BUSINESS

EUR 400 M EIB loan to Ford signed, guaranteed by Romanian Gov’t

Finance Minister Sebastian Vladescu expressed his hope that the loan will allow the US carmaker to manufacture 250,000 cars a year in under 18 months.

Romanian and European Investment Bank (EIB) officials signed a guarantee agreement for a EUR 400 million loan yesterday, to Ford Romania for the expansion and refurbishment of the company’s existing car assembly plant located in Craiova. Under the agreement, Romania will guarantee 80 per cent (or EUR 320 million) of the loan. The guarantee is granted for a period of five years and the risk commission was set at 2 pc a year.


“We hope that by guaranteeing the loan we can further stimulate Ford’s plant in Craiova and the company’s investment in Romania,” Prime Minister Emil Boc said during the signing ceremony.


The EIB loan will finance investments in the Craiova Ford plant for the facilities and tooling needed for the production of a new B-segment vehicle with a start of production in the near future and  production of the existing model of the light commercial vehicle and a new model scheduled to be launched later. EIB funds will also help to introduce the production of a new small, advanced-technology petrol engine with low fuel consumption. It is envisaged that expanded production capacity will represent an annual output of up to 300,000 vehicles and 300,000 engines.


The EIB has also approved – in principle – a loan of EUR 200 million that will finance research, development and innovation towards the development of vehicles and engines to be produced in the Craiova plant. However, these activities will be carried out in Ford’s facilities located mainly in Germany, a press release informs.


“EIB funds, together with the Romanian State support, provided on favourable terms at a time of difficult market conditions, will both help the Romanian economy to better face the consequences of the current economic crisis and contribute to the production of more environmentally friendly cars. Automotive sector is a priority of the EIB in this respect: in 2009 the Bank loans for this sector amounting to EUR 8.2 billion,” EIB Vice-President Matthias Kollatz Ahnen, responsible for lending in Romania, stated.


In his turn, Wolfgang Schneider, Vice President, Governmental and Legal Affairs, Ford of Europe said: “The loan will help to assist in the plant’s ongoing transformation into a world-class manufacturing facility for vehicles and engines. Our guiding principle is that products built in Craiova deliver what customers expect from us: great products offering environmentally-advanced technologies at affordable prices.”


Finance Minister Sebastian Vladescu expressed his hope that the EIB loan will allow Ford to manufacture 250,000 cars a year in under 18 months.


“I hope to see Ford producing 250,000 vehicles annually in Romania, which would mean a major contribution to the Gross Domestic Product and exports. I think we should consider that 18 months from now,” said Vladescu after signing the loan provision agreement


According to the Ford representative they have already begun the production of light commercial vehicles at Craiova, and will soon start to roll out a small vehicle, without other details.


Financing line to overhaul the Paroseni power plant


The European Investment Bank (EIB) will provide, in the coming weeks, a loan guaranteed by the Romanian state, aimed at overhauling the Paroseni power plant, EIB vice-president Matthias Ahnen told Mediafax on Thursday. According to the source, in the near future the Bank will focus on financing projects in the energy sector, like the wind farm in Fantanele. “If Romania wants to achieve post-crisis economic growth, it is important to have an improved energy sector, and we understand to be a partner in these modernization projects,” the bank official added.


A notification posted last September on the EIB internet site indicated that the institution might co-finance with EUR 40 M a project of overhauling generator no. 4 of the Paroseni power plant, initiated by Termoelectrica, upon a total investment estimated at EUR 80 M. The project refers to a green investment at the co-generation group 4 of Paroseni, composed of a gas de-sulphuring installation and a transport and storage system for ash and slag.

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