The Castor Underground Natural Gas Storage (UGS) facility, located in Vinaròs in Spain, is operated by the company Escal UGS and financed by the EIB Project Bond Initiative. In 2013, the storage facility triggered more than 500 earthquakes. As a result all operations were stopped.
Taking into account that:
(a) Spanish Royal Decree-Law 13/2014 provides for a compensation regime for ESCAL UGS of EUR 1.3 billion; and
(b) ‘Under the terms of the On Loan Agreement, the Borrower: […] must prepay Tranche A of the On Loan in full in certain circumstances, including upon failure by the Borrower to achieve Project Start-up before the Project Start-up Deadline’(1).
1. How will the agreed relinquishment affect repayments of the EIB’s EUR 300 million participation? What amounts will be received, when and under what conditions?
2. Will the EUR 200 million ‘Project Bond Credit Enhancement’ from the EIB be used to supplement the termination payments? If so, what amounts will be paid, when, and under what conditions?
3. Will EU funds be used to pay for the obligations which result from the obligation clause?