Nabucco recruits three giant financing institutions for appraisals
Shareholders in the Nabucco natural gas pipeline project and three international financial institutions have formalized conditions under which appraisals of the project will be conducted. According to a statement posted on the Nabucco website Monday, the signatures of representatives from the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the World Bank’s International Finance Corporation (IFC) appear on a mandate letter that indicates "potential levels of financing ... and sets out the work that will be required before a final financing decision can be taken." The mandate letter "starts the appraisal process of the Nabucco project, a required step toward a potential financing package of up to 4 billion euros," the statement said. The potential finance package will consist of up to €2 billion from the EIB, up to €1.2 billion from the EBRD and up to around €800 million from IFC. "The involvement of the three institutions is a demonstration of global and European support for the project and represents an important milestone in ensuring the overall financing of Nabucco," the company said. "This involvement will support Nabucco in meeting the highest standards in environmental and social risk evaluation and procurement. The appraisal of the project will include a thorough assessment of commercial, social and environmental aspects." Following the successful conclusion of the appraisal, financing will need to be approved by the relevant governing bodies of each institution. Export credit agencies and international banks are expected to commence their appraisals of the Nabucco project soon after their approval. Commitments from potential lenders are expected to be sought next year. The planned Nabucco pipeline aims to connect the world’s richest gas regions - the Caspian region and the Middle East - to European consumer markets. The ambition behind the pipeline is to link the Eastern border of Turkey to Baumgarten in Austria, via Bulgaria, Romania and Hungary. Shareholders in the project are Turkish group Botaş, the Bulgarian Energy Holding, Hungary’s Mol, Austria’s OMV, Germany’s RWE and Romania’s Transgaz. Each shareholder maintains an equal share of 16.67 percent of Nabucco Gas Pipeline International GmbH.