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The EU Commission has launched a public consultation on the “Europe 2020 Project Bond Initiative” following the State of Union address by Commission President Jose Manuel Barroso. This project seeks to augment the funding of projects with long term revenue potential by the private sector in correlation with the goals of Europe 2020 policies.

EU 2020 project bond initiative

The Europe 2020 Strategy for smart, sustainable, and inclusive growth outlines a vision for Europe’s economy over the coming decade. Underpinning this program, there will be an increasing need for investment from private sources to complete the internal market. Thus, it is vital that the private sector participates in the financing of large-scale infrastructure projects in Europe. This would be an alternative source of funding to traditional options such as banks given the new restraints upon those in relation to long-term lending and given the current tumultuous economic circumstance.  The role of the Commission and European Investment Bank will be to act as part-holders of the risk involved.

Large-scale infrastructure projects

The consultation paper, prepared under the guise of President Barrosso alongside others, was formulated with the future of the internal market in mind and the need to develop smart, upgraded and interconnected infrastructures across member states to aid the progress of the internal market. It is suggested that around €21.5bn per year from 2013 is needed in the area of transport to accommodate the construction of missing cross border links, the alleviation of bottlenecks and the interconnection of transport modes. Combined, up to €1.5 trillion to €2 trillion investment would be required for transport, the energy sector and information and communications sectors.

Consultation

The consultation, the aim of which is to obtain market participants’ and decisions makers’ feedback on the initiative, is open since February 28 with a conference on April 11 to follow. Target groups include financial institutions, development banks and other long-term lenders, institutional investors, financial, legal and other advisors, public administrations, companies, and the general public.