Strasbourg, 05/07/2012 (Agence Europe) - MEPs gave their overwhelming support in plenary session in Strasbourg on Thursday 5 July to the launch of the pilot phase of debentures, more commonly known as “project bonds”. €230 million will be made available to fund infrastructure projects in the EU. This sum could, however, leverage up to €4 billion from private investment. The European Parliament (EP), then, has approved the compromise reached in inter-institutional negotiations which concluded in May (see EUROPE 10625). The last European summit also strongly recommended use of this new financial instrument. European Commission President José Manuel Barroso hailed the project bonds' becoming “reality”. “We have now concrete instruments to boost our economy and invest in our future”, he added in a press release.
Innovative instrument. MEPs voted by 579 to 32, with nine abstentions, to approve a first test phase of this new financial instrument which will give the market the reassurance of public guarantees on risks and invite private investors to put money into major telecoms, energy and transport projects. The Commission and the European Investment Bank (EIB) will stand guarantors to a certain extent. Over the next 18 months, some dozen projects will take part in this pilot phase; they must meet the conditions laid down by the Connecting Europe Facility and will be evaluated in mid-term. If the trial brings positive results in this pilot phase, the scope of the project bonds will then be extended.
Risk taking. In debate during the run-up to the vote, MEPs were already enthusiastic but wanted some further information on the viability of and need for the pilot phase before they approved it. Several were concerned at the risk; rapporteur Goran Färm (S&D, Sweden) was again able to reassure them: “We are not taking any unreasonable risks with taxpayers' money and we really need this additional effort. Do we socialise risk and privatise profits? I would say that with these guarantees we will be able to mobilise resources which otherwise would stay in the coffers or end up in the speculative markets. It is taxpayers who gain the most from such an approach. The risk is strictly limited”. EIB President Werner Hoyer pointed out that the involvement of his institution gave an assurance of the seriousness of the operation, highlighting the Bank's deep knowledge and expertise in engineering and science. “This is what is needed here in many cases, because if we want to be loyal to our principles it is necessary to test the submitted projects critically in view of technology and technical viability and also from the financial point of view. This is what the EIB is going to guarantee in this process. Then we will come back and report to you”, he said.
Next steps. European Economic and Monetary Affairs Commissioner Olli Rehn set out the next steps for MEPS: “The Commission and the EIB will sign a cooperation agreement as soon as possible after the final adoption of the proposal by the Council in July. As regards concrete projects, my understanding is that the EIB is already receiving expressions of interest and has started assessing a number of potential projects.” (MD/transl.rt)