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European Investment Bank signs EUR 150 million loan agreement for Turku City

The targets of the financing agreement will be, among others, day care centres and schools in the city, infrastructure investments, cultural attractions, traffic and social housing construction.


EIB turku Finland
Updated: 29-01-2019 13:32 IST
European Investment Bank signs EUR 150 million loan agreement for Turku City

The targets of the financing agreement will be, among others, day care centres and schools in the city, infrastructure investments, cultural attractions, traffic and social housing construction. Image Credit: Pixabay

The City of Turku has signed a loan agreement with the European Investment Bank (EIB) for EUR 150 million. The investments under the agreement will take place over the 2017-2022 period and include both renovations and new targets.

The agreement was signed yesterday by EIB Vice-President Alexander Stubb and Mayor of the City of Turku Minna Arve.

The targets of the financing agreement will be, among others, day care centres and schools in the city, infrastructure investments, cultural attractions, traffic and social housing construction. The principle is that the EIB will finance a maximum of 50% of the investments.

"Turku is one of Finland's leading cities when it comes to facing the future with a carbon neutral approach," said EIB Vice-President Alexander Stubb. "This financing will enable the City of Turku to invest in the well-being of its citizens and provide them with high-quality public services. This is perfectly in line with the Bank's mission statement, which is to improve people's lives through the projects we support."

"Turku's objective is to be a carbon neutral by 2029 when the city will be 800 years old. The financing of the European Investment Bank focuses, for example, on improving the energy efficiency of buildings, and is a significant contribution to helping us achieve our climate goal," said Mayor of the City of Turku Minna Arve.

Energy efficiency of investments: a central criterion

When the financing agreement was negotiated, the focal points were the EIB's requirements regarding the energy efficiency of the targets, their climate effects (climate action) and the social dimension. Both the various units of the city and the subsidiaries helped to provide background information about these targets.

The City of Turku and its associated companies already invest heavily in their buildings and infrastructure every year. These investments are of great importance in terms of decreasing greenhouse gas emissions. Under the climate plan accepted by the city council in June 2018, energy consumption and its emissions effects during the life cycle of investments are emphasised more strongly than before.

"Tackling climate change requires forerunners, and the municipal sector has a central role in solving the global climate challenge. This means that Turku's good climate targets and measures also have a wider significance," said Risto Veivo, Development Manager, Climate, City of Turku.

Withdrawal of loan instalments over three years

In autumn 2018, the EIB accepted total investments of EUR 333.84 million from the City of Turku group as objects of financing. According to the financing agreement, Turku can withdraw a maximum of five loan instalments over three years from the signing of the agreement. Interest and repayment structures can be agreed separately for each instalment. The maximum loan period is 25 years, including an instalment-free period of up to five years.

"The financing package with its investments will help the City of Turku group to improve services, giving us tools for sustainable construction. In addition, the financing agreement has very beneficial conditions," said Financial Manager of the City of Turku Kari Pentti, who was responsible for the preparation.

It is likely that the city will withdraw the whole sum of the financial agreement over the three years between 2019 and 2021. Separate decisions will be made on loan withdrawals. The signing of the financing agreement itself does not result in any costs or obligations for the city.

COUNTRY : Finland

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