EU Neighbourhood Investment Facility: record €142.3 million for 15 projects in 2011

The EU’s Neighbourhood Investment Facility (NIF) last year approved grant contributions in the Eastern and Southern Neighbourhood rising to a record €142.3 million, leveraging total new investments of about €4.3 billion, according to the newly-released NIF 2011 report.
In his introduction to the report, European Commissioner for Enlargement and Neighbourhood Policy Štefan Füle said that since 2008, the NIF has supported 52 projects across the Neighbourhood region, representing a total investment cost of around €14 billion.
Last year had been "a test year for our cooperation with the Neighbourhood region, full of historical moments and challenges", he said, adding the EU had stepped up its response to assist the democratic transition in the wake of the Arab Spring.
"Throughout these events, the NIF has proven its adequacy, responding in a timely manner and effectively to our partners’ new priorities and urgent needs. The Strategic Board agreed that NIF support to the private sector and job creation shall remain a priority for the coming years in order to quickly address the economic and social situation that was at the root of the revolutions."
In the Eastern Neighbourhood, the EU had also boosted its cooperation, said Füle, addressing challenges in key policy areas such as trade, transport, energy, security, climate change and support to the private sector. "The NIF has supported several of the Eastern Partnership Flagship Initiatives and other EU regional cooperation areas. It has supported the improvement of interconnections between the EU and its Eastern neighbours, thus promoting increased stability and prosperity, and building an effective regional partnership."
The geographical allocation of the NIF grants was fairly balanced. Nine projects in the Southern region were approved in 2011 for a total NIF contribution of €91.3 million (64%), compared to six projects in the Eastern region approved for a total NIF contribution of €51 million (36%). Seven countries (Armenia, Egypt, Georgia, Morocco, Re-public of Moldova, Tunisia, Ukraine) directly benefited from a NIF grant last year, while substantial support was provided to regional1 projects in the South representing a total NIF contribution of €30 million.
Regarding the sectoral distribution of NIF grants, the bulk of support in 2011 was for infrastructure with a total of €112.3 million (79%) approved, while the remaining €30 million (21%) went to operations in support of private sector development. Within infrastructure, the sectors of transport and energy received most of NIF support (together 69%), while 10% were allocated to water and sanitation projects.
The financial leverage effect of NIF contributions remains very high at 1:15. Indeed, €142.3 million of NIF grants potentially leverage over €2 billion of loans from European finance institutions. In other words, each euro provided by the NIF leveraged almost €15 of lending or investment from European Finance Institutions.
Of the 15 operations approved last year, ten will have a positive direct impact on climate change mitigation or adaptation; three regional projects supporting the private sector in the south, in particular SMEs, were approved; and over 85% of operations were closely linked to the priorities of the Union for the Mediterranean (UfM), the Eastern Partnership (EaP) and other key EU policy initiatives in the Southern and Eastern Neighbourhood.
Projects in the South ranged from support to the first phase of the Ouarzazate Solar Power Plant project in Morocco, a key project of the Mediterranean Solar Plan, to an Improved Water and Wastewater Services Programme in Upper Egypt. In the East, the NIF supported among others road infrastructure improvements in Moldova and Georgia, facilitating future interconnections in line with Eastern Partnership objectives, and a Power Transmission Efficiency Project in Ukraine, fostering the creation of a regional electricity market.
Officially launched in May 2008, the Neighbourhood Investment Facility is an innovative financial instrument of the European Neighbourhood Policy (ENP), whose primary objective is to finance with a mix of grants and loans key infrastructure projects in the transport, energy, social and environment sectors, as well as to support private sector development (in particular SMEs) in the Neighbourhood Region.
Given the considerable resources required to finance and implement large infrastructure projects, the NIF aims to create a partnership, pooling together grant resources from the EU Budget and the EU Member States and using them to leverage loans from European Finance Institutions as well as contributions from the ENP partner countries. To receive a grant contribution from the NIF, a project must be financed by an eligible European Finance Institution. (ENPI Info Centre)
Read more
NIF Annual report 2011
Neighbourhood Investment Facility
ENPI Info Centre NIF interview – Blending loans and grants to finance investments for the Neighbourhood
ENPI Info Centre NIF feature story (Armenia) – The better the metro system the happier the citizen…
ENPI Info Centre NIF feature story (Georgia) – South Caucasus united by common electricity grid
ENPI Info Centre NIF feature story (Morocco) – Roads of hope

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