NIB Nordic Investment Bank

Case

Stronger mandate in non-member financing

NIB has adopted new strategies for its operations in countries outside of the membership area. The country strategies envisage that the Bank will pay even closer attention to those focus countries where it can provide value-added loan financing for projects of interest to its members.

Søren Mortensen, Head of Lending Non-member Area at NIB
Søren Mortensen

"With a set of new country strategies, we are aiming at securing good compliance of financed projects with NIB's mandate—to strengthen the member countries' competitiveness and enhance the environment. The Bank continues financing projects of mutual interests to both NIB and the borrowing countries," explains Søren Mortensen, Head of Lending Non-member Area at NIB.

In order to identify projects that provide a strong mandate fulfilment, NIB is set to extend cooperation with local authorities in the focus countries, other international financial institutions and the European Commission. This will be done through bilateral co-financing of various instruments, such the Northern Dimension partnerships: the Environmental Partnership (NDEP) and on Transport and Logistics (NDPTL).

"To expand the limits of our financing, we are keen to mobilise additional funding from the financial communities to offer our potential customers A/B loan facilities. NIB has a very positive experience with A/B packages provided to customers in Brazil and Russia in recent years," says Mr Mortensen.

NIB will also continue close cooperation with local intermediary banks in offering them long-term loan programmes for financing small and medium-sized projects within renewable energy production, clean technology and other areas of high mandate compliance and mutual interest.

Speaking about NIB's approaches for individual countries, Mr Mortensen emphasises that the Bank will continue to identify and cooperate with member-country companies investing in the Baltic Sea region's countries, as well as in other regions with a high growth potential. He continues:

"In neighbouring countries, like Russia and Poland, or in more distant powerhouses, such as China and India, NIB has financed a large number of projects that benefitted both Nordic companies and the borrowing countries. We carefully scrutinise each project, in particular within technology transfer from NIB's member countries, so that it can be further developed to achieve better mandate compliance."

Located on the Baltic Sea and being a member of the EU, Poland is a strategic partner for the Nordic and Baltic countries. NIB supports both the integration of the energy networks and facilitating transport links between the member countries and Poland as well as environmental improvements.

"For energy investments a key objective is to strengthen and integrate the Baltic Sea Region electricity networks and make them part of a larger integrated European market. A functioning grid is essential for long-term planning of both producers and consumers of electricity," says Mr Mortensen.

The focus of NIB's environmental lending in Poland is on projects related to the Baltic Sea marine environment within the Bank's BASE facility and projects related to mitigation of climate change under the CLEERE facility. NIB will put more emphasis on working together with municipalities in combining EU grant funds with NIB loans for the full financing of environmental projects, in particular wastewater treatment.

India has become an important target for NIB's member country companies with regard to both investment and technological cooperation. The Indian market values Nordic environmental technologies for renewable energy production, energy efficiency, as well as advanced telecommunications, all of which are well in line with NIB's mandate-defined focus sectors.

"NIB will follow up project development in clean-tech and engage itself in a dialogue with the Indian authorities to support the initiatives of member country companies," Mr Mortensen continues.

In China, NIB closely cooperates with the Chinese central government, whose priorities include a balanced development between the urban and rural areas, among various regions, environmental sustainability, as well as balancing China's domestic development and the opening-up to the outside world.

"From the perspective of the Chinese authorities, the overriding interest in NIB's financing is based on a desire for technology transfer from NIB's member countries to the various provinces in China," says Mr Mortensen.

In Brazil, where foreign direct investments from the Nordic countries in the economy have increased considerably in recent years, NIB also has an ongoing dialogue with the national authorities. This concerns the country's priorities in the sectors of environment, energy, infrastructure and communications. NIB will focus its lending to Brazil on financing projects prioritised by the Brazilian authorities and supporting the Bank's mandate.

"For instance, within the Brazilian wind power sector, there is a large potential for new projects, especially in the north-east of the country, which is considered to be one of the most favourable locations for wind energy in Latin America," says Mr Mortensen.

"We are seeing that companies from NIB's member countries are increasingly interested in offering technological cooperation in this area, and also in establishing themselves with local production. NIB will continue to identify solid renewable energy projects in Brazil in support of these companies."

Other focus areas are the transmission and distribution of energy, the safety of offshore oil extraction, the upgrading and expanding of the capacity of 3G and 4G telecom networks, and public transport infrastructure.

Another example is Belarus, with which NIB signed a framework agreement in June 2010. The Bank's operations in this country are, first and foremost, aimed at financing investments that reduce cross-border pollution-reducing discharges to major rivers in the Baltic Sea catchment area as well as cutting air pollutants and reducing greenhouse gas emissions. About 5% of the total Baltic Sea catchment area lies in Belarus, which has the fifth largest surface area of all the countries in this region. In two of the hot spots identified by the Helsinki Commission in Belarus—Brest and Grodno—NIB is currently developing waste water treatment plants under the NDEP umbrella.

Mr Mortensen explains that, as an international financial institution, NIB can use a number of instruments, such as the NDEP and potentially the EU Neighbourhood Investment Facility for loan-financing projects in Belarus.

NIB will continue an active dialogue with a number of other countries, including Ukraine, South Africa and Vietnam, to identify projects with a high member-country interest in the priority sectors, particularly in energy efficiency and renewable energy.

Nov 2010
  • AR2017

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