On 2 February 2012 Siim Kallas Vice President of the EC and Commissioner for Transport gave a speech at the European Policy Centre about the financing of transport infrastructure in Europe. Mr Kallas highlighted that “Europe needs to invest heavily in transport infrastructure before 2050 to remain competitive” despite the current financial crisis that requires Member States to “focus on tackling budget deficits” and “implementing austerity measures”.

The Commissioner stated that investment is crucial for the growth of European economy and for “turning the dream of a single European transport area into a reality”. In this sense the implementation of the trans-European transport network (TEN-T) “will be crucial for creating employment and economic growth” and it is one of the top priorities of the European Union. “With TEN-T every million Euros of public money that [the EU] spend generates 5 million in investment from the Member States. And every million Euros generate 20 million from the private sector. But despite the impressive leverage rates the funds available will not be enough”. Mr Kallas highlighted that a long-term funding will be needed both from public and private sectors.

The European Commission has a new funding programme for the 2014-2020 budget called the Connecting Europe Facility (CEF). The CEF will look at investing in transport energy and ICT infrastructures and it “is also designed to attract and guarantee private sector involvement” including specialised infrastructure investors. Mr Kallas said that he is “confident that the strong track record in EU funding for transport projects […] together with valued partner institutions like the European Investment Bank (EIB) will help generate some impressive leverage on this money. Based on that combined amount of €31.7 billion [from CEF and from the Cohesion Fund] we estimate that the expected leverage and co-funding could raise total transport investments to between €140 and €150 billion”.

However in order to attract private investors the Commission initiative should “reduce the risk for investors looking for long-term investment opportunities as well as give infrastructure projects credibility”. The European Investment Bank will play a fundamental role as it “[…] can offer attractive pricing terms and large loan amounts over long maturities” whilst representing “a strong guarantee for commercial banks when they decide to finance parts of a public-private partnership”.

Mr Kallas concluded by affirming that “transport is a true engine driving European growth. Every European company and citizen depends on an efficient transport system. With the economic crisis Europe needs – more than ever – to improve its mobility. So we must invest in a sustainable transport network. This requires long-term funding and commitments from governments – and not only to attract private funding. Conditions for infrastructure investments must be stable for long periods perhaps 30 years. That’s where we in Brussels can help by creating an environment of business security. And the proposed Connecting Europe Facility is an important part of that”.

Read Siim Kallas’ full speech here.

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Original Publication Date: Mon 06 Feb 2012