipeline International GmbH reported.
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 EBRD'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 IFC's account and up to EUR 400 million to be syndicated to commercial banks).
The Nabucco gas pipeline project is the flagship project for meeting future EU gas demand and will diversify Europe's pool of supplier countries.
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.
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.
Construction of the Nabucco pipeline will be implemented in two main phases. The first phase of construction (2011) includes laying a new pipeline length of 2,000 kilometers, starting at the Turkish border and ending in Austria's Baumgarten. The second phase (2014-2015) includes the construction of the remainder of the pipeline on the border between Turkey and Georgia, as well as Turkey and Iraq.
Nabucco gas pipeline project is worth €7.9 billion. Participants of the project are Austrian OMV, Hungarian MOL, Bulgarian Bulgargaz, Romanian Transgaz, Turkish Botas and German RWE companies. Each of participants has equal share to the amount of 16.67 percent. Construction of gas pipeline is planned to be launched in 2011, the first supplies - in 2014. Maximal capacity of the pipeline will hit 31 billion cubic meters per year. Nabucco Gas Pipeline International shareholders will invest 30 percent of total cost of the project, the rest 70 percent will be paid owing to loans.