Magazine article Europe-East

Energy : Financiers Start Four Billion Euro Nabucco Appraisal

Magazine article Europe-East

Energy : Financiers Start Four Billion Euro Nabucco Appraisal

Article excerpt

Nabucco shareholders and interested parties met in Brussels, on 6 September, to formally sign a so-called mandate' letter. This officially kicks off an appraisal process for the pipeline project. The required step should move the project closer towards a contractual agreement on financing worth up to 4 billion. Whilst the 6 September agreement does not represent a financial commitment, Nabucco consortium Managing Director Reinhard Mitschek portrayed it as a further important milestone for the pipeline project.

The mandate letter formalises the conditions under which three international financial institutions will conduct their appraisal of the Nabucco project. The institutions take pains to point out that the appraisal includes thorough' assessment of not just commercial, but also social and environmental aspects.

The letter also provides an indication of the potential level of financing as well as sets out work required before a final financing decision can be taken. The letter was signed by the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), the World Bank Group's International Finance Corporation (IFC) as well as the shareholders of Nabucco and Nabucco Gas Pipeline International GmbH.

The international financial institutions' potential financing package includes up to 2 billion from the EIB. A further 1.2 billion will come from the EBRD and up to around 800 million from IFC. The Nabucco consortium foresees commitments from potential lenders being sought in 2011. Mitschek admitted that the company did not yet have "detailed" commitment as to the financial institutions' investment, but stressed a "general expectation" that the financiers will go on to close a deal. He foresees the start of the open season' (where shippers of gas commit contractually to the infrastructure) for the end of the year or in the first quarter of 2011. …

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