EAC Cyprus gets €200 mln loan from EIB

The European Investment Bank is providing a EUR 200 mln loan to the Electricity Authority of Cyprus to reinforce and extend the electricity transmission and distribution networks throughout Cyprus. This is the fifth EIB loan to the EAC.
The finance documentation was signed in Luxembourg by EIB Vice-President Plutarchos Sakellaris and EAC Vice Chairman George Pistentis.
Sakellaris, whose responsibilities include EIB’s lending activities in Cyprus as well as energy issues, said that the loan will cater for growth and enhanced efficiency of the energy sector.
“This is of particular importance as the country’s electricity network is not interconnected and has no other indigenous energy resources,” he added.
The project consists of a four-year investment programme (2010-2013) aimed at meeting growing demand while reducing transmission and distribution losses.
The EIB has supported a number of energy projects in Cyprus, mostly in cooperation with the EAC including loans of EUR 200 mln for the Vassilikos power plant, and the previous upgrading of the electricity transmission and distribution network, for a total of EUR 130 mln. A further EUR 30 mln was used for a new internal combustion engine power plant at the Dhekelia power station. Initially powered with heavy fuel oil, the plant can be retrofitted to natural gas, once this becomes available in Cyprus.
The EIB said it is ready to consider future investments including the introduction of natural gas sources to support diversification of supply and long term needs.
EIB lending in Cyprus started in 1981 and increased after 1996, when the country started accession negotiations with the EU. In the past 12 years, total EIB financing in Cyprus has amounted to more that EUR 1.5 bln, half of which was after EU accession in 2004.
In the five-year period 2005-2009, the EIB provided a total of EUR 612 mln for key projects in all productive sectors.
The lending provided in Cyprus in the last years also fits in the broader measures announced by the EIB in December 2007 under the European Economic Recovery Package. In particular the EIB has offered support for the SME sector through an enhanced partnership with major Cypriot banks via an extension of credit lines to support productive investment in employment and growth by smaller enterprises.
The bank has also been active in support of economic infrastructure notably in the environmental area where it has supported water treatment projects by large municipalities and in the energy sector including the Orites project, the first wind power operator in Cyprus, which led Euromoney to award the “Lender of the Year” title to the EIB.
Some EUR 32 mln has been earmarked for projects in synergy with Cohesion and Structural Funds.