HighNorthS.Fridriksson

NORDIC INVESTMENT BANK

Nordic Investment Bank Financing projects in the Northern Dimension

Stefan Fridriksson

Senior Manager, Lending Department

30 NOVEMBER 2011

PRESENTATION NAME / AUTHOR 1

The High North – Infrastructure and Industrial Development

Voksenåsen 29 November 2011


Contents

30 NOVEMBER 2011

1. Basic information

2. Mission and mandate

3. Lending focus sectors

4. NIB and the Northern

Dimension


Basic information

• Founded by the Nordic countries in

1975 (active since 1976)

• The Baltic countries joined in 2005

• Headquarters in Helsinki

• Lending in both member countries

and non-member countries

• Funds acquired on the

international capital markets

• AAA/Aaa credit rating

30 NOVEMBER 2011

NIB Headquarters in Helsinki, Finland. In 2009, NIB Headquarters joined

the WWF Green Office network.


Ownership structure

NOV-11

Iceland 0.9%

Baa3/BBB-

Norway 21.5%

Aaa/AAA

Sweden 34.6%

Aaa/AAA

Denmark 21.1%

Aaa/AAA

Finland 17.7%

Aaa/AAA

Estonia 0.9%

A1/A-

Latvia 1.3%

Baa3/BB

Lithuania 2.0%

Baa1/BBB

4

Authorised capital

to EUR 6,142m as

of 16 February 2011

NIB's Board of

Governors has decided

to increase the Bank's

authorised capital by

EUR 2 billion. The

capital increase has

been allocated to the

unpaid portion.

The Bank's member countries have subscribed to its authorised capital

in proportion to their gross national income.


Regional focus NIB actively participates in international and regional cooperation

30 NOVEMBER 2011

• EU Strategy for the Baltic Sea Region

• Northern Dimension Environmental

Partnership (NDEP)

• Northern Dimension Partnership on

Transport and Logistics (NDPTL)

• Eastern Europe Energy Efficiency

and Environment Program

• More cohesion with other policies. Align with

- Council of the Baltic Sea States (CBSS),

- Barents Euro Arctic Council (BEAC),

- Arctic Council (AC)

- Nordic Council of Ministers.


Mission and mandate

30 NOVEMBER 2011


Mission and mandate

• NIB promotes sustainable

growth of its member

countries

by providing long-term

complementary financing to

− projects that strengthen

competitiveness

− projects that enhance the

environment

30 NOVEMBER 2011


Mission and mandate: Focus sectors

• NIB puts particular emphasis on

projects involving investments in

the following sectors

− environment

− energy

− infrastructure

− innovation

• NIB finances

− larger investments by the

corporate sector

or public sector

− smaller projects through

financial intermediaries

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

2007 2008 2009 2010

Focus sector loans agreed, as a share (%) of total loans

Environment

Energy

Transport, logistics and communication

Innovations

Other sectors

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Strengthening competitiveness

30 NOVEMBER 2011

• Sustainability increases the level of

wealth and prosperity

• All projects considered for financing

undergo a competitive assessment of

• direct effects

- upgrading or expanding a company's

capital base, for example by installing or

replacing production equipment;

• wider direct effects

- improvements in infrastructure, for example

by construction of new highways, railroads

and ports;

• indirect effects

- demonstration effects, for example by

applying global best practice technologies

Metro line in Helsinki.

Photo: City of Helsinki (Finland)


Lending focus sectors

30 NOVEMBER 2011


Focus sector: Environment

• Economic growth and a healthy

environment go hand in hand

• NIB has one of the most explicit

environmental mandates

among the large IFIs

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

2005 2006 2007 2008 2009 2010

Environmental loans outstanding as a share of total loans,

EUR million

Other loans Environmental loans

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Focus sector: Transport, logistics

and communications

30 NOVEMBER 2011

• Effective transport, logistics and

communications are essential for ensuring

competitiveness

• In early 2011, NIB adopted a lending Strategy

for transport, logistics and communications to

ensure mandate compliance

• Many projects also have significant

environmental benefits

Project examples: Road constructions, railways, airports,

broadband and mobile phone networks

Photo: SJ AB (Sweden)


NIB and Life Cycle Model PPP

13

• E 75/A 1, Gdańsk-Nowe Marzy, PL, 90 km, EUR 675 mio.

• E 75/A 1, Nowe Marzy-Torun, PL

• E18, Turku-Helsinki, FIN, 65 km, 25 y, EUR 700 mio.

• E 18, Helsinki-Lahti, FIN, 70 km, 15 y, EUR 100 mio.

• Arlanda Express Train, S, 40 y, EUR 500 mio.

• Norwegian PPP projects, EUR 830 mio.

- E 39 Orkdalsvegen, Klett-Bårdshaug, 30 km, 27 y, EUR 190 mio.

- E-39 Lyngdal-Flekkefjord, 38 km, 27 y, EUR 180 mio,

- E 18 Kristiansand-Grimstad, 38 km new road, 28 y, EUR 460 mio.

• Oslo Toll System, N, 17 y, EUR 1,500 mio.

• Pulkova airport


Norwegian road projects – PPP

Financed by NIB

30 NOVEMBER 2011


NORDIC INVESTMENT BANK 30 NOVEMBER 2011


2006

• Agder OPS Finansselskap AS (NOK 800 m.)

• E 18 Grimstad- Kristiansand

• 38 km new road

• NIB loan EUR 40 million

2004

• Allfarveg (EUR 180 million)

• E39 Lyngdal-Flekkefjord

• 17,5 km.


2003

• Orknadalsvegen AS (NOK 1,431 bn.)

• E 39 Orkdalsvegen, Klett – Bårdshaug OPS


Norwegian road projects – PPP

Financed by NIB


Loan case: Gardermoen Intl. Norway

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• Norwegian Avinor AS

• Terminal 2 expansion

A loan totalling NOK 1,500 million in 2011

20 year maturity

To help the airport maintain a competitive role in

international aviation and ensure an efficient and

reliable transport system for domestic and

international travel in one of NIB's member

country


Focus sector: Energy

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• The energy sector's main focus is on

energy efficiency, integrated energy

networks and sustainable and sufficient

generation capacity.

• In April 2010, NIB adopted an Energy

Strategy to increase proactivity and to

ensure mandate compliance. NIB-

financed projects are also in line with the

European* objectives in this sector.

Project examples: Transmission lines, improved district heating, renewable energy projects, energy efficiency projects in buildings *EU and EEA

Photo: Eidsiva Energi AS (Norway)


NIB- loans in the High North

18

• Rajakiiri – 19 mEUR (2010)

Wind park

• SSAB –100 mEUR (2010)

Investments for improved environment and energy

efficiency in Borlänge och Oxelösund

• Outokumpu– 30 mEUR (2001)

Financing of investments in the chrome mine in Kemi


Focus sector: Innovation

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• Lending to activities related to

innovation processes

• R & D projects

• Lending via financial

intermediaries

Photo: Novozymes (Denmark)


Loans on market terms

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• Various currencies used

• Long maturities: 5–25 years

• Co-financing: up to 50% of project costs

• Grace period, up to 5 years


NIB and The Northern Dimension

NDEP and NDPTL

30 NOVEMBER 2011



22

NIB and the Northern Dimension

NDEP – Northern Dimension Environmental Partnership • Established in 2001.

• Cooperation on concrete environmental projects in Russia and Belarus.

• Also nuclear safety projects in Russia.

• IFIs (loans) and donors (grants) combined in each project.

• Support fund EUR 275 million (125 million for environmental, 150 for

nuclear safety projects).

NDPTL - Northern Dimension Partnership for Transport and

Logistics • New initiative , established in 2010.

• Regional cooperation on policy and projects.

• Linked to EU transport policy via Northern Axis and Motorways of the

Seas.

• Linked to sub-regional cooperation projects such as Barents Corridor.

• Aim to remove bottlenecks and to take a pan-regional perspective on

transport corridors – project list under preparation.

• NIB hosts the NDPTL secretariat.


Cleaning the Baltic Sea (NDEP)

• Vodokanal St. Petersburg, Russia (2005)

• EUR 45 million

• NIB tailor-made the project's financial structure and acted as lead bank.

• Implemented under the umbrella of the Northern Dimension Environmental Partnership.

- loan to Vodokanal St. Petersburg EUR 45 million, launched in 2005

- Substantially reduced the effluent of untreated wastewater discharged in the Gulf of Finland. St. Petersburg now treats 85% of its wastewater

Southwest Wastewater Treatment Plant in St. Petersburg

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NDPTL – A list of projects in the

waiting and development

30 NOVEMBER 2011

24


Role of the IFIs in NDPTL

25

Expertice in financing projects

Play a key role when selecting projects for implementation within the

Partnership.

Collaboration with the NIB, EIB, World Bank and EBRD along with

the National Financing Institutions (NFIs) so as to get their views of

the projects early on.


• The Baltic Sea Region, North Atlantic and Barents Sea

Region have high potential to benefit from an effective

implementation of the Partnerships.

• The results of the NDEP has already demonstrated valuable

results.

• Can the same approach be applied for transport and

logistics projects?

• Enhance the interest of private investors into transport and

logistics investments.

26

The potential of the Northern Dimension


• Secure that interests of the partner countries on public level

remains committed and focussed.

• Areas where the communality of interests is strong but where

actions taken only nationally, too often in an uncoordinated

way, fail to internalize the regional perspective and potential.

• Visible in the transport sector but also the environment and

energy sectors where huge, inter-regional challenges have

been demonstrated.

27

The potential of the Northern Dimension


Loans

A loan = Distributing the capital cost over time

Borrowed money is expensive (cost of funds +

risk premium)

Debt service must be covered with the borrower's own

resources

Operating revenues and/or budgetary funds

Access to borrowing depends on:

Creditworthiness

and/or

Project quality (profitability = capacity to

generate money for debt service)

Bankable projects


Bankable projects -What is needed ?

In order to lend banks need:

• Willing and able borrowers

• Willing = Prepared to take loans at prevailing interest

rates to finance part of their investments

• Able = Creditworthy enough to be able to service the

loan/s and with the other part of the financing secured –

banks never (should) provide loans for a 100 % of the

project cost

29


Bankable projects -What is needed ?

In order to lend banks need:

• Good quality (feasible) projects

• Financiers are focused on all aspects of project feasibility Economic Financial Technical Institutional Environmental

30


Nordic Investment Bank For further information:

30 NOVEMBER 2011

Stefan Fridriksson

Senior Manager, Lending

Head Quarters

Fabianinkatu 34

P.o. box 249

FI-00171 helsinki

Finland

telephone +358 10 618 001

Fax +358 10 618 0725

internet

http://www.nib.int

http://annual.nib.int

HighNorthS.Fridriksson

Documents

nordic investment bank

nordic countries

mandate nib

nib headquarters

focus sectors nib

baltic countries

authorised capital

competitiveness projects