[Premium] EIB Ducks Vote on Giant Tanap Loan
The board of the European Investment Bank (EIB) is to vote December 12 on a loan to Trans Adriatic Pipeline (TAP) but has again deferred a controversial vote on its possible €1bn ($1.2bn) loan for Tanap.
Germany has raised concerns about the EIB, the EU investment bank, making such a major loan to Tanap, a source tells NGW. Another multilateral bank, the European Bank for Reconstruction and Development (EBRD), voted through a $500mn loan to Azeri state-owned Southern Gas Corridor Company (SGCC) October 18 in respect of its funding of the 1,802-km Tanap (Trans-Anatolian Pipeline) which crosses Turkey east to west. SGCC has a majority 58% stake in Tanap, while Turkish state Botas and UK major BP also hold stakes.
At that time, a final decision was expected during November, according to press reports, on EIB financing of up to $2bn – the biggest ever loan proposal in the bank’s history.
That is understood to include a €1bn loan component to SGCC. Some though including Germany are baulking at the idea of lending to Azerbaijan, which announced March 10 it was pulling out of the pro-transparency Extractive Industries Transparency Initiative (EITI). Azerbaijan’s membership of EITI was suspended March 9 over its failure to enable civil society in the country to challenge major projects, and the country looked set to be expelled anyway. EITI is chaired by a former prime minister of Sweden – Fredrik Reinfeldt – which is understood to share Germany’s concerns.
In contrast, the European Commission has said that Tanap should receive a full loan from the EIB. It is anxious to avoid any obstacle to completion of the Southern Gas Corridor (which includes Tanap and Tap) which it deems important for EU gas diversification of supply. The pipes are intended to flow 10bn m3/yr of Azeri gas from the BP-run Shah Deniz 2 venture to Europe, chiefly to Italy, starting 2020.
An EIB spokesman told NGW that lending to “Tanap is under appraisal, the date for the EIB Board discussion is not known yet; as for all the projects that it finances, the EIB will apply the highest standards in its technical, economic, financial, and environmental and social assessment of this projects. It will ensure compliance with EU and national laws as well as EIB environmental and social [rules].”
Two non-governmental organisations sent a briefing note to the EIB September 2017 arguing why it should not finance Tanap, stating that it is a “project which results in human rights violations both in Turkey and in Azerbaijan.” Socar's website says that land acquisition and expropriation within the framework of the Tanap project will be conducted by state pipeline company Botas, with appeal to decisions made by the land rights entity, governed by Turkey's cabinet. Azerbaijan, through its upstream firm Socar, also has a 20% interest in TAP.
EIB announced last week that its president from 2000 to 2011, former Belgian finance minister Philippe Maystadt, died December 7, aged 69. Current president Werner Hoyer said that Maystadt "over 12 years transformed the Bank into a committed institution effectively supporting EU policy; a powerful tool for the European economy."