THE EUROPEAN Investment Bank and European Commission signed an agreement on January 11 establishing a loan guarantee instrument for investment in Trans-European Transport Network development. The partners are each providing €500m, aiming to support up to €25bn of private-sector investment.

EIB estimates that single market and regional integration objectives require €300bn to be spent on TEN-T infrastructure in 2007-13. This is beyond the capabilities of the public sector, but the relatively high risks in the initial stages of transport projects deter private funding. To overcome this gap, EIB will guarantee stand-by liquidity provided by commercial banks. This will provide security for the initial revenue risk over the first five to seven years of a project's operation, enabling borrowers to service debt until traffic grows to the stage where it is financially viable.

'Not only are we making this innovative instrument available to the market today, but we also reiterate that private participation in the financing of transport infrastructure of European interest is welcome and needed', Commissioner for Transport Jacques Barrot said at the signing. 'The new guarantee instrument, unlocking billions of new investment for TEN-T, is a powerful tool to facilitate such partnerships.'

On December 21 the EC launched a consultation covering state aid to railway undertakings, including proposed changes to rules on aid for rolling stock renewal and restructuring freight operators.