Last week we attended a focal point meeting organized by EUs transport department, DG Move. New financing for green shipping was presented.
CEF/EFSI Green Shipping Guarantee has € 3 billion.
CEF/EFSI Investment Platform – Green Shipping Guarantee Programme (GSGP)
- Objectives: a sustainable, scalable and commercial financial instrument that:
- Supports investment in greener shipping (new vessels and environmentally focussed retrofittings)
- Supports compliance with new regulations (such as on ballast water), and
- Works through financial institutions in the sector
- Eligibility criteria:
- Investments eligible under CEF horizontal priorities and EIB transport lending policy with significant European interest (flag, ownership, incorporation, routes).
- Particular focus on green investments and sustainable shipping (alternative fuel such as LNG, hull treatment, ballast water treatment systems, …).
- Co-financing rates:
- Up to 50% of debt financing on new vessels.
- Up to 100% of green components of retrofitting operations.
- GSGP’s financing (up to EUR 750 million) : Risk capacity, EIB's competitive funding cost and Versatility of financial instrument (funded risk participation or guarantees, seniority of debt)
GSGP: Way forward
- Financing via a Partner Financial Institution (PFI):
- First step is a Framework Agreement with the partner financial institution, which sets out key terms and conditions for cooperation : (e.g. Agreed funding/guarantee envelope, Transaction eligibility; Transactionapproval process, etc)
- Individual transactions are originated, screened and assessed by the PFI and presented to EIB for internal review and pricing with an EIB accelerated/short approval cycle.
- Upon agreement on final terms between PFI and EIB, underlying (standardized) documentation is entered into between the PFI and EIB and PFI
- PFI contribution: concludes transaction with the borrower, retains client interface and transaction control, market interface and presence, Sector expertise and structuring capability, Co-financing capability and Capacity to document and administer transaction
- Pilot phase programme focused on France, The Netherlands and the Nordic countries.
- Pilot launched with financial institutions in France (Société Générale), The Netherlands (ABN AMRO) and Nordic countries.
- 2 additional financial institutions expected to join the programme by the end of 2017. First transaction expected to be signed by the end of September.
- EUR 250 million supported by the CEF and EUR 500 million by the EFSI/Juncker plan.
The rational of blending
Pure financial instruments may not be sufficient for complex TEN-T projects. Public funding will always be needed to achieve flagship transport infrastructure on the TEN-T Network e.g. cross border. Combining public funds with private finance helps projects having high economic and societal impact and help closing the financing package. A targeted component of CEF grant enables the financial case to be established.
This approach has been successfully applied in a number of projects both in cohesion and non-cohesion Member States: e.g. Calais and Dublin port expansion, Riga clean urban transport, Investment platform for rail access to ports in Spain, LNG of the public bus fleet in Mallorca. This has been impactful. The grant component helps in speeding up the preparation, quality and implementation of projects.
CEF Blending Call 2017
Blending, in the context of the CEF Call, is the combination of CEF grants with finance from the EIB, notably the EFSI, or with finance from National Promotional Banks or private investors.
As for a "conventional call", but:
- Letter of support by public or private financial institutions to be included in the submission;
- Financial readiness evaluated to assess project "maturity";
- Disbursement of grants conditional to financial closure.Other specifities:
- Co-funding rates as for a "conventional call" (General envelope)
- The project total cost should be in excess of EUR 10 m
- Only works are supported (not studies)
- Sections criteria streamlined
- CBA/funding gap methodology streamlined
- Implementation of the Action till 2023Blending call - first cut-off date, outcome:
- 68 proposals submitted
- 17 proposas in coehsion member states
- € 2.2 bn of request
- Innovation one of the horizontal priority with larger oversubscription
- Letters of support from EIB, NPBs and from commercial banks, some from more than one institutions