European Investment Bank to Finance Bulgaria's Nabucco Share, Major Highways

European Investment Bank to Finance Bulgaria's Nabucco Share, Major Highways

A number of Bulgaria's key infrastructure projects will be financed by the European Investment Bank, Bulgarian Prime Minister Boyko Borisov and EIB Group President Philippe Maystadt have announced.

Borisov welcomed Maystadt in Sofia on Friday, not hiding his happiness over EIB's readiness to grant support for the Bulgarian infrastructure projects during their joint news conference.

The EIB head has vowed funding for Bulgaria's share in the Nabucco gas transit pipeline, the Struma Highway, the Black Sea Highway, the Hemus Highway, the second Danube Bridge with Romania, railways, waste plants and other projects. In addition to money, the European Investment Bank also promised to help Bulgaria with experts.

The Struma Highway starts at the Daskalovo road junction to the west of Sofia, where it will be connected with the short Lyulin Highway, and will run to the Kulata border crossing on the Bulgarian border with Greece. Some of the sections of the 156-km road are promised to be completed by the end of the Borisov Cabinet's term in 2013. A total of 19 km have been completed so far.

The European Investment Bank will also facilitate the Bulgarian Hemus Highway's inclusion in EU's structural funds, according to the Bulgarian PM.

The Hemus Highway will connect Sofia with Varna on the Black Sea through Northern Bulgaria. Currently, only 34% of the Hemus Highway have been constructed - that is, 145 km out of a total of 423 km; these are only the start section from Sofia to Yablanitsa and the end section from Shumen to Varna.

Borisov was especially excited over the commitment of the European Investment Bank to loan Bulgaria the entire sum of EUR 1.2 B for its share in the construction of the Nabucco gas transit pipeline - an arrangement announced for the first time by him and Maystadt on Friday. In addition to granting the loan, the EIB is also going to issue a guarantee for it, the PM emphasized.

Nabucco Gas Pipeline International GmbH, the Vienna-based project company, has been involved in talks with the European Bank for Reconstruction and Development, the European Investment Bank, and the International Finance Corporation, a member of the World Bank Group, asking for an EUR 4 B loan. These negotiations are expected to be completed in 2011.

The Nabucco gas pipeline, which is supposed to reduce EU's energy dependence on Russia by bringing in natural gas from the Caspian region, Central Asia, and the Middle East, will have a total capacity of 31 billion cubic meters per year.

The construction of the Nabucco gas transit pipeline will start in 2012, and the first natural gas deliveries through it should be a fact in 2015. From that, the direct investments in the Bulgarian economy from the construction of Nabucco will be about EUR 400 M and a few hundred jobs. Another about 1000 jobs will be created indirectly by the project.

The Nabucco shareholders are: Bulgarian Energy Holding (Bulgaria), Botas (Turkey), MOL (Hungary), OMV (Austria), RWE (Germany) and Transgaz (Romania), Each shareholder holds an equal share of 16.67% of Nabucco Gas Pipeline International GmbH.

Nabucco is estimated to cost EUR 8 B, and Bulgaria, as a partner with 1/6 of the shares, will be expected to provide 1/6 of the total sum, or about EUR 1.3 B, rather than finance just the section on its territory.

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