EIB lends €155m to energy sector

The European Investment Bank (EIB) is set to lend €155m to the energy sector and part guarantee the investment of €80m in the innovation sector over the next number of months.

The Luxembourg-based bank will lend Bord Gáis €155m to invest in the renewable energy sector.

The European Investment Fund (EIF), a subsidiary of the EIB, has entered into a risk sharing agreement with AIB.

Speaking yesterday at the announcement of both deals, EIB vice president Mihai Tanasescu, said: “We are here to do business with the Irish authorities and the private sector. Our lending to Bord Gáis is very important because it is in the renewable sector and it sends an important message to the market.

“The EIB is also working very closely with the banking sector to provide funding to the SME sector.”

Bord Gáis will use the €155m to invest in six wind farms in Tipperary, Clare, and Kilkenny. The overall size of the investment is €311m and is due to be completed by 2014.

The projects will add 141 megawatts to its capacity and forms part of the firm’s strategy to generate 20% of its total energy production from renewables by 2020.

Mr Tanasescu said he had no concerns about lending to Bord Gáis even though its energy business is scheduled to be sold off next year.

Michael G O’Sullivan, Bord Gáis chief financial officer, said the loan would enhance the firm’s value.

Under the terms of the risk sharing agreement between AIB and the EIF, the state controlled bank will extend €80m in loans to the innovation sector.

The agreement facility will enable AIB to lend up to €7.5m to SMEs in this area. AIB chief executive David Duffy said: “This sector does not have much capital or funding but it is very important for Ireland and the smart economy.

“Ireland has a reputation for innovation and as being a technology hub for Europe.”

Through the risk sharing agreement, the EIF will guarantee 50% of the loan extended by AIB in the event of a default.

It is part of the European Commission’s strategy to invest in research and& development throughout the region.

Mr Tanasescu said the EIB was looking for further investment opportunities in Ireland. He noted the investment it made in the education sector last month and said this would be an important area in the future. Another announcement in partnership with AIB will be announced in the new year.

Mr Tanasescu said Ireland had a “very good reputation for delivering”.