Most of the projects under evaluation could have been financed in full by commercial funders, albeit at higher cost. However, EIB involvement in a project does not normally create conflict with commercial funders:
• They still get business from guaranteeing the EIB's loan until after completion of construction, and sometimes throughout the life of the loan;
• EIB's assumption of risk on guarantee release, or refinancing, cuts down the average life of commercial banks' commitments, which is desirable from their point if view. Commercial banks normally prefer not to be long-term lenders;
• Commercial bank involvement would probably be based on a syndication anyway;
• The commercial banks get ancillary business, such as the interest rate swaps;
• There is a validation effect in the EIB's presence.
None of the commercial banks contacted during the Evaluation raised any objection to the EIB's presence, and some of them particularly drew attention to the benefit of the Bank's validation of projects, contribution to negotiations (cf. 5.4), and thereafter during the on-going monitoring of the operation.
Several Member States are now beginning to use public sector funding for PPP projects, in effect adding to what the EIB is already doing in this field, e.g. the U.K. Treasury's "Credit Guarantee Finance". These are public-sector loans to PPPs, guaranteed by commercial banks or insurance companies, and are an obvious parallel with the EIB's role. Similarly, there is the provision of funding for PPPs by Infrastrutture SpA in Italy. This approach lowers total costs and is something that Providers have also been looking for in other countries, e.g. Germany.
Competitive tension amongst bidders should ensure that the EIB's cost benefit is fed through to the Promoter's end-cost, provided EIB funding terms are made available to bidders before they submit their final offers. This appears to have been the case in the majority of the projects evaluated, although, as discussed in §5.2, there may be a case for a higher level of EIB credit approval at the final bid stage of procurement to ensure that bidders make best use of EIB funding and fully reflect its terms. In the projects evaluated where the Bank came into after the appointment of the preferred bidder, it was clear that the benefit from lower EIB funding costs was retained by the Provider and/or intermediary bank.