International banks may lend $5.2 billion for Nabucco gas pipeline
07 Sep 2010
Nabucco gas pipeline project, which rivals Russia's Gazprom-led South Stream and Nord Stream projects for transportation of natural gas to the European Union, received a boost yesterday when shareholders of Nabucco and Nabucco Gas Pipeline International GmbH (NIC) signed a mandate letter with three international financial institutions (IFIs) to start the appraisal of the project for its financing.
The appraising financial institutions include European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and International Finance Corporation (IFC), according to a joint statement issued Monday.
The assessment is a pre-requisite for a potential financial package for up to €4 billion ($5.2 billion) for the project, which is more than 50 per cent of its total capital cost of €7.9 billion ($10.2 billion).
It is anticipated that about 70 per cent of the project cost will be financed through debt from financial institutions and the balance from its stakeholders.
The much-hyped Nabucco gas pipeline project is designed to meet the future EU gas demand and diversify Europe's pool of supplier countries by sourcing natural gas from the world's richest Caspian and Middle East gas reserves, bypassing Russia.
EIB will provide up to €2 billion, EBRD up to €1.2 billion and around €800 million will be from IFC. About half of the commitments from EBRD and IFC, amounting €1 billion will be syndicated to commercial banks.
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