Digital Single Market
Digital Economy & Society

Action 119: Pilot project to test project bonds for broadband deployment

Article

A legal framework for the "Europe 2020 Project Bond Initiative" was created by Regulation (EU) No 670/2012 of the European Parliament and of the Council amending Decision No 1639/2006/EC establishing a Competitiveness and Innovation Framework Programme (2007-2013), and Regulation (EC) No 680/2007 laying down general rules for the granting of Community financial aid in the field of the trans-European transport and energy networks, adopted on 11 July 2012. This action will also be followed up in the framework of the CEF.

What is the problem?

Debt capital market financing is not readily available for ICT infrastructure projects in the Union. The difficulties for infrastructure projects in gaining access to long-term private finance or public funding contribute to the slowing down of broadband penetration.

Why is EU action required?

Due to the fragmentation of the bond markets across the Union, combined with unknown demand as well as the size and complexity of infrastructure projects which require long lead times for project preparation, it is appropriate to address this issue at Union level.

What has the Commission done so far?

A legal framework for "Europe 2020 Project Bond Initiative" has been created by Regulation (EU) No 670/2012 of the European Parliament and of the Council amending Decision No 1639/2006/EC establishing a Competitiveness and Innovation Framework Programme (2007-2013), and Regulation (EC) No 680/2007 laying down general rules for the granting of Community financial aid in the field of the trans-European transport and energy networks, adopted on 11 July 2012.

The Regulation provides for the redeployment of EUR 20 million from the budget of the Competitiveness and Innovation Framework Programme for ICT and broadband Policy.

Following the adoption of the Regulation, the Commission concluded a cooperation agreement with the European Investment Bank (EIB), which is a risk-sharing partner and will manage the Union contribution to the risk-sharing instrument for project bonds on behalf of the Union.

What will the Commission do next?

On the basis of a pipeline schedule of identified projects which may be potentially funded under the initiative provided by the EIB, the Commission will contribute up to EUR 20 million towards risk provisioning on a first-loss basis for the subordinated facilities of the eligible project portfolio. The Union contribution to the risk-sharing instrument for project bonds has been committed, and the EIB is currently assessing candidate projects.

The Commission and the EIB shall submit an interim report to the European Parliament and the Council with a view to optimising the design of that instrument and will conduct a full-scale independent evaluation in 2015 - the interim report is currently in ISC.

Less digging = more broadband. What does this mean for …

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