1.4.1 Extent to which the IF allows to finance development needs that would be too risky to be funded with OR

General See the example of Inga under I-1.2.2

Operation

/General See I-1.4.2

General According to an EIB staff member, the fact that an operation is financed through IF or OR comes from an internal decision. However the EIB is transparent in its decision vis-a-vis the

client/borrower. The final choice regarding the type of financing is related to the characteristic of the project and the sector.

Source: MN016

General Inter alia IF allows equity and less than senior loans, which OR does not

2003_MAURITIUS

CONTAINER N/A

2003_GILGEL

GIBE No evidence was found in that respect.

2003_BOAD PG IV The loan of this operation was funded on OR, with the guarantee and the equity investment on the IF. No justification was found on the choice of OR vs. the IF.

An internal 2003 note mentions as observation that an IF loan might be requested for a parallel BOAD activity relating to new financial instruments developed for the private sector:

« La BOAD a par ailleurs développé de nouveaux outils financiers (garanties, émissions, syndications, etc.) en faveurs des opérateurs du secteur privé et pour cette activité souhaiterait également bénéficier du soutien de la Banque. Il est donc envisagé d’offrir parallèlement à un prêt global classique sur ressources propres, un concours sur la Facilité d’Investissement. Le détail des modalités de cet éventuel concours sera présentée lors de la présentation du FSA. »»

Source : « Relevé quotidien (RQ) » (for this operation), EIB, 9 April 2003 (p1)

2003_Dakar-

Ziguinchor The operation’s 2004 “fact sheet A” mentions that an consideration for this IF senior loan (which has materialized according to the IF’s latest Annual interest rate subsidy was under Reports). It mentions that this subsidy was necessary for having the EIB participating to this project with undisputable development impact:

«L’octroi d’une bonification est donc justifié compte tenu des caractéristiques de ce projet mais également nécessaire pour que l’Etat du Sénégal puisse respecter les engagements pris vis-à-vis du FMI au titre de la Facilité Réduction de la Pauvreté et de Croissance. En effet, pour être conforme, les conditions de l’intervention de la Banque devront inclure un taux minimum de concessionalité de 35%.

La Banque a demandé l’avis de la Commission pour l’application d’une bonification à ce projet.»

« Pour que la Banque puisse envisager de participer à ce projet, qui a un impact sur le développement de la Casamance indiscutable, bien que difficilement quantifiable, il est nécessaire et justifié qu’elle puisse affecter à son concours une bonification d’intérêt. L’avis de la Commission à ce propos a été sollicité. »

Source : « Fact Sheet A : Proposition portant sur l'instruction d'une nouvelle opération » (of the operation), EIB, 26 March 2004 (p2 and 3)

That document also mentions that it was a difficult and risky project (see I-8.1.2), reason for which it was probably funded on the IF instead of on OR.

According to an EIB staff member, this project presented a higher risk level due to the fact that it involves a new boat with a new operator. Furthermore the Joola disaster shows that the

government is not so effective in respect with the management of this kind of project. This explains the utilization of the IF.

Source: MN017

2004-WAGP In this case the operations was initially envisaged as a risk capital operations funded under the IF (cf. EIB, Fact Sheet A: proposal to appraise new operation, Luxembourg 17/2/2005,

(OPS/B/ACPIF-1 WestAfr & Sahel/20040026/Walter Eve)

); eventually it was implemented as an ordinary loan to the Government of Ghana. This was possible with the agreement of the MS and given the fact that the sovereign risk was reduced by the guarantee of the government of Ghana and that of MIGA and IBRD.

Source EIB, Appraisal Report, West African Gas Pipeline, Ghana. Luxembourg, 02/10/2006

2005_ACPGLOB

CA2006 OR cannot accept equity

2005_EMP

AFRICA FUND II OR cannot accept equity 2005_ACPGLOB

CA2004 OR cannot accept equity

2005_ACPGLOB

CA2006 OR cannot accept equity

2005_ACPGLOB

ADEMI The IF allowed EIB to take successive equity positions in Banco Ademi which would have been too risky for OR (no equity under OR). Line of credit to Ademi not secured, and presumably not acceptable to OR.

2005_Pacific

islands The loan to the NDB (Niue’s DFI), as part of the global loan to this facility, benefited from an interest rate subsidy, as this country recovered from a natural disaster:

“As a result of Hurricane Heta which devastated Niue in 2004, the island is presently still in a recovery phase. NDB being Niue’s development finance institution, it is playing a key role in the island’s recovery through its lending activities. As foreseen under Cotonou for countries recovering from natural disasters, NDB will be able to benefit from an interest subsidy of up to 3% per annum on the allocations for infrastructure projects. The estimated present value amount of subsidy for the golbal loan to NDB over the duration of the loan is estimated to be a maximum of EUR 600 000”

Source: “Fact Sheet B – Financing Proposal” (of the operation), EIB, 11/10/2006 (p2)

2006_EAU

SENEGAL According to an EIB staff member, this project was evaluated as not too risky which implies that the OR have been used. Several factors have been used by the EIB staff in order to prove the “low” risk of the financing to the legal department. These factors can be found in the Financial

MID-TERM EVALUATION OF THE IF AND EIBOR OPERATIONS IN ACP/OCTS

ADE - EGEVAL II

Final Report September 2010 Annexe 9/Page 34

Source: MN016

“Rapport financier. Projet: Programme eau Sénégal”, EIB, 2007, p 13

2007_ACPGLOG

SOCREDO The requirements established by the Council Directive 2001/822/CE in respect with the IF utilization are fulfilled. But it is not stated that the operation would be too risky to be funded with OR.

“Fact sheet B: financing proposal”, EIB, 2007, p 3

2009_MICRO

FINANCE_ACP No evidence has been found so far.

I-1.4.2 Accordingly, different prioritisation approaches exist for IF and OR operations