Israel stands to get up to €900 million worth of investment in the form of funds and loans from the lending arm of the European Union, to help finance a renewable energy-powered desalination plant in the Western Galilee and the Tel Aviv rail project as well as climate-focused business projects.
The European Investment Bank (EIB), the financial arm of the European Union, announced Sunday that it will invest €150 million into a seawater desalination facility planned for the Western Galilee. The project, Israel’s seventh such desalination plant, is estimated to cost about NIS 1.5 billion to build.
The world’s largest international public bank has also entered into a strategic cooperation agreement with Bank Leumi for the provision of a €500 million credit line to small and medium-sized companies across Israel, to encourage new investment in green and environmental business projects. In addition, the EIB is in the advanced stages of an appraisal to project finance the Tel Aviv green line light rail with an investment of €250 million.
“Whenever I travel within the region, whether it is to Israel and or in the Middle East, I always say that water is life,” Gelsomina Vigliotti, vice president of the European Investment Bank responsible for the Middle East, told The Times of Israel. “Access to water is relevant, especially at a time in which water scarcity is becoming an even more pressing urgency.”
“Developing a tech project, like the Western Galilee desalination project here in Israel, is not only a way to share expertise, but also to learn and make use of these best practices that we can develop through being involved in such relevant projects to also use this practice in another part of the region,” Vigliotti added.
Vigliotti on Sunday embarked on a four-day visit to Tel Aviv, Jerusalem and Ramallah to announce and outline details of the EU lending arm’s plans to finance climate-related projects in the areas of water management, clean transport and renewable energy.
During her visit in Israel, Vigliotti will meet with President Isaac Herzog to discuss climate and energy issues and host a climate finance symposium at the Tel Aviv University with banking and business executives.
The EIB, active in 160 countries, is the world’s largest international public bank and is owned by the 27 European Union member states, which together provide the financing to fund projects. In Israel, the EIB has been active since 1981 investing about €2.3 billion to co-finance a total of 28 projects.
The Western Galilee project will be the fifth Israeli desalination plant the EIB has invested in. IDE Technologies in November won the tender to construct and operate the facility, which is expected to produce 100 million cubic meters of desalinated water annually to secure the supply to Haifa, the Western Galilee and Upper Galilee regions.
Water from the Western Galilee plant will bring total production from desalination plants in Israel to almost 900 million cubic meters per year, accounting for nearly 90% of total household and industrial freshwater consumption in the economy. The 1.5 billion shekel project is expected to be completed in 2025, according to IDI’s website.
“The financing of the Western Galilee desalination is particularly important to us because it will be the first desalination plant which will be powered through clean energy, and at the EIB in 2019 we took a very bold decision not to finance fossil fuel projects anymore,” said Vigliotti. “In this regard, pushing tech solutions which can enhance the use of renewable energies in particular in a very energy-consuming product like desalination is very important.”
During her Israel visit, Vigliotto will also be discussing the proposed €250 million project loan financing for the planned Tel Aviv green light rail that connects central Israel from Holon and Rishon Lezion in the south through Tel Aviv and north to Herzliya. The project is part of a greater transportation investment plan to address growing mobility demand and reduce traffic congestion.
“Contributing to a project like this would be particularly relevant for lowering traffic congestion through a sustainable infrastructure,” remarked Vigliotti. “Sustainable infrastructure and supporting green mobility within cities is one of our objectives, not only outside of the European Union but also within the European Union.”
In Ramallah, Vigliotti is this week scheduled to meet with Palestinian officials as well as the CEOs of the Palestine Investment Bank and of Vitas microfinance, which provides lending and financial services to small enterprises.
In May last year, the EIB officially opened its first office covering the West Bank and Gaza, located in Jerusalem, and announced €215 million in support for Palestinian business investment.
During this week’s visit, the EIB delegation led by Vigliotti is expected to announce a set of portfolio guarantees with the Palestine Investment Bank, for Palestinian entrepreneurs and smaller companies to have access to finance and strengthen lending activities by local financial institutions.
“We strongly believe in the role of financial inclusion, and the guarantees will provide support to the financial institution to provide additional financing to those who are more constrained to access finance,” said Vigliotti.
Vigliotti said that the meetings in Ramallah will also focus on advancing climate-related projects especially in the area of wastewater management.
“Overall, we are very keen to look at and contribute to regional coordination, to the regional dialogue, and we strongly believe that climate can be an important part of the geopolitical diplomacy in the area,” said Vigliotti. “There are many cross-border projects which could be developed to the benefit of the whole region.”