BULLETINnordic investment bank december 2001

Green power in the Nordic region

nib celebrated 25 th anniversary Infrastructure improvement in letter from the president

nib invests in the environment a new forum of cooperation has the permanent members of the steering group, been established as part of the eu’s representatives of the Russian Federation and Northern dimension, namely the nefco also attended the meeting.

Matias Uusikylä Matias Northern Dimension Environmental ’s active participation in the work of the Partnership, ndep. The goals of the ndep is of the utmost importance for the envi- partnership are to coordinate and ronment of the Baltic Sea and Barent Sea streamline the financing of environ- regions. The presence of a Deputy Minister mental investments with cross-bor- from the Russian Finance Ministry at the Stock- der effects, above all in the Baltic Sea holm meeting was a positive sign. The Russians and Barent Sea regions. Through are interested in cooperating on environmental this partnership, international finan- projects in northwest Russia and the Kaliningrad cial institutions, the European Com- region. mission, bilateral donors and transition The ndep will be involved in environmental economies are now taking a joint approach to projects that target sectors such as district heat- important environmental projects. ing, solid waste management, water purification, In March 2001, nib and , which at that sewage treatment, and air pollution abatement. time held the eu Presidency, initiated a meeting These kinds of projects are often expensive and of heads of international financial institutions, i.e. complicated, as well as time-consuming. The the eib, the EBRD, the World Bank, nib and results of this type of investment only become nefco. Representatives of the European Com- apparent in the longer term, for example, when mission, Sweden, and Belgium also distinct improvements are made in air quality. attended this meeting held in and host- The Environmental Partnership aims to acceler- ed by nib. The meeting resolved to establish an ate the implementation of environmental pro- environmental partnership, the ndep. A working jects and facilitate their funding. Given effective group consisting of representatives of the ifi’s coordination, the work of the partnership will and the ec, and chaired by the ebrd and Sweden lead to a distinct reduction of air pollution and was given the task of drafting a structure for the other cross-border effects detrimental to the partnership. The working group’s proposal environment. The ndep will help to bring about received strong support upon its presentation at urgently needed environmental investments the June 2001 eu summit in , Swe- within the transitional economies of the North- den. ern Dimension Area. This applies both to The ndep’s activities are headed by a steering nuclear waste and to other environmental prob- group that decides which projects are to be given lems. priority and coordinates the funding of projects. The initiative leading to the eu Northern The steering group also appoints Dimension came originally from Finnish Prime a lead bank for each individual Minister Paavo Lipponen, in the autumn of ebrd eib nib project. The , the , , 1997. The current environmental partnership the World Bank and the Euro- can be seen as one of the most tangible results of Kerold Klang Kerold pean Commission are perma- that Finnish initiative. In the ndep the Nordic Helsinki nently represented in the steering countries and their neighbouring regions have St. Petersburg Tallinn group. an important channel for financing urgent envi- nib , elected to chair the steer- ronmental investments. nib has been actively ing group in its first year, called involved in the ndep cooperation right from the the first meeting in September start. 2001 Riga . At the invitation of the B a l t i c S e a Swedish Ministry of Finance and Kaliningrad the City of Stockholm, the meet-

Vilnius ing took place in the Stockholm City Hall, and was opened by the Swedish Minister of Finance Jón Sigur˛sson Bosse Ringholm. In addition to November 2001

2 bulletin december 2001 HEADQUARTERS

Fabianinkatu 34 P.O. Box 249 FIN-00171 Helsinki Finland Telephone +358 9 18 001 Telefax +358 9 1800 210 18

OTHER OFFICES

COPENHAGEN Landgreven 4 4 Textile output growing in Estonia 18 Panorama DK-1301 K NIB 25 YEARS 6–15 20 Lithuanian infrastructure undergoing eu’s constructive changes Telephone +45 33 144 242 6 Northern dimension a natural Telefax +45 33 322 676 forum THEME: ENERGY 22-29 8 Mergers and acquisitions absolute 22 Heavy winds at sea necessity Dronning Mauds gate 15 26 Finnish investment in bioenergy Strong credit rating and great (at Eksportfinans) 10 public benefit 29 Loan for long-term power N-0119 Oslo investments 11 Focus on the Baltic, Russia and Telephone +47 2201 2201 the environment 30 The Nordic Finance Group Telefax +47 2201 2202 News 13 An evening to remember 32 34 nib in brief REYKJAVÍK 14 NIB projects during 25 years 2001 Kalkofnsvegur 1 35 Interim report January–August 16 International environmental (in the building of Bright future in fibre optic networks Se˛labanki Íslands) cooperation 36 IS-150 Reykjavík Telephone +354 5 699 996 13 20 30 Telefax +354 5 629 982

STOCKHOLM Västra Trädgårdsgatan 11 B (in the building of AB Svensk Exportkredit) S-111 35 Stockholm Sverige Telephone +46 8 613 8525 Telefax +46 8 205 728 BULLETIN PUBLISHER NIB’s Bulletin is published in Danish, English, NORDIC INVESTMENT BANK Finnish and Swedish. Fabianinkatu 34, Helsinki, Finland P.O. Box 249 SINGAPORE EDITORS FIN-00171 Helsinki Regional Representative Jamima Löfström, Editor-in-chief Telephone: +358 9 18001 Office Linda Hintze, Gunilla Nyman and Telefax: +358 9 1800210 78 Shenton Way # 16-03 Pamela Schönberg Internet: www.nib.int Singapore 079120 E-mail: [email protected] Telephone +65 2276 355 Translation Roger Tanner, Stockholm Telefax +65 2276 455 Graphic design and production CHANGE OF ADDRESSES Journalistgruppen JG AB, Stockholm Telefax: +358 9 612 1417 Printed by Nomini, Helsinki

bulletin december 2001 3 Krenholm in Narva, Estonia, was one of the world’s biggest textile concerns in the 19th century. Today it remains one of Estonia’s foremost industrial export enterprises. NIB and other international banks are now committed to help Krenholm continue to develop. Textile output growing in

AFTER ESTONIA GAINED independence in minimum of 2,000 people and to invest at 1991, Krenholm no longer had access to the least eek 20 million (equalling some eur 1,3 Soviet market. A couple of years later, it was million) over a three-year period. on the brink of collapse. It lacked raw materi- Mauritzon continues, “Today we have al, operating capital and any effective mar- 4,800 employees and technical investments keting. The government decided to privatise of eek 350 million. We have more than the company, and in 1995 it found an inter- honoured our commitments.” ested buyer in Swedish Borås Wäfveri ab. Lars Mauritzon, Borås Wäfveri’s Group Pre- SINCE BORÅS WÄFVERI became principal sident, was appointed chairman of the board owner in early 1995, turnover has more at Krenholm, a position he still holds today. than doubled. It has risen from eek 535 “Krenholm at that time was entirely pro- million to 1,240 million, even though per- duction-oriented,” says Mauritzon, “It had sonnel strength has declined somewhat. been controlled from Moscow, based its The average monthly wage has almost A survivor of WWII, Krenholm is operations on annual production plans and quadrupled and is now slightly higher than today a historic monument as well as had no regard for either quality or logistics.” the regional average. As in many other a beacon of hope for the future. countries, the textile industry is not wage UNDER SWEDISH MANAGEMENT, Kren- leading in Estonia. Krenholm is one of the holm has gone through a fascinating evolu- few companies in Estonia to sign a collec- tion. The mammoth enterprise was initial- tive agreement. Mauritzon describes how ly divided into a parent company and six the company assumes greater social subsidiaries. The subsidiaries were forced responsibilities than the law requires, pro- to, internally as well as externally, operate viding extra days holiday, health centres at on commercial terms. Each subsidiary has every factory and biennial health examina- its own board of directors. Borås Wäfveri tions for every employee. The company acquired a controlling interest of 75 per also allows calls on sick employees; gives cent of the parent company’s share capital presents to employees who marry, have and votes; the Estonian government children or retire; runs summer camps for retained 25 per cent. Today, Borås Wäfveri the employees’ children; and arranges is the sole owner of the company. security for employees’ house mortgages. “The involvement of the Estonian gov- In January 2000, the World Bank, acting ernment was important to us for political through the International Finance Corpo- reasons. This is because Krenholm is locat- ration (ifc), granted a credit of eur 25 mil- ed in what was then one of the politically lion. nib and the Nordic Environment most sensitive regions of Europe, on the Finance Corporation were also involved in Russian border,” says Mauritzon. the transaction. This was the last loan In its agreement with the Estonian govern- granted by nib under the Baltic Investment ment, the company promised to employ a Programme.

4 bulletin december 2001 Estonia

Lauri Johnson, nib’s Baltic Regional Manager, describes textile manufacturing as one of Estonia’s most important sectors Average monthly earnings have nearly quadrupled since 1995, when Borås Wäfveri became for employment and exchange earnings. the principal owner. “This is a big sector in the Baltic countries and fits in well with their present stage of development. It was natural for nib, work- Before Borås Wäfveri took over, Kren- ing with the World Bank/ifc, to study the holm’s sales were virtually confined to NARVA TODAY industry when we were approached by cheap raw fabric, some of which was Krenholm’s Swedish owner. We found exported to the usa. Today 90 per cent of Narva, with a population of that Krenholm, with the support given by sales go to the usa and Western Europe. 85,000, is the third largest city its new owner, had made good progress. The company’s products are to be found in in Estonia. More than 95 per cent of the The company was operating at a profit and a growing number of areas – furnishing population is Russian speaking. had the potential to meet new objectives.” fabric, sheets, towelling and bathrobes. In In addition to the Krenholm textile the future, Krenholm will presumably plant, a furniture factory and two THE AIM OF THE INVESTMENT is to make start to build its own trademark. oil-shale-fired power stations are Krenholm more competitive. The goals are the city’s biggest employers. to include a higher proportion of upgraded ESTONIA’S LEADERS are very pleased with products, reduce energy use, streamline the advancements made by Borås Wäfveri. operations to use the plant and infrastruc- President Lennart Meri expressed his grat- ture more efficiently, and improve its capi- itude when he visited in the autumn of tal supply. Reduction of the use of steam 2000. The Mayor of Narva, Imre Liiv, and electrical power will also improve considers Krenholm important, not least Krenholm’s environmental performance. as one of the city’s biggest employers. The Managing Director Meelis Virkebau local taxes paid by its employees support says, “The investment loan from nib has the expansion of education, cultural amen- made it possible to construct a second gar- ities and health care. More than one quar- ment factory for manufacturing more ter of the city’s revenue comes from the upgraded products. Next year, thanks to company and its employees. the credit, we will be able to establish a Imre Liiv says, “Above all, Krenholm is number of energy conservation measures. of great cultural and historical importance. We’ll change the lighting systems in three The pride of Narva, the old city in spinning mills and two weaving plants, and Baroque style, was flattened during the improve heat recovery. All new Western war and the Town Hall is just about all that equipment is leaner than what we had in has been rebuilt. Krenholm survived. It is the old Soviet plant. Thanks to nib we can a monument to the past and a beacon for Economist Andres Küng is the author of more invest for a much longer term than we the future.” than 60 books, primarily on Baltic subjects. could with our short-term cash flow.” Andres Küng He lives in Sweden.

bulletin december 2001 5 Nordic Investment Bank 25 years

Nordiska Investeringsbanken 25 år

25 years of Nordic cooperation When NIB was founded in 1976, its three primary goals were focused on the Nordic region: To increase the level of cooperation in the respective financial communities, improve the infrastructure and contribute to the internationalisation of Nordic companies. NIB’s Chairman of the Board Bo Göran Eriksson opened the 25th anniversary festivities by saying, “We have succeeded far beyond our expectations!” Speakers at the event, held on June 1 at the Finlandia Hall in Helsinki, included both NIB owners and financial experts. They touched on a range of topics that are reviewed on the following pages. Glimpses of the Bank’s history are also presented.

NORTHERN DIMENSION A NATURAL FORUM FOR NIB

nib can look back on a highly successful 25 had a common interest outside the Nordic area. Lipponen specifi- years, said Prime Minister of Finland to stabilise our economies and promote cally mentioned the Baltic Investment Paavo Lipponen at the Bank’s anniversary business cooperation across national Programme, inaugurated in 1992, and its celebration. He also described the vital boundaries. nib acquired the task of pro- developmental importance in the Baltic role of the Bank in the future, as an essen- viding long-term capital and supporting Sea region. tial player in ensuring a successful environ- the integration of Nordic business enter- mental partnership throughout the eu. prise. Today, twenty-five years later, we can AS REGARDS THE future of nib, he named The establishment of the Nordic Invest- see that the Bank has amply fulfilled expec- a number of priorities, “Today it’s natural ment Bank in 1976 took place against the tations.” for businesses to regard the Nordic area as background of the oil crisis, in a business a home market. In this area, nib has sup- environment where capital and the money THE WORLD HAS changed more rapidly plemented other financing, especially for market was regulated, and long-term capi- than anyone could have foreseen. While long-term projects of national economic tal was in short supply. Nordic integration was occurring, the importance. sme’s are often the mainspring Lipponen said, “It was clear that the focus of interest had shifted to markets of the economy; this is a growth area where

6 bulletin december 2001 Matias Uusikylä Matias

During NIB’s first quar- ter-century, the Nordic area has become a home market for busi- ness enterprise. In his jubilee address, Finnish Prime Minister Paavo Lipponen foresaw the Baltic Sea region as the next focal point. The photo shows him (second from the right) chatting with, from left, Ewald Nowotny, Vice President of the Euro- pean Investment Bank, Bo Göran Eriksson, Chairman of the NIB Board of Directors, and NIB’s President and CEO Jón Sigur˛sson.

nib can provide desirable added-value.” lake. While this development creates con- sion is actually working. Lipponen described the role of technolo- siderable potential for growth, it also poses He urged the Bank to continue to adapt gical development for nib’s future. challenges. to changing circumstances when necessary. “Intellectual capital and knowledge- “The action plan for the Northern “Nordic cooperation has been a central based industry are destined to eventually Dimension attaches great importance to form of international partnership for take over the role traditional industry has measures of environmental improvement almost fifty years for Finland. This co- played. This applies to initiatives in the it in the candidate countries and also in operation is distinguished by preparedness sector as well as to areas such as genetic northwest Russia. The Environmental and political determination to adapt to new research and biotechnology. These are Partnership now being prepared is of piv- conditions.” both fields that can be significant to nib’s otal importance, and nib will undoubtedly Lipponen believed nib is in a good start- future role as a financier,” said Lipponen. have an important role to play in this area.” ing position, saying, “nib has a sound Lipponen also stressed the importance of Lipponen named the southwestern waste- financial position, strong political support, the Baltic Sea region. He said eu expansion water treatment plant in St. Petersburg as a well-established customer base and a will virtually transform the Baltic Sea to a particular proof that the Northern Dimen- highly competent personnel.”

bulletin december 2001 7 Nordic Investment Bank 25 years

Nordiska Investeringsbanken 25 år

DISCUSSION ON THE FUTURE OF THE FINANCIAL SECTOR

Mergers and acquisitions absolute necessity Never before has consolidation in the financial sector been so rapid the personnel wonder how the change will affect their jobs. There is an as it is today. Judging by the discussion at the jubilee seminar on enormous need to communicate with cross-border consolidation in the Northern European financial sector, customers and personnel. The new leadership should be selected this development can be expected to continue. immediately. Bosses should be chosen according to merit, not office politics. THE SEMINAR OPENED with speeches by itself as a niche bank, thus risking becom- Complete all unpleasant tasks such as Michael A. Carpenter, head of Citibank’s ing marginalised, or acquire other compa- cutting jobs as quickly as possible. Global Relationship Bank, and Thorleif nies to build a leading position in the big The differences between the merging Krarup, President and ceo of Nordea. markets. Citibank opted for the latter companies’ corporate cultures must be Both banks have been involved in extensive course, and has now endured four major respected. mergers in the past few years. take-overs in three years, a very exacting Companies merge for many reasons, but process. in today’s capital market there are no other “Those takeovers involved difficulties I options. The market is global. wouldn’t wish on my worst enemy. We As Carpenter put it, “If you aren’t in were forced to redesign our product com- Matias Uusikylä Matias globally, you’re out.” pletely,” Carpenter commented. This does not mean that everything in Further consolidation is unavoidable in the finance market has to be viewed in a Carpenter’s opinion. Consolidation is global perspective. For example, retail good for the customers, because it reduces banking, insurance and smaller companies costs. frequently operate in a geographically defined context. But the appropriate focal THE TROUBLE WITH MERGERS and take- point for a financial analysis varies from overs, as Carpenter saw it, is that they case to case. often occur without having been thor- Carpenter said, “The distribution of oughly considered from a strategic point of financial services is becoming an increas- view and do not add any value for share- ingly important issue. There is a definite holders. for customer control. Hopefully, the out- Carpenter’s recipe for successful integra- come of the battle will be a situation where tion: banks, insurance agents and brokers are Everyone in the organisations must not competing for the same customers.” be convinced of the strategic logic of Carpenter described how Citibank had the integration. Michael A. Carpenter, Head of Citibank’s reached a point in 1997 where it had to Good communication is vital. Fifteen Global Relationship Bank: “Communication choose between stagnating and positioning minutes after a takeover is announced, is essential for a successful merger.”

8 bulletin december 2001 Thorleif Krarup noted that his own bank, always regarded as a production factor, but adapting the legal structures to the com- Nordea, is the result of many mergers. today it’s an integral part of customer con- mercial ones. If they can’t be adapted, There were several reasons for the latest tact. The development of online services is banking activities will not be able to be merger, which has given the bank a pres- essential, but it’s expensive and not suitable optimised. Krarup noted, in particular, the ence in northern and northeast Europe. for smaller players.” rules preventing the transmission of cus- Krarup explained, “Further organic tomer data between different countries growth was not possible. The bank needed KRARUP MAINTAINED that Nordea’s it represent one obstacle overcome. a broader base in order to develop more experience provides a definite advantage in In the discussion that followed, Björn advanced electronic services. There were the Nordic area. “We’re also more cus- Wahlroos, President and ceo of Finnish synergies to be harvested. The Nordic tomer-focused than our competitors, and Sampo, also emphasised the importance of area is regarded as one region by Europe, much more so than competitors in other putting business logic first and of doing so which makes it important for us to estab- parts of Europe.” in a long-term perspective. lish ourselves in the market as a Nordic Krarup’s suggestions for making a merg- “It’s strategy that counts, not geography.” bank.” er succeed: It can be good business logic for a Nordic The mergers have left Nordea with a Present a clear vision and strategy. bank to start an operation in North Ger- customer base of approximately 10 million Install the new leadership quickly. many, even if this is outside the existing customers, making the organisation the Seek rapid profits: Act, ensure results and Nordic framework. twenty-second largest bank in Europe. communicate. Wahlroos believed the financial sector is Krarup said, “This may not sound Take cultural differences seriously and in the first stages of mergers and consolida- impressive, but it’s important to be one of manage them with a flexible management tions, but it is important to develop elec- the top 25. It forces the analysts to watch structure. tronic banking services. our progress and include our shares in The mergers of recent years have taught “it investments don’t need to cost as their portfolios.” Nordea that cross-border mergers raise much as people have said at this seminar,” many new issues. Banks, which by tradition Walhroos said. “You can do quite a lot on NORDEA IS ALSO INTERESTING because have had a relatively straightforward struc- fim 10 million.” of its nearly 2.5 million on-line customers. ture, have been forced to find a more so- “IT development is an important motive phisticated way of working. BJØRN SKOGSTAD-AAMO, Director Gen- force in our sector,” said Krarup. “It wasn’t Experience has shown the importance of eral of Kredittilsynet (The Banking, Insur- ance and Securities Commission of Nor- way), was sceptical of the benefit of big mergers. ”To be successful, you have to create rela- Matias Uusikylä Matias Uusikylä Matias tionships with customers on local levels. This is especially important in Norway, where we have a long tradition of treating everyone equally,” he said. In a panel discussion on the theme of ‘small is beautiful,’ Krarup declared it self- evident that one has to act locally. How- ever, this does not alter the necessity of being globally active. Both approaches are needed.

In addition to Michael A. Carpenter, Thorleif Krarup and Björn Wahlroos, the panel included Halldor J. Kristjansson, Managing Director of Nordea’s President and CEO Thorleif Krarup: Sampo’s President and CEO Björn Wahlroos: Landsbanki Íslands and Björn Skogstad-Aamo, “IT knowledge and customer focus places “Business logic is crucial. It’s the strategy that Kredittilsynet. nib’s President and ceo Nordic banks ahead of the competition.” matters, not the geography.” Jón Sigur˛sson, chaired the panel.

bulletin december 2001 9 Nordic Investment Bank 25 years

Nordiska Investeringsbanken 25 år

JÓN SIGUR˘SSON REVIEWED 25 SUCCESSFUL YEARS

Strong credit rating, favourable credit terms, great public benefit

“NORDIC INTEGRATION will continue. NIB won the top The Nordic countries have an important credit rating, AAA, from the leading role to play in eu enlargement. The Baltic

Matias Uusikylä Matias credit rating agen- Sea region in the broad sense is already one cies in 1982. In an of Europe’s main growth centres. If the overview of the Nordic countries want to participate fully Bank’s activities, in these exciting developments, they have a NIB’s President useful common resource at their disposal and CEO Jón in the Nordic Investment Bank.” Sigur˛sson said the This is how Jón Sigur˛sson, President rating is especially and ceo, summed up his jubilee overview of important during the Bank’s activities. downturns. nib began with a simple business philoso- phy: Promotion of Nordic growth opportu- nities via long-term cross-border invest- NIB’S PROFITABILITY IS GOOD. The annual The Bank has environmental procedures ments. A common Nordic financial institu- real return on equity between 1996 and requiring environmental assessment of all tion would raise capital with long-term 2000 averaged 8.5 per cent, which is 5.3 per credit applications. nib does not participate maturities and at favourable prices. cent higher than the average non-risk euro in financing of projects that do not meet “These have proved to be the right ideas. rate for the same period. A surplus of eur international environmental standards. The Bank has followed the internationalisa- 130 million was posted for 2000, and a divi- As part of its environmental profile, nib tion of Nordic industry. Today we are fi- dend of eur 39 million will be paid for 2001. has developed close cooperation with the nancing projects of mutual interest to the Jón Sigur˛sson said, “In fact, nib is the Nordic environmental authorities and Nordic area, as well as to 33 borrower coun- only international financial institution pay- other international financial institutions. tries in other areas,” said Jón Sigur˛sson. ing a regular dividend to its owners.” The Bank’s Nordic lending statistics show REGARDING THE CREDIT FACILITY for en- THE NORDIC INVESTMENT BANK has the share of manufacturing industry to be rel- vironmental investments in the neighbour- grown to an impressive size in the past 25 atively stable, accounting for roughly half of ing regions, Jón Sigur˛sson said this is now years. At the end of 2000, its assets totalled all disbursements. The relative share of the fully subscribed. The facility needs to be eur 13.9 billion and its loan portfolio eur energy sector is diminishing. For the past five increased substantially to enable nib to con- 9.3 billion. years it has been about 13 per cent of loans tinue playing an active role in the Northern In addition to the lending facility made disbursed, but the absolute amounts remain Dimension Environmental Partnership, possible by the Bank’s authorised capital, high. Growing shares are noted for commu- ndep. (More about the ndep on pages 2 and nib has had special loan facilities at its dis- nications, retail trade and services. 16.) posal for Project Investment Loans (pil) nib’s latest decade has been dominated by He said nib already has a leading role in outside the Nordic area, for Baltic projects environmental investments in the Nordic financing the first big environmental pro- and for Environmental Investment Loans area and the neighbouring regions. jects in northwest Russia, St. Petersburg and (mil) in the neighbouring regions. Total Jón Sigur˛sson said this initiative has the Kola Peninsula, and that there is still lending capacity now stands at eur 13.5 bil- required patience and long preparation much to accomplish in these areas. lion, of which 70 per cent has been utilised. times, but is now starting to bear fruit. nib’s strong capital base and good perfor-

10 bulletin december 2001 mance already earned in 1982 a top credit rating, aaa, from the leading rat- ing agencies Moody’s and Standard &

Poor’s. The Bank has kept the rating Uusikylä Matias ever since. According to Jón Sigur˛sson the great flexibility of nib’s funding and its policy of always searching for the best possibil- ities in the global capital market, has fre- quently led the Bank to enter new mar- kets for its borrowing, such as Asia and Central and Eastern Europe.

TO STRENGTHEN ITS financial guide- lines and risk management methods, nib has established an independent risk management department and an autonomous back-office unit. Uniform quantitative risk grading and portfolio analysis of all the Bank’s credit expo- sures have been introduced for lending and financial portfolios. Jón Sigur˛sson said that capital mar- Suvi-Anne Siimes, Minister at the Finnish Ministry of Finance said, “As Chairman of the kets are undergoing a period of trans- Nordic Council of Ministers of Economy, I can assure you that the Nordic Investment Bank formation. He said the liberalisation can count on continued strong political support from its owners.” and deregulation affected by factors such as technological changes are in the process of forming a broad, deep OWNERS AGREE common European capital market. “This can have the effect of reducing nib’s added-value to some Nordic nib enterprises and, most importantly, can will focus on the affect the very largest ones. However, there will continue to be gaps in capital Baltic countries, Russia supply for long-term projects of national importance and for sme’s.” and the environment BY VIRTUE OF NIB’S aaa credit rating, the Bank’s role of supplementing the THE MAIN FOCUS OF ATTENTION should effects, nib should aim to supplement Nordic commercial banks is particu- be on the Baltic countries and Eastern other credit sources. This can be achieved, larly important during cyclical down- Europe said the Nordic finance ministers, for example, by granting loan facilities to turns. commenting as representatives of nib’s local banks for sme finance. “The operational base of Nordic lend- owners on the role and future tasks of the Cooperation is also a key to current envi- ing activities plays an important part in Bank. They agree that much work needs to ronmental initiatives in the Baltic coun- the Bank’s strong financial position. Our be done to benefit the environment. tries and Russia through the eu’s North- aim is to maintain a judicious balance Norwegian Minister of Finance Karl ern Dimension. between Nordic lending and the Bank’s Eirik Schjøtt-Pedersen noted that the de- “Considering the magnitude of the tasks growing international activities.” finition of “Nordic interest” has gradually that lie ahead of us in this area, we should expanded over the years. Although this welcome the international institutions that change helped create new fields of activity are also cooperating with the European for nib, it has resulted in that the Bank has Commission,” said Schjøtt-Pedersen. more competition. According to him, the Nordic countries To counteract unwanted competitive have an important role to play in the deve-

bulletin december 2001 11 Nordic Investment Bank 25 years

Nordiska Investeringsbanken 25 år

Swedish Minister of Finance Bosse Ring- holm called nib “Perhaps the most impor- tant and most concrete result of economic and financial cooperation between the Nordic countries in recent decades.”

Fredrik Sandberg, Scanpix Sandberg, Fredrik As he saw it, one important explanation for nib’s success is the Bank’s capacity to continuously adapt its activities to chang- ing requirements. Ringholm was convinced the speed of change will remain high. Regarding the neighbouring areas, Ring- holm mentioned Poland, “After consider- ing the situation, nib can grant loans to the Baltic countries as part of its regular lend- ing. A similar change should be considered for lending to Poland, which does not involve any special risk.” Ringholm pointed to nib’s considerable knowledge of Russia and the Baltic Sea region. “An understanding of conditions in Russia is especially important in view of Swedish Minister of Finance Bosse Ringholm said about the eib’s lack of lending experience in that NIB: “Perhaps the most important, most concrete result country.” Commenting on nib’s resource utilisa- of economic and financial cooperation between the tion, Ringholm said, “The Bank has Nordic countries in recent decades.” accomplished its tasks with a relatively small work force, but it is clear that some of the tasks that lie ahead, such as the lopment of the Baltic region’s financial sys- bouring areas to develop activities in these preparation of complicated environmental tem and anti-pollution investments in the sectors. projects or the further development of spe- nickel plants of the Kola Peninsula. “The Northern Dimension Environ- cific sectorial competence, will require “Modernisation of these facilities would mental Partnership may require a heavy additional expertise. Therefore, a certain mean a great deal for regional environ- investment from nib in the coming years, increase in spending can be acceptable.” ment.” He said Norway gives the project but it’s important for us to start dealing high priority. with the many environmental problems SUVI-ANNE SIIMES, Minister at the which have gone unnoticed for so many Finnish Ministry of Finance, noted in her PERMANENT SECRETARY Michael Dith- years.” concluding remarks that Nordic coopera- mer, representing the Danish Minister of Icelandic Minister of Finance Geir tion in the business sector has experienced Economy, Marianne Jelved, described how Haarde said that nib has adapted very suc- an upswing since the late 1990s. nib and the European Investment Bank are cessfully to changing conditions in the last “This applies to the traditional manufac- working together. few years in terms of market liberalisation, turing industry, banking, finance and “Cooperation between the two banks has free movement of capital, globalisation, telecommunication. This development is a developed fruitfully as regards, for exam- European integration, the fall of the Berlin source of strength for Nordic growth ple, cofinancing projects.” Wall and the new configuration of national potential.” According to Dithmer, nib should pri- states in the Baltic region and Eastern Like her fellow-ministers, Suvi-Anne oritise its activities in the Baltic and the Europe. Siimes supported a concerted, coordinated Barent regions. He’d like to see the Bank “Nordic involvement, partly through effort to support eu candidate countries in include this priority as part of its daily busi- nib, has clearly contributed to the build-up the Baltic region as well as Russia. Siimes ness in the next few years. of a competitive business sector in these said it is essential that ndep, as part of the The environment and energy should be countries.” Northern dimension, is successful. another focal area. In Dithmer’s view, nib He noted that the Bank’s activities are should now deploy its expertise on the quite important for loan activities in Ice- environment and energy. nib should also land, accounting for roughly 10 per cent of use its good relations with the neigh- the country’s international borrowing.

12 bulletin december 2001 Matias Uusikylä Matias

President and CEO Jón Sigur˛sson and master of ceremonies Ann-Kristin Schevelew welcome NIB guests. An evening to remember TO ROUND OFF NIB’S BIG DAY on 1st June, staff members, customers and associ- ates gathered at the Helsinki Stock Matias Uusikylä Matias Exchange for a musical evening. Uusikylä Matias ‘Unlimited Entertainment’ was the theme of the evening, with music by top- flight performers from several Nordic countries. Bass baritone Kristinn Sig- mundsson and pianist Jónas Ingimundar- son from Iceland, accordionist Maria Kalaniemi from Finland and, from Sweden, the Hej Kalle Orchestra with soloists Kalle Moreus and Viktoria Tolstoy all performed. Ann-Kristin Schevelew was master of cer- emonies. Guests also enjoyed a buffet and Icelandic bass baritone Kristinn dancing to music by the Eije Oscarsson Sigmundsson opened the evening’s Quintet. musical programme.

Swedish jazz with Viktoria Tolstoy.

bulletin december 2001 13 Nordic Investment Bank 25 years

Nordiska Investeringsbanken 25 år

NORDIC LENDING CEMENT PRODUCTION CROSS-BORDER TAKE-OVERS IN NORWAY During the mid-1980s NIB’s largest The first credit to Norwegian A/S NIB’s FIRST CREDIT credit at that time, upwards of SEK 350 Norcem, NOK 20 million, was granted million, went to Finnish Outokumpu Oy The first loan application NIB received in 1982 and helped finance the mod- for a major cross-border takeover; the came from Icelandic Alloys. The partly ernisation of a cement plant in Norway. acquisition of the state-owned company was building a The company wanted to use Danish fly Swedish company plant with an output capacity of 50,000 ash in the production process. A new Gränges Metall- tonnes of ferruginous quartz, used in credit of NOK 60 million was granted in verken. The merger steel manufacturing. This was a major 1984, this time for resulted in a suc- Nordic project, organised on a project- Norcem to purchase cessful Finnish- financing basis. The Bank’s participa- shares in its Swedish Swedish joint pro- tion, combined with export credits and associate Euroc. The ject to manufacture commercial bank credits, was crucial two companies had copper and copper to the realisation worked closely alloy products. The of the project. The together for a long project signalled an important structur- credit granted by time, particularly ing of Nordic enterprise in the interna- NIB totalled USD internationally. tional market. 38.6 million.

1976 1980 1985 1990

AFRICAN ENERGY PROJECT ENVIRONMENTALLY FRIENDLY VENEZUELAN POWER PLANT HYDROPOWER FOR INDIA NIB’s first project investment loan (PIL) In eastern Venezuela, NIB financed a was signed with the Botswana Power Towards the end of the 1980s, NIB signed traditional hydroelec- Corporation. Totalling USD 15 million, it an agreement worth SEK 420 million with tric station with a helped to finance a coal-fired power the National Hydro Power Corporation concrete gravity dam station at the Morupule coal mine near (NHPC), to help finance the Uri hydro- at Caruachi. The dam the town of Serowe. Several Nordic power station in Kashmir in northwest structure is 55 suppliers took part in the project, India. A Nordic consortium consisting of metres high and has among them Denmark’s Burmeister & Skanska, NCC, ABB, Sweco and Kværn- a 238 sq. km reser- Wain Energi, which delivered three boi- er Boving delivered voir. This is considered small in relation lers. The project, a positive example of a run-of-river plant. to the capacity generated, 2,160 MW, infrastructure invest- As the name due to the abundant supply of water ment in a developing implies, this type of and the swift current (30,000 cu. m. per country, was cofinanced plant does not sec.). A consortium headed by Norwe- with the European need dam con- gian GE Energy (formerly Kværner A.S.) Investment Bank and struction, resulting delivers the electro-mechanical equip- the World Bank. in reduced environmental impact. ment for the power station, which is due Instead the water is led through an for commissioning in 2006 at the latest. underground tunnel. A large number of In addition to the NIB credit of USD 60 Nordic companies were subcontractors; million, the Nordic part of the financial NIB co-financed the project with the package also includes export credits. Swedish International Development The Inter-American Development Bank Cooperation Agency (Sida), the Swedish (IDB) is also one of the financiers. INTERNATIONAL Export Credit Corporation and Britain’s LENDING Overseas Development Administration.

14 bulletin december 2001 MILESTONES IN MAJOR INFRASTRUCTURE WIND POWER IN DENMARK NIB’s HISTORY PROJECT IN SWEDEN The years surrounding the turn of the The Arlanda Line, a direct rail link millennium have witnessed a growth in between Stockholm Central Station NIB’s lending to financial intermediaries and Arlanda International Airport, was for secondary loans to SMEs. The 1975: Agreement to found NIB. Authorised one of NIB’s largest infrastructural pro- credit to Ringkjøbing Landbobank in capital SDR 400 million. jects of the 1990s. NIB’s share of the Denmark is one such example. The credit to A-Train AB was SEK 500 mil- frame credit of DKK 1976: Operations begin. lion. Among other things, the project 75 million was grant- 1980: Regional loan facility established. involved building 16 km of track to ed for onlending to Arlanda, constructing new terminal SMEs for financing 1982: NIB awarded top credit rating buildings at the Arlanda airport and projects of Nordic AAA/Aaa. NIB’s first Project Stockholm Central Station, and pur- interest. The sec- Investment Loan (PIL). chasing rolling stock. The trains now ondary loans have pri- run at fifteen-minute intervals between marily helped finance 1984: Authorised capital doubles, to airport and station, with a guaranteed wind power plants SDR 800 million. travel time and environmental investments in the of 20 agricultural sector. By financing wind 1987: Authorised capital doubles, to minutes. power projects, NIB is helping to har- SDR 1,600 million. PIL facility ness the Nordic area’s own energy resources. raised to SDR 700 million. 1989: Environmental investments in the Nordic area.

1992: Inauguration of the Baltic Inves- ment Programme (BIP).

1995 2001 1993: The ECU established as NIB’s accounting and capital currency. Authorised capital raised to ECU 2,809 million. Investments made in infrastructure. FLUE-GAS PURIFICATION ENVIRONMENTAL CREDIT AT POLISH COAL-FIRED TO ESTONIA 1994: PIL facility raised to ECU 2,000 POWER STATION NIB subscribed its first credit in the MIL million. PIL loans paid to the private One of the biggest environmental pro- environmental credit facility in 1999. sector for the first time. jects in Europe right now is the moderni- The loan of 200 million Estonian crowns sation of Poland’s second-largest power (EUR 13 million) helped the state- 1996: The BIP is extended. station, the coal-fired Turów plant. Built owned Eesti Energia power corporation NIB subscribes shares in in the 1960s with an output capacity of finance important environmental invest- Baltic investment banks. 2,000 MW, Turów was the biggest coal- ments in two oil-shale-fired power sta- fired generating tions in Narva, eastern Estonia, and a 1997: New credit facility introduced, plant in Europe. gas and oil-fired power station at Iru, Environmental Investment The goal of the near Tallinn. These investments are Loans (MIL). modernising is expected to reduce sulphur dioxide to reduce sul- emissions by 20,000 tonnes annually. 1998: Authorised capital raised to phur dioxide The investment ECU 4,000 million. PIL facility emissions by programme raised to ECU 3,300 million. 60 per cent before 2005. Among other also includes things this will mean replacing boilers, improvements 1999: New agreement and new head- turbines and generators as well as to the national quarters agreement acknowledges installing flue-gas purification facilities. power distribu- NIB’s multilateral state. NIB’s share of the total financing for the tion network. The euro established as NIB’s state-owned Elektrownia Turów compa- NIB has granted two new credits for the accounting currency. ny is USD 150 million. project since 1999. 2001: NIB joins the Northern Dimension Environmental Partnership, NDEP.

bulletin december 2001 15 International envi The inauguration of the Northern One of the most important elements of the Dimension Environmental Part- Partnership is a fund created to collect money from potential contributors who can nership, NDEP, marks a new form help finance ndep projects. Many environ- mental projects, especially in Russia, are only of cooperation between interna- sustainable with the help of substantial dona- tional financial institutions. tions. The European Commission is expect- ed to play an important part as one of the A meeting of the ndep steering group took biggest donors to the ndep fund. place in Stockholm in mid-September 2001. The event was chaired and hosted by WORK WITHIN THE Partnership is advancing nib and attended by the permanent stee- rapidly. In January 2002, the European ring group members the eib, the ebrd, the Commission and the ebrd will be calling World Bank Group, nib and the European potential donors to a pledging conference to Commission. The purpose of the meeting raise funds and secure the financing of seve- was to draw up a list of important environ- ral important ndep projects. mental projects that the ndep can finance. The eu and the Nordic countries strong- Representatives of nefco and the Russian Finance Ministry were also present. “It is gratifying that the Russian Swedish Minister of Finance Bosse Ring- holm said that it was very gratifying that government is actively partici- the Russian government was actively par- pating in this work.” ticipating in this work and trying to help accelerate priority initiatives for the envi- ronment. He said cooperation under the ly support working with the ndep. In ndep would help speed up the mobilisa- 2000, the eu Summit in Santa Maria da tion of resources and the implementation Feira, Portugal, approved an action pro- EBRD of environmental projects in the Baltic gramme for the Northern Dimension as region. part of the eu’s foreign policy in northern European Bank for Reconstruction 2001 and Development The steering group discussed the alloca- Europe. In March , during Sweden’s tion of tasks and the financial arrange- eu Presidency, a meeting was convened at EIB ments for individual projects. It also decid- the initiative of Sweden and nib to discuss European Investment Bank ed which environmental projects in the the possibilities of supporting the realisa- Northern Dimension Area, especially the tion of the eu action programme for the HELCOM Baltic and Barents regions, would have pri- Northern Dimension. Helsinki Commission, the Baltic ority in the ndep’s operations. Northwest Marine Environment Protection Russia, including the Kaliningrad region, REPRESENTATIVES at the meeting, with Commission was designated a priority region. other international financial institutions, resolved to draft a plan for establishing a NDEP THE SOUTHWESTERN wastewater treatment partnership, the ndep. The goal of the Northern Dimension Environmental plant in St. Petersburg will most likely be the ndep is to resolve the most pressing envi- Partnership first project to be financed through the Part- ronmental problems within the Northern nership. Dimension Area by reinforcing and co- NEFCO The steering group decides which projects ordinating the funding of environmental Nordic Environment Finance Corporation are to be financed and appoints a lead bank projects that have cross-border effects. The for each of them. In addition, the steering proposal was approved by the eu at its 2001 NDA group will coordinate finances and how the Gothenburg summit in June , and the Northern Dimension Area different bodies in projects work jointly. The ndep received strong support in connection steering group has selected 13 priority pro- with the eu Russian summit in October jects in northwestern Russia, six of which nib 2001. is leading.

16 bulletin december 2001 ronmental cooperation Anders Anders

The St. Petersburg PILOT PROJECT:WASTEWATER Southwestern Waste- water Treatment Plant will probably be the first PURIFICATION IN RUSSIA project to be financed nib is actively involved in the Northern charged into the Gulf of Finland, which through the Environmen- Dimension Environmental Partnership, dramatically affects the water quality of the tal Partnership. Con- ndep, which has been inaugurated as part entire Baltic Sea. Most importantly, emis- struction work on the of the eu’s Northern Dimension. The sions of oxygen-consuming substances plant began in the 1980s, but was suspen- completion of St. Petersburg’s southwest (bod5), nitrogen and phosphorus will be ded for lack of funding. wastewater treatment plant is expected to substantially reduced when the purifica- be the first project to be funded by the tion plant is working. Once it’s running, ndep’s participants. the new plant will meet the helcom effi- work on the southwest ciency requirements.

wastewater treatment plant in St. Peters- Roughly one-fifth of the plant’s concrete Klang Kerold burg started in the 1980s, but was suspend- structures were completed in the 1990s. Murmansk ed for lack of funds. It is now hoped that the The current plan is for the plant to be plant will be completed under ndep aus- completed on the basis of a ppp (Public- pices. International financial institutions Private Partnership) model. This means a ebrd eib nib nefco such as the , the , and , project company owned by the Nordic Archangelsk the European Commission, Sweden, Fin- construction consortium, nefco and the land and Denmark are expected to help St. Petersburg municipal water and sewage St. Petersburg finance the project, through credits or company Vodokanal will be in charge of e a

donations. Other donors may also be project implementation. The total cost of a l t i c S B Novgorod involved. the project is estimated at eur 125 million. Kaliningrad It is essential that the project gets started. Work on the plant is planned to commence Moscow Currently, unprocessed sewage from a in early 2002, and aims to have the plant population of a million people is being dis- ready to open in 2004. Bela

bulletin december 2001 17 panorama

18 bulletin december 2001 KATE KÄRRBERG

Photographs by Käte Kärrberg of Lerum, Sweden, who specialises in the people and culture of the North, and Sami culture. Her work has been exhibited at the Ethnographic Museum in Gothenburg and at the National Museum of Greenland in Nuuk.

bulletin december 2001 19 The three Baltic countries have been rebuilding, renovating and restructuring their countries in the last ten years. International support and money has played an important role in the rebuilding project. Lithuanian infrastructure undergoing constructive changes

STROLLING THROUGH the old parts of Vil- THROUGH CREDIT LINES to the Founda- nius, Lithuania, you admire the newly ren- tion, nib and the World Bank have partici- ovated, beautiful buildings. The country’s pated in the financing of 200 school reno- infrastructure is also being restructured vations in Lithuania. The schools are now and developed at a rapid pace, as part of the healthier and more comfortable for pupils preparation to join the eu. and teachers. Before the renovations, the nib has played an active role in the devel- indoor temperature could fall to +5ºC; opment of the neighbouring areas to the today the indoor temperature holds at Nordic region throughout the 1990s. The +18ºC. The asbestos in the roofs of the Baltic states have high priority, particularly buildings has also been removed. New when it concerns environmental and infra- windows and doors and modern heating structure development projects. In Lithua- regulation systems contribute to a more nia, nib has been supporting these kinds of pleasant classroom environment. The projects through the Housing and Urban addition of new, efficient boilers in the Development Foundation, hudf. buildings improves energy efficiency and Established in 1996 by the Lithuanian reduces pollution emissions. Ministry of Finance, hudf is a state-owned The school renovation projects have LATVIA Aukstaitija financial intermediary that acts as an been worthwhile from both an infrastruc-

Kerold Klang Kerold National Park agency to ensure sustainable financing for ture and environmental viewpoint. “The

a e municipal infrastructure development, environmental as well as the socio-eco- S

c lti Panevezys housing, and energy efficiency improve- nomic effects are important. The pupils a B ment projects in the country. learn the benefits of the renovations and Klaipeda Ignalina Managing Director at hudf Aloyzas can teach their parents how to save energy L I T H U A N I A Vitkauskas says, “These projects include at home,” says Vitkauskas. improvement of the environment, energy The pilot projects have been highly suc- Trakai efficiency, water supply and wastewater cessful. People are starting to care, which Vilkaviskis treatment, and solid waste management. they should. Lithuanians pay up to 40 per Kaliningrad hudf’s (RUSSIA) One of important tasks is assisting cent of their salaries for energy. Although BELARUS Trakai Historical Lithuanian governmental or municipal energy prices are on the same level as in the National Park institutions establish sound policies and Nordic countries, the consumption is sig- promoting sustainable urban development.” nificantly higher in Lithuania. As energy

20 bulletin december 2001 Linda Hintze Linda Litauens ambassad, Stockholm ambassad, Litauens

A team of international experts and HUDF staff, a total of 22 people, support local commu- nities in their efforts to improve the country’s housing conditions and urban development.

efficiency is improved in private and public treatment plant. The new plant is designed nib and ibrd have initiated an extensive buildings, people need to learn how to use to cater for a population of 8,500 people institutional development programme in energy wisely and economically. Informa- served with an average capacity of 1,200 order to support the implementation of tion is conveyed to the public in seminars cubic metres per day. municipal infrastructure projects via hudf. and leaflets. In the near future, monthly “The plant will meet national effluent Bilateral aid contributors such as Den- energy costs for Lithuanians should be dra- standards, the eu’s Urban Wastewater mark, Finland and Sweden provide some of matically less than they are today. Directive and the helcom standards. All the external financing for development this will contribute to Lithuania’s accession programmes. With Nordic funding, NIB HAS ALSO participated in the financ- to the European Union,” says John Charl- experts from Denmark, Finland and Swe- ing of six water and wastewater treatment ton, hudf’s Water and Environment den work at hudf providing their expertise projects, and one solid waste management Expert. The construction of the new plant in municipal financing, procurement, envi- project. These projects are also accom- will be completed in the autumn of 2001 ronment, and energy. plished via the Housing and Urban Deve- when the treatment of wastewater accord- Vitkauskas says, “The joint approach lopment Foundation. nib provided loans to ing to effluent standards will commence. works very well, for hudf, the Lithuanian complete the funding package of two A similar project is under construction municipalities, for nib and the other finan- important wastewater treatment plants in 30 km west of Vilnius. The existing waste- cial institutions involved in the projects. Lithuania, the Ignalina and the Trakai water treatment plant in the town of Trakai We believe we’re making an important wastewater projects. Both projects are is being rebuilt. When completed, it will contribution to the well being of the important from an infrastructure and envi- service Trakai and the nearby town Lent- Lithuanians. After all, they’re the ones ronmental perspective, as well as for the varis. Offering an average capacity of 2,200 who’re the actual endusers for all our pro- country’s eu accession. cubic metres per day, the new plant is jects.” The town of Ignalina is located in the designed to serve about 20,000 people. It eastern part of Lithuania, 110 km from the will meet the same national and helcom capital Vilnius and adjacent to the Auk- standards and eu directives as the Ignalina nib has an ongoing relationship with hudf. staitija National Park. The town’s original plant. In November 2001, nib approved a credit line wastewater treatment plant was old and did “The nearby Trakai National Park, with of eur 30 million for Lithuanian municipali- not meet effluent standards, which led to its environmentally sensitive system of ties to develop their infrastructure and pollution in the local environment, includ- lakes, will benefit from this project,” says environmental projects. The aim is for hudf ing the environmentally sensitive region of Charlton. “The improved water quality to function as a representative for the the National Park. The goal of the Ignalina will ensure that watercourses and the Lithuanian Ministry of Finance and oversee project is to replace the town’s wastewater groundwater will not become polluted.” the management of each project.

bulletin december 2001 21 theme: ENERGY

Green power growing World demand for energy continues to grow. The global emphasis is on environ- mentally friendly and renewable sources of energy. And energy should be pro- duced as efficiently as possible and in a way that does as little damage as pos- sible to the environment. NIB aims to actively assist the development of alternative sources of energy by financing suitable projects. Finland is investing heavily to produce energy from biomass and Denmark has set its sites on wind power.

HEAVY WINDS AT SEA

THE WORLD’S BIGGEST offshore wind Eltra is also responsible for network con- farm is due to be up and running in the nections between Norway and Sweden. summer of 2002. West of Blåvands Huk, in Eltra and Elsam are jointly involved in a the Jutland area of Denmark, 80 wind tur- unique project since 1998. They are in the bines will be located 14 to 20 km offshore, process of constructing the world’s biggest in the North Sea. nib is one of the offshore wind farm, Horns Rev, south of financiers of this exciting energy project. Jutland. Jutland is the home of the Elsam power Denmark is a wind-powered country, 12 corporation and the Eltra transmission per cent of its electricity supply is generated company. A few years ago they were one by wind turbines. Compare this to Sweden, company, but following the deregulation of where the corresponding figure is roughly Denmark’s power market they are separate 0.3 per cent or Finland, where it is less than companies with their own responsibilities. 0.1 per cent. Norway produces virtually no Elsam produces and sells electrical power. electrical energy from wind power. Eltra secures power supplies and ensures the Denmark is also the world’s biggest transmission capacity and dependability of exporter of wind turbines. There is a polit- the Jutland and Fyen high voltage network. ical explanation for this situation. Since the

22 bulletin december 2001 André Maslennikov, Pressens Bild Pressens Maslennikov, André

bulletin december 2001 23 much stronger offshore than on-shore. These wind farms are pilot projects. If the experiment turns out well, the offshore wind power initiative will be expanded. Eltra and Elsam have been commissioned by the Danish Ministry of Environment Poul-Jacob Vilhelmsen, Tech-wise Vilhelmsen, Poul-Jacob and Energy to construct two of the wind farms. The first is Horns Rev. Elsam is in charge of the construction and operation of the plant, Eltra for feeding the current into the national grid. This is where nib comes in. A nib loan of dkk 300 million has been granted to Eltra for construction of a grid connection cable and an offshore trans- former. Elsam has been granted a loan of dkk 300 million to finance the wind farm. Per Klaumann, nib’s Regional Manager for Denmark, says, “Our point of departure is our willingness to take part in financing projects that benefits the entire Nordic area. Ultimately, we would like to see the Nordic area self-sufficient in energy.” A total of 80 wind turbines with a com- bined output capacity of 160 mw will be working by the end of 2002. The cost of Horns Rev is estimated at dkk 2 billion, with Elsam providing 1.7 billion and Eltra 300 million. “It’s a gigantic project, but at the same time, it is fraught with risks. Placing wind turbines offshore on this scale is complete- Pile-driving for the platform to house Eltra’s transformer station at Horns Rev off the coast ly new. Weather conditions can be difficult, of Denmark. Drilling in the shipping lanes off was resumed at the beginning of with heavy winds and very high waves, October after several weeks’ high winds and waves. which means that safety aspects are impor- tant,” says Flemming Thomsen, Elsam’s Head of Wind Power. 1980s, the Danish government has priori- IT STARTED WITH tised wind power, providing research sup- HORNS REV WAS CHOSEN because it offers THE OIL CRISIS port and guarantees to private investors. excellent wind conditions and the location Denmark’s development of renew- But there is also a geographic explanation: of the farm will disturb as few people as pos- able energy sources, wind power Denmark has favourable wind conditions sible. Additionally, Horns Rev is an area among them, gathered new speed a and few natural windbreaks. where fishing is infrequent and radio com- few years after the 1973 oil crisis. The Danish government’s objective is for munication will not be interrupted. It is also 50 When the USA decided in the mid- per cent of the country’s power con- essential that any area chosen as a wind farm 1980s to focus on native, renewable sumption to be based on wind power by the must not be involved in military activities. and clean energy sources, Danish year 2030. Today Denmark has 6,000 wind “In order to get maximal power from the industry was able to provide mass- turbines and there is not much room for wind, the turbines have to be at least 110 produced wind turbines. The sub- further expansion on the onshore. The gov- meters tall. They should also be located in stantial American commitment to ernment has therefore decided to construct water 5 to 15 meters deep, which makes wind power at this time did much to five large wind farms. One advantage of off- Horns Rev the perfect site,” says Flemming hasten its development in Denmark. shore wind turbines is that they have 50 per Thomsen. cent more output, since winds tend to be The wind turbines will be 560 metres

24 bulletin december 2001 theme: ENERGY

apart. The total site measures 20 sq. km. delivery into the national grid. nib The plan is for the wind turbines to be The loan will also help finance the DANISH WIND POWER – 2002 built from March to November , and infrastructure of the power transmission FACTS AND FIGURES Elsam expects the first turbine to start gen- network between Denmark and Sweden, Denmark has over 6,000 wind tur- erating in the summer of that year. which will make it easier to buy and sell bines, nearly all of them onshore. Careful checks are planned concerning electrical power in the Nordic area, among Only 40 are offshore. the wind farm’s environmental impact. other things. There are many ageing wind tur- Financial and technical performance will Örjan Hedblom, a handling officer with bines all over the country with no also be closely monitored. the Swedish Wind Power Association more than 100 kW capacity. The svif “What is new about Horns Rev is that it ( ) says Sweden is taking a very close biggest onshore wind turbines in will now be technically feasible to control interest in the Danish wind power project. Denmark today have ratings of the amount of current that the wind tur- “Local residents in Denmark are often 2,000 kW. That kind of turbine has bines generate. If we see that we don’t need shareholders in wind power stations. This is an annual output of roughly 5.3 160 mw, we can ask Elsam to generate 100 financially advantageous to them, because million kWh, which is enough to mw instead,” says Per Andersen, Eltra’s they don’t have to pay tax on their full prof- supply electricity to 1,900 flats or to 365 electrically heated houses. Head of Information. it, and as owners they receive a guaranteed The gross cost of such a turbine Regulating electricity production is one payment for every kWh produced.” is about DKK 18 million. of the present-day difficulties of wind Hedblom says, “Historically speaking, A wind turbine has an estimated power. Per Andersen explains that current high costs have been the principal difficul- service life of 20 to 25 years. can easily be wasted because winds can ty where wind power is concerned, but the The blades on a 2,000 kW wind change so very quickly. cost of production keeps falling. Today turbine rotate at about 19 rpm. Horns Rev, in his opinion, will be Den- wind power is competitive. Electrical ener- Inside the generator, this is in- mark’s first wind farm worthy of the name. gy from a wind farm today costs no more to creased to 1,500 rpm. “We have had wind turbines before, but produce than power from other newly con- Wind farms in Denmark are built a Horns Rev will be the first large-scale wind structed generating facilities. And interna- minimum of 300 metres away power production.” tionally, wind power is growing faster than from houses and buildings. any other kind of energy where new pro- THE CURRENT FROM the wind turbines duction of electricity is concerned.” Örjan will be transmitted by cable to the trans- Hedblom would like to see the other former platform that Eltra is planning on Nordic countries following Denmark’s the edge of the wind farm. From there the example of commitment to wind power. current will be transferred to the coast, for AS REGARDS THE FUTURE of wind power in Denmark, Per Andersen expects to see

Elsam more wind farms offshore. “I think many of the onshore turbines are going to disappear. A lot of them are small and inefficient. The government will proba- bly choose to make investment in offshore wind turbines economically interesting.” Flemming Thomsen believes that the trend is in favour of larger wind turbines, and that the next generation will be a good deal bigger than those of Horns Rev. “Sure, electricity produced via wind power is expensive. But if Denmark wants to reduce carbon dioxide emissions, then wind power is the cheapest way to achieve that goal,” say Per Andersen and Flemming Thomsen.

Eighty wind turbines will be completed by the end of 2002.

bulletin december 2001 25 Osmo Kaipainen

One of the new facilities being built by Pohjolan Voima in the town of Jämsänkoski in central Finland. theme: ENERGY

NIB AND ENVIRONMENTALLY FRIENDLY PROJECTS: Major Finnish investment in bioenergy

Finnish power company Pohjolan Voima is increasing its biomass facilities. The compa- ny is adding five new plants to the already existing four, putting Finland further ahead as the leading European nation in this field.

WHEN THE NEW wood and peat-fuelled tant sources of energy than wood, peat and power stations are commissioned, Finland’s hydropower. Kauko Relander says, “I think consumption of wood chips will double the energy sources are gratifyingly versatile. THE NEW FACILITIES from the current figure of 700,000 cubic The same goes for Finland’s energy policy.” SUIT NIB metres. The power stations being built are next to the large paper and pulp mills in the THE MINISTRY OF TRADE AND INDUSTRY Concerning NIB’s role as financier towns of Jakobstad, , Jämsänkoski, estimates that electricity demand in Fin- of biomass facilities, Assistant Kuusankoski and Ristiina. However, the land will grow by 13 TWh by 2010. How Regional Manager Asko Heilala says, “We want to be expressly new power stations won’t only fill the ener- that demand is met will, to a great extent, involved in financing environmen- gy demands of forest industry. A new kind depend on the policy choices the eu and tally friendly energy projects using of joint project between the forest industry Finland make regarding energy and the renewable energy sources.” and power companies has resulted in the environment. One important energy poli- In addition to the environmental formation of joint companies. Various cy issue concerns a possible expansion of aspects, the Bank also emphasises communities also play a pivotal role in the nuclear power. Pohjolan Voima and its cost-efficiency. “It is very important projects. subsidiary, Industrins Kraft, are campaign- that the energy should be as The sum being invested in the new ing. Pohjolan Voima’s task is to produce advantageous as possible for the Pohjolan Voima facilities is fim 2.5 billion. and procure electricity and heat as cheaply customers.” Heilala anticipates a very palpable growth of energy nib participates in the financing of four of as possible for its owners. demand. “One has to be realistic these power stations, contributing a total It is currently estimated that woodchip and understand that the growing of slightly more than half a billion fim. The energy can fill a gap of 3 TWh between the 2010 energy demand cannot be met plants are expected to be commissioned by anticipated electricity demand until entirely with bioenergy, for exam- 2002 at the latest. Publicity concerning the and the anticipated supply. Finnish power ple. However, that form of energy new generation of power stations has pri- companies can benefit from exporting can still account for a surprisingly marily focused on Alholmens Kraft in energy from the biomass facilities. Kauko large share of supply.” Jakobstad. Its output of 240 mw makes it Relander says, “We know how to manufac- Heilala believes that NIB’s for- the biggest plant of its kind in the world, ture boilers and customise entire power ward-thinking in the area of energy was recognised when the Bank according to Senior Vice President Kauko stations, which enables us to export as well. was selected as a financier for Relander, who is in charge of Pohjolan For example, we’re working with a major usa energy projects of the magnitude Voima’s fuel procurement. project in Milwaukee in the .” of these new biomass facilities.

Despite the magnitude of these projects, The company continues its research and oil and nuclear power remain more impor- development in the unceasing search for

bulletin december 2001 27 theme: ENERGY

“The energy sources are gratifyingly versatile. peat are a very good energy combination. “If the price of chips goes up, we can use The same goes for Finland’s energy policy.” more peat, and vice versa. The problem with peat is that it produces carbon dioxide new ways to produce energy. “One of the claimed that Europe was already capable of when burned. For that reason, some peo- things we’re doing is investigating the pos- manufacturing biomass boilers with an ple maintain that peat isn’t a real biofuel, sibilities of converting town fuel produced electricity output of 10 or 20 mw. “When I just ‘a slowly renewable biofuel’.” from dry refuse as well as municipal and said we were making boilers with an output industrial waste into gas. This can be of 240 mw I had to show them our draw- INCREASED USE of natural gas is often burned with coal in the old coal-fired ings before they’d believe me,” says equated with wind and hydropower, bio- power generating plants. The first project Relander. energy or refuse gasification. Kauko Re- for gasification plants has already started in lander says that natural gas is not a compet- the town of , north of Helsinki,” THE RENEWABLES PROGRAMME of the itive raw material today, which is why Fin- says Kauko Relander. If 23 per cent of a Ministry of Trade and Industry assumes that land’s latest and technically most sophisti- coal-fired power station’s fuel input is the use of chips in energy production can be cated natural gas plant has only been run- replaced with gasified town fuel, emissions raised to five million cubic metres annually. ning for a few days this year. He says, can be brought down to the same level as if Kauko Relander believes that this can just “Things will change, of course, if a dimin- the plants were running on natural gas. about be achieved, as long as nothing in the ishing supply increases the price of elec- Gaining acceptance for modern energy forest is wasted – including knot wood, tricity.” thinking in a large corporation like Pohjo- which is expensive and mainly gathered by Relander describes the present day situa- lan Voima isn’t easy. hand, and comes to 1.5 million cubic metres. tion in the energy sector, “In the mid- Kauko Relander explains, “This is prima- For Pohjolan Voima the most profitable 1970s, I moved from a labour market rily because investments in the energy proportion is to build its biomass power organisation to the energy industry. Ener- industry are very long term. We should be stations close to paper and pulp mills. “The gy in those days was a fairly tranquil indus- able to forecast what global energy needs essential requirement is for collection and try, with its machines and turbines turning. will look like in 2030.” He admits that the transport of the raw material which both Basic stability, dependability and continu- Finns have failed to fully exploit the PR the factory and the power station depend ity were the main considerations in those potential of the bioenergy projects. “If this on to form part of the same logistical chain. days. Instead we have perpetual movement project had happened in Sweden, all Euro- Collecting the raw material more than 100 now. We need to lead development and pe would know about it,” he says. km away from the power station would be understand how the world situation will Relander quotes a revealing example of too expensive, because timber waste is so look in the future.” Finnish modesty. He describes how a lead- porous,” says Kauko Relander. He main- ing eurocrat in Brussels proudly pro- tains that, technically speaking, wood and

UPM-KYMMENE OPTED FOR BIOENERGY

Four of the five new bioenergy plants are facilities are also bigger than their pre- tions could be built within five or ten projects that are initiated by the giant cursors. UPM-Kymmene calls this a years to supplement those now under forest industry undertaking UPM- replacement investment programme. construction. Kymmene. The new power stations are Pertti Simola says, “The technological Simola says, “I know that a great deal being built in Jakobstad, Kokkola, Jäm- leap from old to new is enormous.” more bark and chips could be collected sänkoski, Kuusankoski and Ristiina. UPM-Kymmene’s main environmental and used in all industrial communities. UPM-Kymmene controls 38 per cent of objective is to increase its use of bio- We have very systematically developed Pohjolan Voima. energy and cut down on fossil fuel methods for this process.” He sees signs Pertti Simola, UPM-Kymmene’s Energy inputs. It is easy to support the use of of new attitudes from manufacturing Director, says that bioenergy coopera- bioenergy, because in terms of carbon plants and nearby urban communities to tion between the two companies “has dioxide emissions this production is a establish a cooperative approach to come very naturally.” The biomass facili- neutral form of energy. The company has energy. He says, “The time is now ripe ties replace worn-out boilers. The new estimated that another three power sta- for that sort of cooperation.”

28 bulletin december 2001 theme: ENERGY Loan for long-term power investments A 30 million euro credit from NIB strengthens the financing of long-term investments made in recent years by the utility Energiverk AS. The investments concern power production, district heat and distribution networks.

“WE HAVE BEEN FINANCING OUR invest- ments with short-term credits,” Arne Hovd,

Finance Manager of Trondheim Energiverk, Sveen Mikal tev, explains. “When we looked for long- term financing, nib could offer us long-term credit on competitive terms. The nib credit helps create a sensible financing structure and a good foundation for modernising and developing our operation.” tev aims to become the power centre of central Norway in the Nordic market. The market has become fiercely competitive since Norway’s deregulation in 1991, which has been followed by similar measures in the other Nordic countries. The vision demands investment at every level. Opera- tions need to be streamlined and changes implemented. In addition, the company will invest in profitable projects and devel- op its range of products and services. As part of this adjustment, tev changed The Moholt power station in Trondheim, Norway, owned by TEV. TEV is the biggest energy its structure in 1999. Today it is a group company in Mid-Norway and an important energy producer and energy distributor. with subsidiaries that focuses on four core areas, hydropower, district heating, distrib- and other undertakings. Production, which autumn of 1901, and the company’s power ution and power sales. is primarily based on refuse incineration station began supplying electrical power to “Hydropower and district heating enable and waste heat, recycles 92,000 tonnes of the railway and a few subscribers. us to produce environmentally friendly refuse annually from Trondheim and 16 Much has happened during the interve- energy,” says Arne Hovd. neighbouring communities. ning hundred years. tev today is the big- Power distribution is also handled by a gest energy company in Mid-Norway. At HYDROPOWER PRODUCTION is done in 14 separate subsidiary, and the power distrib- national level, it is the seventh largest ener- fully owned and five part-owned power sta- ution company sells its own and out- gy producer and sixth largest power distri- tions. Most production is sold through sourced electrical power to about 84,000 butor. Operations grew slowly to begin NordPool, the Nordic power exchange, and end customers. with. In the 1960s growth surged at a very the hydropower company is a leading player healthy rate of six per cent annually until in the financial power market. THE HISTORY OF Trondheim Energiverk, the mid-1980s. Electricity consumption The group’s district heating company tev, goes back to 1890, when construction today in the company’s distribution area is produces and distributes waterborne ener- work began on the Øvre Leirfoss power sta- six times the figure for 1960. gy to 4,000 households and 250 industrial tion. The first turbine was started in the

bulletin december 2001 29 the nordic finance group

The Nordic Finance Group consists of four multilateral financial institutions whose goal it is to finance projects of Nordic interest. The institutions are located in the Nordic House in Helsinki.

SUPPORTING THE PRIVATE SECTOR

The Nordic Council of tional and Nordic development institu- modalities for the Fund’s permanent activi- Ministers approved an tions, the Fund participated in the financ- ties in the private sector were based on amendment to the ing of several large infrastructure projects, experience gained during the trial period. statutes of the Nordic Development Fund, venture capital funds and sme’s. The Considerable advantages can be gained, ndf, in September 2001. The amendment especially in the infrastructure sector, by allows ndf to support private sector activi- combining the Fund’s public sector lending ties in developing countries, without gov- with private sector financing. In addition ernment guarantee. to the financial contribution, borrowers The new private sector activities will can benefit from the Fund’s experience of become an integral, permanent part of cooperation with multilateral financial ndf’s operations and supplement the Fund’s institutions and national authorities in the lending with government guarantee for the borrower countries. public sector. Financial support to sme’s in developing Through its support to the private sector, countries will mainly be channelled ndf promotes economic and social develop- through national and sub-regional devel- ment and poverty reduction in developing opment banks, and via participation in ven- countries. The poor developing countries, ture capital funds. especially in Africa, will have priority. ndf’s private sector activities will require During a trial period from the mid-1990s that Nordic enterprises contribute to the 2000 ndf until the end of , operated a facil- NDF participates in a telecommunications projects in the form of equity capital, ity, which enabled it to participate in pri- project in Uganda where 2000 public know-how and products. vate sector activities. In cooperation with telephones are installed throughout the Nordic enterprises, local partners, interna- country. www.ndf.fi

FINNISH HEALTH CARE IN ST. PETERSBURG

SCANFERT OY, a privately ical station in the heart of St. Petersburg. established a joint approach with various owned Finnish medical com- The medical station will offer a wide insurance companies, with a view to pany, is extending its activities spectrum of specialities: outpatient care, a attracting new groups of patients. to St. Petersburg. Nopef, the laboratory, X-ray and ultrasound examina- The investment will cover procurement of Nordic Project Export Fund, helped tion, and a hospital wing with three operat- medical equipment, construction and repair finance a pilot study, which is the basis for ing theatres and about 20 beds. It will be work. These activities are being financed investment decisions and financial solu- the first medical station in St. Petersburg partly with Scanfert’s own resources and tions. to offer its clients such a comprehensive partly with loans from the IFC (Internation- Founded in 1993, Scanfert Oy has clinics range of services. Activities will proceed in al Finance Corporation), Finnfund, in and in Finland. The stages, starting with general medicine and Nordea, Finnvera and the International company specialises in infertility treatment, paediatrician services in November 2001. Moscow Bank. The main contractor has urology and gynaecology. With Tohtoritalo Private health care is increasingly popu- been selected locally in St. Petersburg. Oy, a private hospital that offers general lar in St. Petersburg. Scanfert Oy is target- medicine, surgery and occupational health ing companies and individuals who have care, Scanfert Oy will now establish a med- medical insurance. The company has www.nopef.com

30 bulletin december 2001 THE NORDIC FINANCE GROUP

THE NORDIC DEVELOPMENT FUND (NDF) grants long-term credits on

Göran Gustafsson, Pressens Bild Pressens Gustafsson, Göran concessional terms for high priority projects in developing countries. The Fund also provides loans to private sector projects. All projects must be in accordance with development aid policies of the Nordic countries. THE NORDIC ENVIRONMENT FINANCE CORPORATION (NEFCO) finances environmental projects in Central and Eastern Europe. Projects in the private sector and local govern- ment qualify. NEFCO works with equity investments as well as loans. In addi- The new programme will reduce agricultural run-off in the Baltic Sea. tion, NEFCO manages the Nordic Envi- ronmental Development Fund (NMF), through which the Nordic countries channel their financial support of urgent environmental projects in the neighbouring areas. NMF supplements CREDIT FOR A CLEANER INLAND SEA the Nordic countries’ national environ- mental support programmes. nefco AGRICULTURE is easier to take the necessary steps. will THE NORDIC PROJECT EXPORT one of the principal work with local agricultural advisory orga- FUND (Nopef) promotes the interna- villains for eutrophication, the over-fertilisa- nisations in each of the Baltic countries, to tionalisation of Nordic enterprise by tion of a body of water, of the Baltic area. The support the preparation and undertaking of financing feasibility studies that are expected to lead to project deliveries World Bank has established a vigorous action projects. or joint enterprises with Nordic par- programme under the Global Environment The programme will also have the effect ticipation. Fund (gef) to decrease the run-off from of improving the individual farmer’s quality farming. Credits from nefco will help to of life. Liquid manure will not be able THE NORDIC INVESTMENT BANK (NIB) finances projects both in and improve fertiliser management and provide to infiltrate the soil and drinking wells, and outside the Nordic countries. The implements for environmentally appropriate less ammonia will be released into the Bank provides long-term loans to planting. atmosphere. projects in the private and public The World Bank, which administers the The project is being financed with dona- sectors. Loans are granted on com- gef, has developed a comprehensive pro- tions from the gef and credits from nefco. petitive market terms. gramme for identifying the most effective The nefco credit facility, with funds from the www.nib.int means of reducing agricultural run-off in the Nordic Environmental Development Fund coastal regions on the eastern side of the (nmf), is expected to result in 20-25 invest- Baltic Sea. ments in better fertiliser management and The initiative is expected to be highly tools for environmentally appropriate plant- effective in a region where these problems ing depths to maximise plant nutrition are above all due to lack of knowledge and uptake. The loans will make it easier to adapt resources for sustainable fertiliser manage- to helcom’s recommendations for managing ment. The programme includes training and plant nutrients and pesticides, and to the funding. During the training, a sustainable stricter legislation that is expected to come development plan will be developed for the into force in the Baltic countries. individual farm. Funding goes to implement- ing activities and monitoring the results. Standardised design of fertiliser plants and a list of qualified local contractors will make it www.nefco.org

bulletin december 2001 31 news

SUPPORT FOR FEMALE ENTREPRENEURS Through a loan facility of EUR 1 million NIB has been able to support women entrepreneurs in the Baltic countries. The loan facility has now been fully utilised and the response from participants is generally positive. A total of 44 projects in Estonia, Latvia and Lithuania were financed by the loan programme, which offered female entrepreneurs medium term loans for commercial projects. NIB’s Senior Vice President Siv Hellén presented the results of the loan pro- gramme at the Women and Democracy conference in Vilnius, in June 2001. She comments, “The programme has received a great deal of attention and we have gotten quite a bit of feedback. We China enlists the aid of Nordic technology to develop its healthcare. are currently exploring the possibilities of how to continue the programme. Estonia has expressed definite interest in continu- ing, and with Lithuania we are dis- INTERNATIONAL LENDING cussing how to reach smaller companies in rural areas. In Russia there is also inter- est in a similar programme for female Healthcare a topical entrepreneurs.” sector in China NORWEGIAN FINANCIERS NIB’s Board of Directors granted a loan pro- NIB and the Chinese Finance Ministry have ON THE WEB gramme of USD 40 million to the Finance Min- a longstanding relationship. The first loan istry of the People’s Republic of China to programme was signed in 1990. The eighth Now it is easier for Norwegian compani- finance projects in the country’s healthcare general loan programme, worth USD 60 mil- es to find information on contacts, mar- sector. lion, was signed in June 2001. Previous loan ket surveys, exports, investments and This is the first time NIB has granted a programmes have financed projects in such start-ups. A number of Norwegian orga- specifically sectorial loan programme to China. sectors as food manufacturing, paper, ener- nisations joined forces in the spring of Nordic suppliers and the Chinese Finance Min- gy, telecommunication and healthcare. 2001 to launch www.midler.no. istry have called for a special loan programme With this loan programme for the health The goal of the website is to provide essential information related to compa- for the health sector for some time. China sector, NIB makes it possible for Chinese nies that are active in the area of inter- wants to utilise Nordic technology in its com- projects to be financed up to a total of USD national ventures. NIB, NEFCO, NDF prehensive plans for the development of health 116 million. Loans generally range from USD and Nopef are participating in this joint services, especially in the poorer, interior 2 to USD 5 million, with a normal maturity of project. regions of the country. approximately 10 years.

RUSSIA PROJECT DRAMATICALLY REDUCES EMISSIONS The Bank has signed an agreement on a Norway and Sweden. Once the plants are loan of USD 30 million for financing pollu- modernised, emissions of sulphur dioxide

Fredrik Funck, Pressens Bild Pressens Funck, Fredrik tion abatement measures and modernisa- and heavy metal particles will be reduced tion of nickel smelter plants in the Kola by 90 per cent. The current sulphur diox- Peninsula. The investment, which totals ide emissions from these nickel smelters approximately USD 93,5 million, is also are three times that of Sweden. financed with grants and assistance from

32 bulletin december 2001 Göran Gustafsson, Pressens Bild Pressens Gustafsson, Göran NEW E-MAIL ADDRESSES FOR NIB NIB switched to a new e-mail address on 1st December 2001. The new domain address is nib.int (the old address ended in nib.fi). Eirik Brekke Tore Henrik Lars-Åke Lars Synnes Linda Hintze New addresses: Emanuelsson Michaelsen Olsson www.nib.int [email protected] [email protected]

MAJOR ISSUE IN SWEDISH KRONOR Pound sterling, Swedish kronor, Seija Ehanti Aini Joensuu Jouni Tuija Raukola Torben Jani Japanese yen and new Taiwanese dol- Järvenpää Vindeløv Poikkimäki lars were the Bank’s main borrowing currencies in the first eight months of 2001. Sterling bonds have been issued NEW APPOINTMENTS for the equivalent of EUR 722 million. The Bank carried out a SEK 3 billion THE OPERATIONAL Sweden in the Bank’s Nordic Department. transaction, corresponding to EUR 326 DEPARTMENTS: His last position was with Handelsbanken. million. This is the first liquid bench- Eirik Brekke (N) has been appointed mark transaction to be issued by a Deputy Regional Manager for Norway in NEW STAFF FUNCTION MEMBERS: supranational in Swedish kronor. the Bank’s Nordic Department. He has Linda Hintze (FIN) has joined our Informa- previously worked for Kreditkassen, Oslo, tion Department as an Information Officer. and the Norwegian Focus Bank. She comes from the Institute for Corporate Competence Development of the Swedish Tore Emanuelsson (S) has been appoint- School of Economics and Business ed Manager in the Private Sector Unit of Administration, Helsinki. the International Department. He has worked for NIB earlier, but his most recent In the IT Department, Seija Ehanti (FIN) appointment was with Scania CV AB in has taken over as Development Manager. Sweden. Aini Joensuu (FIN) and Jouni Järvenpää (FIN) have been engaged as System Man- Henrik Michaelsen (DK) has taken over as agers and Tuija Raukola (FIN) as IT Spe- André Maslennikov, Pressens Bild Pressens Maslennikov, André Deputy Regional Manager for Denmark in cialist. the Bank’s Nordic Department. He comes most recently from Unibank in Copen- THE NORDIC FINANCE GROUP: hagen and is stationed at NIB’s Copen- Torben Vindeløv (DK) has been appointed hagen office. Senior Investment Manager with NEFCO. He comes from Danida and a posting in Lars-Åke Olsson (S) has been appointed South Africa. Prior to that he worked for Senior Vice President of the Bank’s Inter- Nopef , NIB’s and NEFCO’s sister organi- national Department where he will contin- sation. ue to serve as Regional Manager for Latin America. Jani Poikkimäki (FIN) has joined Nopef as a Project Manager specialising mainly in Lars Synnes (S) has accepted an appoint- Swedish and Danish enterprises. He joins ment as Deputy Regional Manager for Nopef from SEB’s London office.

bulletin december 2001 33 nib in brief

This is nib The Nordic Investment Bank (nib) ber countries appoint representatives to the by borrowing on the international capital finances private and public projects, which Bank’s Board of Directors and to its Con- markets. nib’s bonds enjoy the highest pos- have high priority with the Nordic coun- trol Committee. sible credit rating, aaa/aaa, with the leading tries and the borrowers. nib finances pro- The Bank’s operations are controlled by rating agencies Standard & Poor’s and jects both within and outside the Nordic an agreement between the Nordic coun- Moody’s. countries. tries as well as the Statutes connected with nib has its headquarters in Helsinki and nib is a multilateral financial institution this agreement. offices in Copenhagen, Oslo, Reykjavik, owned by the five Nordic countries. The nib offers its clients long-term loans and Stockholm and Singapore. The Bank has Bank operates in accordance with commer- guarantees on competitive market terms. approximately 135 employees, recruited cially sound banking principles. The mem- nib acquires the funds to finance its lending from all the five Nordic countries.

NIB’S FINANCING NORDIC LOANS tee, particularly to private sector infra- structure investments. The loans are grant- INVESTMENT LOANS ed for up to half of the project’s total cost. POSSIBILITIES nib offers medium-and long-term loans with Project investment loans can be utilised to 5 15 maturities of to years. The loans are finance all types of project costs, including The Nordic Investment Bank grants loans granted in various currencies at fixed or float- local costs. The loans are granted at mar- and guarantees on commercial banking ing market-based interest rates, for up to half ket-based interest rates in a currency pre- nib terms within and outside the Nordic coun- of the project’s total cost. finances pro- ferred by the customer. Project investment tries for projects, which are of mutual jects in: loans have been granted for projects in interest for the Nordic countries, and for The manufacturing sector, including more than 40 countries. nib can also pro- the borrower country. Loans and guaran- investments in facilities and machinery, vide loans to investments, including joint tees are granted to finance investments that Infrastructure, including transportation, ventures and corporate acquisitions, within oecd assure energy supply, improve infrastruc- telecommunications, energy, water the area. ture or support research and development. supply, sewerage and waste treatment, High priority is also given to projects, Environmental improvement, both in which improve the environment in the THE NEIGHBOURING AREAS the private and the public sector, Nordic countries and their neighbouring nib areas. nib participates in the financing of Research and development, gives priority to the financing of public foreign investments, which provide Cross-border investments, such as merg- and private infrastructure and industrial nib ers and corporate acquisitions, investments in the neighbouring areas to employment in the Nordic countries. nib finances various international projects in Foreign investments in the Nordic coun- the Nordic region. Further, partici- emerging markets as well as within the tries. pates in the financing of projects in the oecd area. The Bank grants loans to pro- Baltic countries through investment loans jects that support economic development REGIONAL LOANS to companies, which are investing in the Baltic countries. in the Nordic countries’ neighbouring Regional loans are granted to national, nib areas as well as to investments of mutual regional credit institutions for the further is authorised to grant special environ- interest in various parts of the world. development of business in priority regions. mental investment loans to public and pri- In addition to loans, nib also grants vate sector environmental projects in the guarantees for projects that meet the neighbouring areas to the Nordic region, Bank’s conditions. INTERNATIONAL LOANS i.e. to Poland, the Kaliningrad area, Esto- nia, Latvia, Lithuania and northwest Russia nib’s The core of international lending (St. Petersburg, the Leningrad area, the operations consists of project investment Karelian Republic and the Barents region). 20 loans. These are long-term loans, up to The projects are to help in reducing envi- years, for projects in emerging markets in ronmental degradation, and thereby also in Asia, the Middle East, Central and Eastern reducing cross-border pollution. The envi- Europe, Latin America as well as Africa. ronmental investment loans are granted on Project investment loans are usually the basis of commercial banking terms to granted on a sovereign basis but may also governments, governmental authorities, be granted without a government guaran- institutions and companies.

34 bulletin december 2001 interim report

January–August 2001

Increasing investments in energy sector The Nordic Investment Bank has good responding period last year. Within the tion of the large South West Wastewater results to report for the first eight months of Bank’s Nordic lending the energy sector Treatment Plant in St. Petersburg. the year. Net interest income came to eur has about one-third of all disbursements nib has approved a loan of usd 30 million 98 million as against eur 94 million for the during the period in question. During the for a project designed to modernise the corresponding period last year. Profits for period, nib financed several investments for nickel smelting works in Pechenga on the the period came to eur 88 million (85). Total bio-fuelled power stations and for the Kola peninsula. The project is part of an assets rose by 5 per cent, amounting to eur expansion of electricity transmission net- investment totalling about usd 93,5 mil- 14.5 billion at end-period, compared with works. Environmental investments in steel lion. Major contributions from Norway 13.8 billion at end-2000. Net liquidity at and metal production constitute the largest and Sweden will also support the financing period-end reached eur 3,421 million, com- recipient group within the manufacturing of the project. pared with eur 2,913 million at end-2000. industry, now nib’s second-largest sector. Much of nib’s borrowing programme Forty per cent of nib’s international loan STABLE PROFITS was carried out during the first eight disbursements went to the Baltic countries The quality of nib’s loan portfolio and that months of the year, as in the year 2000. and Central and Eastern Europe, and 27 of its financial counterparties continues to During this period, nib carried out new per cent to Asia. Several new lending pro- be maintained at a high and stable level. borrowing transactions in an amount grammes were also signed during the peri- During the period under review nib made equivalent to eur 1,889 million, compared od under review, including nib’s eighth one loan loss provision in the amount of with eur 1,288 million by the same time lending programme with China. eur 0.5 million, in respect of one loan. A last year. The pound sterling, Swedish kro- provision for anticipated loan losses, which nor, Japanese yen, and new Taiwanese dollar ENVIRONMENTAL COOPERATION nib made at end-2000, resulted during the were nib’s most important borrowing cur- A number of important environmental pro- first four months of 2001 in a realised loss, rencies. jects are currently in the planning stage or without any effect on profits. being carried out in northwestern Russia. The stable development in nib’s profits MORE LENDING TO THE ENERGY SECTOR The operational focus is primarily water and experienced during the first eight months of The demand for nib’s Nordic and interna- wastewater treatment projects in St. Peters- the year is expected to continue. tional loans was greater during the first burg and Kaliningrad. nib has been mandat- eight months of 2001 than during the cor- ed to lead the structuring and implementa-

loans outstanding total assets net interest income

InternationalInternationella NordicNordiska eur milj. eur millionmilj. eur million eur milj.million 10 000 15 000 150

8 000 12 000

100 6 000 9 000

4 000 6 000 50 2 000 3000

0 0 0 1997 1998 1999 8/2000 8/2001 1997 1998 1999 8/2000 8/2001 1997 1998 1999 2000 9/2000- 8/2001

bulletin december 2001 35 Bright future in fibre optic networks Iceland is constantly strengthen- ing its link with modern informa- tion society. Geographically isolat- ed, it is firmly committed to the very latest information technology. Efficient connections with the out- side world are essential and Ice- landers want to be part of the lat- est technical developments.

THE LINA.NET COMPANY’S investments in a fibre optic cable network has a vital part to play in increasing Iceland’s infrastruc- ture as a modern information society. nib has contributed isk 200 million to financ- ing fibre optic cables for the greater Reyk- javik area. Lina.net, established in 1999, builds and operates a carrier system for national and Fibre optic cables transmit signals faster over greater distances than copper wires. Each optic cable contains 96 fibre strands. international connections. It offers telecommunication services, mainly data transmission and permanent Internet con- Lina.net’s Managing Director, Eirikur nection over the powerline grid. Using the nections, in the capital and the largest Bragason, says the company most likely set broadband networks, households can sub- communities. a new world record by laying 150 km cable scribe to a variety of services, such as the Iceland has had a certain amount of fore- in only six weeks. Internet, music and video-on-demand. sight when it developed cable networks in Each cable contains 96 fibre threads or and around the capital. The spare capacity 48 pairs of lines. Signals travel through the EIRIKUR BRAGASON sees a bright future created when Reykjavik Energi laid new cables, efficiently and in large quantities, in ahead of the company, “Internet use is cable pipes for its power distribution net- the form of light beams. Fibre optic cables growing all the time. There is also a market work a few years ago can be used by have the same function as traditional cop- for other new services, and we want to be Lina.net today. The existing pipeline sys- per wires, but allow faster transmission able to offer customers what they want. tem is a great asset for the new venture, over longer distances. Our strength lies in a flexible organisation, enabling Lina.net to lay new lines and cre- speed and outsourcing. We can offer rapid ate a network of fibre optic cables for the LINA.NET’S MAIN CUSTOMERS are public installations through our subcontractors Reykjavik region in record time. The com- institutions, universities and hospitals. when the need arises, with systems of con- pany now operates the IP Metropolitan Lina.net offers three last mile solutions to sistently high quality.” Area Network, which partly uses the the fiber optical network, i.e. the conven- power distribution network as last mile tional fiber connection, connection over solution. the microwave network and also the con-

36 bulletin december 2001