Brussels: The head of the European Investment Bank says that private investors are discouraged from putting money into major European Union infrastructure projects because of red tape and lack of budgetary reform.
Werner Hoyer said on Monday that when he asks potential investors what is scaring them off “they come with regulation, and they come with bureaucracy”.
The EIB is providing seed capital for the EU’s new €315 billion ($356 billion) investment fund, which will provide loans for higher risk strategic projects like energy networks or broadband internet. Hoyer said seed capital won’t be enough if the plans are “not accompanied by ambitious reform processes”, notably budget reforms in the EU and its member countries.
The fund is set for official launch in September. Hoyer said that private capital is a key to restoring growth and employment in the EU.
“Most of the money to overcome the investment gap and the innovation gap must come from private capital. It is pivotal,” he said.
The EIB has begun vetting a list of some 2,000 potential projects, worth more than €1.3 trillion, which could be developed over the next three years. Those that were put on the list because they couldn’t get funding elsewhere are likely to be rejected.
The priority is being given to projects that are of high quality and shorter-term.
“We need projects which are going to be visible soon,” Hoyer said.
Some private sector companies in research and development have been reluctant to take part due to the public listing of the projects. A number don’t want financing arrangements revealed, while others are concerned about patents or protecting trade secrets.
A few companies fear they might struggle to get funding elsewhere if the EIB rejects their project.
