The European Bank for Reconstruction and Development (EBRD) is offering a loan of €15m to the Republika Srpska's ZP Elektrokrajina A.D. Banja Luka, the state-owned power distribution company to strengthen its resiliency.
The financing will be the first non-sovereign loan to a publicly owned power company in the Republika Srpska.
The funds will be divided into two parallel tranches, with the EBRD providing up to €7.5m and the Green Energy Special Fund (GESF) contributing the same amount.
The GESF is a special fund established and managed by the EBRD with the contribution of the Taiwanese International Cooperation and Development Fund (TaiwanICDF) to support EBRD projects related to investments in green energy technologies.
Along with resilience, building sustainable and energy efficient – green – economies is one of the EBRD’s priorities. The Bank’s new transition concept argues that a well-functioning market economy should be competitive, well-governed, green, inclusive, resilient and integrated.
Under its Green Economy Transition approach the EBRD aims to raise the level of its environmental investment to 40 per cent of its total financing by 2020.
In line with this initiative the loan will enable ZP Elektrokrajina to improve the reliability of power supply, strengthen the distribution network in order to enhance the integration of renewable sources of energy and reduce technical and commercial losses. This alone is expected to translate into a savings of about 63,000 tonnes of CO2 emission savings per year.
The loan is supported with Technical Cooperation funds provided by the Austrian Programme Account DRIVE (Delivering Resource Efficiency Investments in the Western Balkans and Turkey), while additional support will be extended by the EBRD Shareholder Special Fund.
EBRD in Bosnia and Herzegovina head Ian Brown said: “This is a pioneering agreement and we are very pleased to be able to sign it today. The provision of our first non-sovereign loan in the Republika Srpska is testament to our belief in its economic potential.
"At the same time the loan addresses one of the core issues by supporting a more efficient and stable system of power distribution which will benefit commercial and private customers as well as the environment.”
Taiwanese authorities representative Tao Wen-lung said: “The idea of the Green Energy Special Fund was developed during my tenure at the TaiwanICDF, where I was oversaw the whole process and signed off on the final commitment of $80m.
"The current project is a great start towards achieving across-the-board efficient energy usage and the development of the green economy, and we hope to see more collaboration going forward.”
Elektrokrajina general manager Seka Kuzmanovic said: "We are pleased that we have signed this loan agreement with the EBRD for modernisation of a part of the power distribution network.
"The project envisages reconstruction of the network and the installation of digital meters with remote reading of consumption for 30,000 customers within the next three years. The benefits are reflected in the planned reduction of distribution losses and operating costs, while customers will have a more reliable supply of electricity.”
Since the beginning of its operations in Bosnia and Herzegovina, the EBRD has invested more than €2b in 137 projects in the country.
The EBRD’s strategic priorities for the period 2016-18 for its countries of operations include re-energising growth, strengthening regional integration and addressing global challenges.