Nabucco to Commence Financing Round
The Nabucco consortium is set to announce that top international lenders will sign an agreement to take a senior financing role for its planned EUR7.9 billion natural gas pipeline.
At a ceremony and press conference scheduled to take place Monday morning in Brussels, the consortium will say the lenders will sign a mandate agreement that will kick off a due diligence process, expected to culminate in "significant" financing for the project at the end of 2011 sources told Dow Jones Newswires.
The lenders include the European Bank for Reconstruction and Development, the European Investment Bank and possibly the World Bank's International Finance Corporation
A spokesman for the Nabucco consortium declined to comment on the information but confirmed financing issues will be addressed at the press conference in Brussels Monday.
The exact amount of financing the lenders will contribute remains unclear, but a person familiar with the matter said they would provide a "large part" of the required capital, while another said the lenders would take a "senior financing role."
The Nabucco consortium has said it intends to build the 3,300-kilometer pipeline with around 30% of equity capital and 70% debt. The EBRD had indicated in June 2009 that it could lead a group of lenders to finance the project in the amount of EUR1 billion, but major development banks have subsequently been silent on potential financing contributions.
In October 2009, Nabucco said it had started discussion with EBRD and EIB over financing of the project and soon afterwards also launched negotiations with IFC. A month later, officials at Nabucco shareholder Transgaz said that EBRD and EIB could lend up to EUR1.5 billion of an overall debt capital requirement of EUR5.6 billion.
The Nabucco pipeline is expected to deliver around 31 billion cubic meters of gas annually from the Caspian region and Iraq to central Europe through Turkey, Bulgaria , Romania and Hungary , bypassing Russia.
The Nabucco pipeline has been backed by the European Union as it is considered crucial to diversify the block's heavy dependence on Russian gas. Russia accounts for around 25% of the EU's annual gas supplies.
.