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Bank of Ireland and the European Investment Bank (EIB) announced on Wednesday 30 April 2014 that they have financed a Public Private Partnership (PPP) project to construct the new N17/N18 road between Gort and Tuam in County Galway.
Contracts were signed on Wednesday, construction will start later this year and the road is expected to be completed during 2017. The Bank is part of a group of funders who are providing over €300 million of debt for the project.
The European Investment Bank is providing €144 million over 26 years for the scheme. The overall cost of the scheme is estimated at €550 million.
The contracts have been awarded to the Direct Route consortium and the roads will be constructed and operated by a group of leading Irish contractors - John Sisk & Son, Roadbridge and Lagan alongside Strabag, a major Austrian contractor.
Other shareholders in the Direct Route consortium include two large European infrastructure investment funds - Marguerite and HICL Infrastructure Company Ltd.
The N17/N18 Gort to Tuam PPP Project, a 57 km stretch of motorway standard dual carriageway, forms an important part of the Atlantic road corridor. It is a strategic component of the national primary route network providing high quality north-south linkage in the western region. The project is a significant development, enhancing not only road safety but also increasing capacity, reducing journey times and thereby benefitting trade and commerce along the route.
Donal Murphy, Director, Project Finance, Bank of Ireland Corporate Banking said:
"Bank of Ireland's funding commitment to the Irish infrastructure market since 2008 is now well over €500m and we are recognised as the leading project finance team in the Irish market. This transaction is another very important milestone for the Irish infrastructure market in that it demonstrates that privately financed projects can continue to be delivered. Of real significance is the presence of two major European banks alongside ourselves and the EIB. For some time Irish infrastructure projects were not attractive to overseas funders due to the perceived risks associated with the Irish economy. This significant commitment from overseas banks signals growing international confidence in Ireland. Bank of Ireland is proud to bring our local experience and expertise to this international funding group. We believe the return of international funders to the market augers well for the financing of the Governments programme of PPP projects across the Roads, Schools, Healthcare and Justice sectors".
Commenting Tom Hayes, Chief Executive, Bank of Ireland Corporate Banking said:
"This transaction highlights Bank of Ireland's commitment to supporting Ireland's recovery. As the leading financier of infrastructure projects in the Irish market we look forward to continuing to play a key role in funding critically important infrastructure projects like the N17/N18".
Jonathan Taylor, European Investment Bank Vice President said:
"The European Investment Bank is pleased to support this new investment in Ireland's road network. This will not only improve transport links in the west of Ireland, but also directly benefit the construction sector with hundreds of new jobs. The M17 project represents the European Investment Bank's third engagement to support PPP projects since 2010. We welcome leading European commercial investors' participation in the project. This shows that the Irish PPP market, with transitional assistance from the EIB, has once again become attractive to international investors. The European Investment Bank looks forward to supporting Ireland through similar engagement in the future."