Faro Council has approved the cancellation of an unused €16.42 million bank loan and is moving ahead with a new financing package worth almost €14 million for five municipal projects.
The proposal was approved at Monday’s council meeting with the votes of the four Socialist councillors, while the three PSD councillors abstained.
It marks a change from September 21, when an earlier version of the proposal was rejected. The revised package now includes the Pontes de Marchil roundabout, alongside the Faro-Olhão coastal ecovia, redevelopment of Bairro Ribeirinho and Largo Francisco Sá Carneiro, and expansion of Penha football ground.
The new loan must still receive prior approval from the Faro Municipal Assembly, the council explains in a statement to the press.
The loan now being terminated dates back to 2023 and was intended to finance four major projects: the redevelopment of Faro’s downtown central axis (€3.3 million), extension of the Porta Nova port infrastructure (€8.5 million), the Pontes de Marchil roundabout (€2.4 million) and the Faro-Olhão section of the Ecovia do Litoral (€2.22 million).
Those figures totalled €16.42 million, as recorded when the financing was originally approved.
The Court of Auditors approved the loan on February 9, 2024, giving the municipality until February 9, 2027 to use the funds.
However, Faro Council says none of the money was ultimately drawn down, as the projects were not sufficiently advanced.
Both the downtown redevelopment and Pontes de Marchil roundabout required corrections to their designs, while the Porta Nova port extension was unable to meet the conditions imposed in external opinions.
The Faro-Olhão ecovia had progressed to public procurement and market consultation, but the tender attracted no bids. The municipality also says it had not yet secured all of the land parcels needed for the route.
With no financial execution and the projects still at different stages of preparation, the council concluded there was no justification for keeping the original loan active, it says.
New projects, new financing
Faro now intends to seek medium- and long-term borrowing of nearly €14 million, with some of the projects having since reached a more advanced stage and their costs updated to reflect price revisions.
The package presented by the municipality includes approximately €3.06 million for the Pontes de Marchil roundabout, €3.95 million for the Faro-Olhão ecovia, €5.18 million for the urban redevelopment of Bairro Ribeirinho, €768,306 for Largo Francisco Sá Carneiro and just over €1.01 million for expanding Penha football ground.
The biggest single investment would therefore be Bairro Ribeirinho, accounting for more than a third of the planned borrowing.
The new financing proposal will now be sent to the Municipal Assembly for approval before the council can proceed with taking out the loan.