When the Nordic Investment Bank (NIB) was established 45 years ago, the idea was to create a pan-Nordic financial institution which could help the region to flourish economically. The driver was the Nordic interest. It was seen as important to create an institution which could efficiently raise capital and finance important investment projects across the borders.
Since starting operations in 1976, the Bank’s investments in the region have amounted to more than EUR 65 billion. During this period, we have had more than 1,100 customers and we have financed more than 2,200 projects.
Whereas the original purpose of the Bank was built on an economic pillar, environmental analysis became an integral part of financing decisions already at the beginning of the 1990s. Since 2006, both economic and environmental pillars have been similarly important when assessing projects for financing.
Arctic is on the NIB radar
To highlight the importance of the Arctic region, the Bank established an Arctic Lending Facility in 2015. Earlier, the Bank has used such facilities to fight the pollution of the Baltic Sea as well as for climate finance.
When the Bank looks at projects in the Arctic region, it does so from an angle derived from its vision to work for a prosperous and sustainable Nordic-Baltic region. Arctic projects go through the same mandate analysis as other projects. Naturally, the Bank’s Sustainability Policy also applies to Arctic projects.
In the Arctic, NIB has been financing infrastructure projects that benefit local economic activity in the territory and NIB is increasingly focusing on the environmental and sustainability aspects of its investments. NIB recognises that the risk of degradation of ecosystems is high in the region, and we need to protect the environment and avoid mistakes made in the past elsewhere.
The year 2021 provides us with a good example of what kinds of projects we finance in the Arctic.
Financing power network in the Norwegian Arctic
In Norway, we signed a seven-year loan with the Norwegian grid operator and electricity distributor Arva AS to upgrade the power network and enhance its security of supply in the Arctic region. The NOK 400 million (EUR 40 million) loan will not only allow Arva to build new power lines, cables, and sub-stations, but also refurbish the current grid solutions. The investments will enable electrification of the region and address current grid constraints by enhancing the security of supply. There is a growing demand for a reliable electricity system in Northern Norway, especially with ports, fishing industries, and in the charging infrastructure for vehicles. The electrification of the region will replace diesel-generated electricity, which will phase out a significant amount of carbon emissions caused producing it.
Investing in the maritime port of Ajos in Northern Finland
In Finland, we signed a 13-year loan with Kemin Satama Oy to finance the deepening of the port of Ajos from 10 to 12 metres, including fairway and basin dredging. The EUR 21 million loan will also help finance the building of a new 400-metre quay, as well as investing in the harbour infrastructure, including technology from ship electrification to sewage, and the digitalisation of the harbour. The Port of Ajos is important for the Finnish forest industry and for the northern parts of Finland in general.
…and a spaceport in Kiruna, Northern Sweden
Sweden provides a different kind of example of Arctic financing. Last year, NIB and the Swedish Space Corporation (SSC) signed a EUR 12 million loan agreement for the final construction of a new spaceport in the Esrange Space Center in Kiruna, northern Sweden. The 12-year maturity loan will finance the investments to enable the use of reusable rockets and the basic ability to launch small satellites into orbit as early as 2022. The new capacities will be integrated into existing Esrange operations for sounding rockets, stratospheric balloons, advanced test operations and satellite communications. The space industry estimates that the use of satellites worldwide will grow from approximately 4,000 today to more than 10,000 over the next five to ten years. Currently, there is no site for satellite launching from continental Europe, so this project means that Sweden will become a launching state, a goal which NIB gladly supports.
Supporting SMEs in Greenland and FaroesAmong the last Arctic loans signed last year was one between NIB and the Faroese BankNordik. This DKK 300 million (EUR 40.3 million) loan agreement was aimed at on-lending to small and medium-sized enterprises and small mid-caps as well as environmental projects in the Faroe Islands and Greenland.
Altogether, these signings are worth more than EUR 110 million and are allocated to different countries and to various sectors. To the external world, the signings signal what kind of projects we would be interested in financing at NIB to contribute to a prosperous and sustainable Arctic region.
Cover photo: Aerial view of the port of Kemi. Copyright: Port of Kemi
- Jukka Ahonen is Head of Communications at the Nordic Investment Bank (NIB)
- NIB is a multilateral financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor’s and Moody’s.