ANNOUNCEMENT 26 Oct 2018

In October 2018, the European Investment Bank (EIB) signed a loan agreement with Oulun Energia Oy to support its deployment of a new Combined Heat and Power (CHP) biomass-fired plant. The loan will be guaranteed by the European Fund for Strategic Investment (EFSI).

NUMBER OF INTERVENTIONS

2

  • 2 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

The European Investment Bank, Financed Projects, OULUN ENERGIA CHP PLANT: https://www.eib.org/en/projects/loan/loan/20170803
The European Investment Bank, project summary, OULUN ENERGIA CHP PLANT: https://www.eib.org/en/projects/pipelines/pipeline/20170803
Oulun Energia Oy: https://www.oulunenergia.fi/en/oulun-energia-group/about-us/subsidiaries-and-joint-ventures
European Commission (13 January 2015): The Investment Plan for Europe: Questions and Answers: http://europa.eu/rapid/press-release_MEMO-15-3223_en.htm
EIB: European Fund for Strategic Investments - Questions and Answers. Available at: http://www.eib.org/attachments/press/investment_plan_for_europe_qa_en.pdf
Instituto de Crédito Oficial: https://www.ico.es/en/web/ico_en/mission-and-functions

Inception date: 26 Oct 2018 | Removal date: open ended
Still in force

State loan

On 26 October 2018, a loan agreement between the European Investment Bank (EIB) and Oulun Energia Oy was signed. The loan has a total value of EUR 100 million (approx. USD 114 million).

The loan will support the company's deployment of a new Combined Heat and Power biomass-fired plant. The plant will have a total capacity of "70 MWe (electric) and 175 MWth (heat and steam)". The plant is intended to replace an already existing solid fuel (combined peat and biomass) plant.

Oulun Energia Oy is located in Finland and is wholly owned by the City of Oulu, Finland. The company generates, procures and sells electricity with a focus on the city.

A state act in the GTA database is assessed solely in terms of the extent to which its implementation affects foreign commercial interests. On this metric, the investment support granted here is discriminatory.

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
Inception date: 26 Oct 2018 | Removal date: open ended
Still in force

Loan guarantee

The EIB's loan to Oulun Energia Oy signed on 26 October 2018 was issued under the European Fund for Strategic Investment (EFSI). The loan has a total value of EUR 100 million (approx. USD 114 million) and will support the company's construction of a new Combined Heat and Power biomass-fired plant.

Oulun Energia Oy is located in Finland and is wholly owned by the City of Oulu, Finland. The company generates, procures and sells electricity with a focus on the city.

The EFSI is a joint initiative by the EIB and the European Commission to promote investment in Europe. The EIB has designated EUR 7.5 billion of its capital for lending to European projects with a higher risk profile than usually taken on by the bank. To compensate for the increased lending risk, the European Commission has agreed to fully guarantee all lending under the EFSI up to a budget of EUR 26 billion. The loan described was issued under the EFSI and thus benefits from a full guarantee through the EU budget.

EFSI support does not fall under EU State Aid rules as it is meant as a tool to address "market failures or sub-optimal investment situations". However, the investment support does include favourable conditions in the form of public assumption of risk.

As described in the European Commission's Fact Sheet from 13 January 2015: "The type of risk-financing instruments will be designed so as to take uncertainty out ("first loss protection") of as such viable projects and therefore crowd-in private sector investments. Since the EFSI will take riskier tranches in investment projects, the private sector will be able to join under more favourable conditions." Furthermore, the EIB states that "The new initiative [i.e. the EFSI] will benefit from the EIB’s strong credit standing that enables funding at favourable conditions and across maturities".