The European Investment Bank (EIB) is lending EUR 50 million to Transgaz, the national gas transmission company of Romania, to finance part of the construction of a new European gas corridor that will link with Hungary.
The project is the first phase of the Romanian section of a gas pipeline that will eventually run from Bulgaria to Austria via Romania and Hungary, and which is known by the acronym BRUA.
The aim is to increase security of gas supply and to reduce energy dependence by making it possible to diversify gas supply routes and sources, according to a press release sent to the Budapest Business Journal. The scheme is backed by the European Fund for Strategic Investments (EFSI), under the Investment Plan for Europe.
The Transgaz-BRUA Gas Interconnection project has an estimated cost of more than EUR 500 mln, and has already been awarded a grant of EUR 179 mln by the European Commission under its Connecting Europe Facility (CEF).
The EIB funds will finance the construction of a 478-km natural gas transmission pipeline between Podisor and Recas, and the construction of three compressor stations located in Romania.
“This strategic project implemented under the Investment Plan for Europe will interconnect the South-East and the Central European gas transmission infrastructure and eliminate the dependence of South-Eastern European countries on a single gas supplier,” commented EIB vice president Andrew McDowell.
“It will improve the security of supply for these countries, opening up access to potentially cheaper gas, and delivering improved price convergence and transparency, consequently reducing consumer vulnerability. It will have a significant impact on employment, creating some 4,000-5,000 jobs during the construction phase and 300-400 positions during the pipeline’s operation,” he added.
The European Investment Bank is the long-term lending institution of the European Union, and is owned by its member states. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.
The Investment Plan for Europe, the so-called “Juncker Plan”, focuses on boosting investments to create jobs and growth by making smarter use of new and existing financial resources, removing obstacles to investment and providing visibility and technical assistance to investment projects.
The European Fund for Strategic Investments (EFSI) is the central pillar of the Juncker Plan. It provides a first loss guarantee, allowing the EIB to invest in more, often riskier, projects. The projects and agreements approved for financing under EFSI so far are expected to mobilize some EUR 241 bln in investments and support up to 462,000 SMEs across all 28 (current) member states.