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Project Finance considerations for infrastructure financing in South Eastern Europe EU-Balkans Discussion Group – 6th Luncheon German Embassy, London, 20 September 2011
Group luncheons which aim to strengthen regional cooperation as well as to explore and evaluate the potential for public/private sector investment in South East Europe, are also useful in providing potential investors an opportunity to network with likeminded business leaders from the region who are seeking foreign capital. In this context, he expressed delight that one of the speakers was already operating in the region and the meeting was an excellent opportunity for the speaker to present his project before participants.
Ambassador of the Federal Republic of Germany, His Excellency Mr Georg Boomgaarden and the Chief Executive of IBDE, Mr Rudi Guraziu, hosted a luncheon for the EU-Balkans Discussion Group at the German Embassy on 20 September. Forty participants from the diplomatic and business communities listened to presentations by Ms Lin O'Grady from the European Bank of Reconstruction and Development, Mr Carsten Conrad from Tirana Business Park, and Mr Pierre Kahn from Deutsche Bank, and engaged in a lively discussion about opportunities for infrastructure development in South Eastern Europe. The event was the sixth in a series organised by IBDE in cooperation with the European Embassies. The German Ambassador emphasised the strong support for the European prospects of the region stating that after the horrors of war witnessed in the Balkans during the 1990s it is encouraging to see that today’s Balkans is viewed as a region of business opportunities and investment potentials. Following the welcoming remarks by the Ambassador, Rudi Guraziu briefed participants on the working of the Group noting that the EU-Balkans Discussion
Lin O’Grady - from the Municipal and Transport Team at EBRD - outlined EBRD goals in supporting the development of the market economies and democracies. Ms O’Grady noted that most of the work of EBRD in the Balkans has tended to go to public sector companies rather than the private sector, although the main objectives of the bank are to support the growth of the private sector. She outlined the criteria that the projects need to meet to qualify for EBRD financing; i.e. a project must support sound market economies and democracies; it inherently needs to support the development of private sector (something very important to EBRD) and it has to strengthen sustainability, because of the banks environmental mandate. According to her since 1991 EBRD has financed over 3100 projects - a total volume of 170 billion Euros. In the transport sector typical projects are road rehabilitation/ reconstruction and railway renewal/refurbishment (bringing railway companies within European norms). The bank on this date of the meeting (20 September 2011) signed a loan of 100 million for Macedonia to finance a key section of corridor 10 from Serbia, Macedonia into Greece. In financing ports, rehabilitation is ongoing in Croatia and Montenegro, as well as the port of Durres in Albania. Financing is also ongoing at airports in Montenegro and Zagreb (Croatia). In the municipal sector EBRD works with the European Union on co-financing, including the rehabilitation of water and waste water systems. Public-Private-Partnerships come into bank’s financing of urban transport systems, including rehabilitation of roads. We also do financing of district heating systems. In terms of the fund allocation, EBRD commits around 500 million Euros to this region each year, amounting to at least about 5 significant projects. Finally, Ms O’Grady added that a small amount of EBRD’s portfolio is channelled into financing waste fields, including one in Croatia. Carsten Conrad - Tirana Business Park General Manager - spoke about “Bridges between Infrastructure Development and Private Foreign Direct Investment [PFDI]" and focused on: a) Infrastructure essentials/necessities in order to attract PFDI (i.e. road networks, airports, railways, public transport etc) b) Infrastructure components (or the lack of it) which could be subject to the PFDI in liaison with authorities (i.e. water treatment plants, power distribution, IT supply etc) and c) Monetary impacts on the PFDI and approaches to funding.