EIB Transport Project Appraisal

Its aim is to use its financing operations in order to facilitate integration among the European member states as well as social cohesion. This is a financial institution that is owned publicly. The broad policy goals are set by the member states. The member states also oversee the board of directors and board of governors, which form the two basic and independent decision making bodies. Its headquarters are in Luxembourg (Pinder, et. Evidently, this has improved the mobility of people besides curbing the negative effects of transportation on the environment. The investments of EIB are supposed to follow the priorities set by the European Union in relation to the transport sector. These priorities were mainly set up in the White Paper “European Transport Policy for 2010-Time to Decide”.

These priorities were viewed as the most vital to the environment. The White paper clearly gives priority to the modes of transport with the least external cost, that is, the public transport system in the urban areas and rail transport. In the urban public transport, the metro systems were allocated 62% while the other 38% went to the remaining means of transport. The air transport was not left behind. More than half of the financial aid was assigned hub airport that is, 54% while the remaining 46% was assigned national and regional airports. 41% of the financing went to 35 high-speed rail modes of transport. The remaining 59% went to the normal rail transport system. This has resulted to increase in efforts so as to increase traffic with the aim of increasing income, thereby promoting the growth of traffic.

Shifting the balance between modes of transport is also one of the objectives of European Investment Bank. It is important to note that EIB has provided more financial support to road transports more than public transport. This also posits that the bank has not given many contributions to the growth and development as well as the progress of urban public and rail transport. The TEN-T programme entails many rail projects as compared to other modes (Thomson, & Yescombe, 2005 p359). For the projects to be fully implemented, the European Investment Bank has the mandate of undertaking both financial and economic appraisals. Financial appraisal’s importance is the identification of various expenditures as well as revenues during the time that the transport project will be undertaken.

Subsequently, the project will be subject to assessment on its ability to ensure financial sustainability and a satisfying return rate is achieved. Financial appraisal, therefore, entails the difference between the revenues and expenditures during the period they are incurred. Therefore, financial appraisals entail; revenues and expenditures as well as financial profitability. The financial sustainability of a project is then recorded in consideration of indicators such as the financial internal rate of return (FRR). Economic Appraisal The estimates of the value of a project do not necessarily come from the indicators of financial profitability. It is vital to note that the European Union focus on the perspectives of the investors. However, under situations where there is a coincidence of interests, financial appraisals can be used in the assessment of the viability of a given project.

The economic benefits in the transport sector involve; the amount of time used when moving from one place to another, the cost of vehicle operation, curbing accidents such that they are either reduced or prevented and the benefits incurred by the environment as a result of reduced emission of carbon iv oxide. EIB is confident in its financial support to these modes of transport since they are eco-friendly and contribute little to the greenhouse effect. The bank should prioritise the adoption of maintenance and safety improvements especially in the road sector where accidents have been prone. There should also be improved efforts towards supporting projects that are related to improving transport in the member countries. (b) Process-related recommendations The European Investment Bank ought to prepare by conducting public consultation, transport sector operation policy of its own.