European Investment Bank to Increase Gas Loans in Poland from €520mln to €869mln

European policy-driven banks continue in their commitment to increase energy security in South-Eastern Europe, confirming there are several institutions that can help Brussels speed up the implementation of the Energy Union project. The European Investment Bank (EIB) is one of these institutions that are taking the lead in the energy sectors from Bulgaria to Poland. The Luxembourg-based bank could soon increase its support to “gas projects" from €520 million, already lent in the last 5 years, to €869 million. 

Indeed, the EIB confirmed on Tuesday it has appraised and has negotiated two projects with PGE. The first one, ‘with the proposed EIB financing of PLN 1.465 billion (EUR 349 million)’, concerns three gas-fired, combined heat and power (CHP) plants in various locations in Poland. According to EIB, the new units will replace ‘obsolete coal-fired installations.’ Secondly, EIB has also proposed a PLN 1.5 billion (EUR 359 million) financing plan for a second project concerning the extension and modernisation of Central and Eastern Poland’s electricity distribution networks operated by PGE Dystrybucja. 

“The EIB, the bank of the EU, strongly promotes the diversification and security of the energy supply. We are glad to support projects in Poland that add capacity and robustness to the existing Polish gas transmission system and allow better connectivity to new gas supplies. We believe that projects financed by the Bank in the energy sector in Poland contribute to the modernisation of this sector, which is necessary for the successful economic development of the country,” László Baranyay, EIB Vice-President responsible for lending in Poland, told Natural Gas Europe. 

According to a EIB’s spokesperson, EIB’s efforts are meant to increase efficiency and sustainability of Poland’s energy infrastructure. Gas seems to play a major role.  

‘As far as the “gas projects” (energy projects with a gas component) in Poland are concerned, in the last 5 years EIB signed loans for EUR 520m supporting such projects, which included gas transmission, an LNG terminal and gas-fired combined heat and power plant’ the spokesperson wrote Natural Gas Europe in an email, mentioning some of these “gas projects.”

EIB granted a €140 million loan for the construction of a combined cycle gas turbine (CCGT) power station with an electric capacity of 450 MWe and heating capacity of 240 MWth in 2013. In 2014, the EIB also supported the extension of Poland’s gas transmission network with a PLN 410m (EUR 98m) loan to the national gas transmission operator GAZ-SYSTEM S.A. 

‘This expansion of a gas pipeline in western Poland from Lwówek to Odolanów will reinforce the EU North-South gas corridor and the connection to alternative sources of gas supply, thus further improving Poland’s security of supply and terms for the acquisition of such energy’ the EIB wrote Natural Gas Europe, adding that the Lwówek - Odolanów gas pipeline could lead to an increase in gas transportation from the LNG terminal in Świnoujście, through the Polish transmission system to the borders with the Czech Republic, Slovakia and Ukraine. 

According to EIB, the Lwówek - Odolanów gas pipeline should be completed by 2017. 

In general, the current negotiations between EIB and PGE are a sign of European banks’ increased focus on interconnections and energy projects. At the same time, they hint at a renewed interest in Eastern Europe and the Balkans, which could be of key importance in case of a GRexit.  

Last week, the European Bank for Reconstruction and Development (EBRD) took part in a €20 million loan to energy distributor Bulmarket DM to support the development of liquefied natural gas (LNG) to Bulgaria. EBRD also said it could invest up to $1 billion in Ukraine this year, including in the gas sector, conditionally to the implementation of reforms. 

Sergio Matalucci is an Associate Partner at Natural Gas Europe. He holds a BSc and MSc in Economics and Econometrics from Bocconi University, and a MA in Journalism from Aarhus University and City University London. He worked as a journalist in Italy, Denmark, the United Kingdom, and Belgium. Follow him on Twitter: @SergioMatalucci