An east European initiative seeking to boost infrastructure, and lauded by U.S. President Donald Trump as a way of curbing dependence on Russian energy supplies, is moving closer to gaining financing.
The state development bank of Poland, a country that helped create the Three Seas Initiative in 2015, is close to picking an asset manager for the group’s planned 5 billion euro ($5.7 billion) fund, its deputy chief executive officer told Bloomberg.
The project, which aims to strengthen trade, energy and political co-operation among 12 European Union nations located between the Adriatic, Baltic and Black Seas, has so far largely been a political talk shop without cash to support investments.
Poland is eager to expand Europe’s gas pipeline infrastructure with help from the Three Seas Initiative. There have been discussions at Three Seas summits about boosting links between the gas grids of member states, including a project for a north-south pipeline that would connect the region to a planned LNG plant off Croatia’s Adriatic coast.
“The asset manager will be independent within the fund’s geographical mandate and focus on projects supporting interconnectivity in the region,” Pawel Nierada, deputy CEO of Bank Gospodarstwa Krajowego, said at the lender’s headquarters in Warsaw last week. “The fund will be free to invest broadly: in equity and other instruments, perhaps without guarantees.”
BGK plans to inject 500 million euros into the fund and become one of its core partners, alongside other development banks from the region.
In its endeavor to pick an asset manager for the vehicle, the lender has reached out to more than 10 global infrastructure and private equity funds and plans to shortlist two or three by the middle of March, Nierada said. The chosen party will be tasked with topping the fund up with private investor money to reach the 5 billion euro target, and then manage it.
When attending a meeting of the Three Seas Initiative in Warsaw in 2017, Trump said that the U.S. can sign a gas supply deal “in 15 minutes” if needed, vowing that eastern Europe should never be “held hostage” to a single supplier. The group’s members include Austria, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.
The fund could also invest in non-energy projects, such as Slovenia’s Koper port on the Adriatic, as one of the shortest routes into the EU for goods travelling from Asia via the Suez Canal, Nierada said.
“We want to level the playing field between new and old EU countries,” he said. “There are a lot of projects that haven’t been carried out and they would increase the potential of the EU as whole.”