SARAJEVO (Bosnia and Herzegovina), December 16 (SeeNews) – The European Bank for Reconstruction and Development (EBRD) plans to provide up to 200 million euro ($261 million) in new investments for projects in Bosnia next year, the head of the EBRD office in the country said.
“In addition, the EBRD will continue to closely cooperate with other international financial institutions and donors active in the country, such as the EIB [European Investment Bank], the EU, and SIDA [Swedish International Development Cooperation Agency] to ensure that grant financing is available to address affordability issues, particularly in infrastructure projects at the municipal level,” Libor Krkoska told SeeNews in an emailed interview.
The EBRD expects to focus its operations in Bosnia next year on three key areas – infrastructure, energy, and the private sector.
“In infrastructure we will continue to support upgrades of key transport routes throughout the country, putting emphasis on both efficient disbursement of already agreed loans, such as those for Corridor Vc, and on providing financing for not yet fully funded sections of key transport routes,” the official said.
In the energy sector, the lender will aim at increased energy efficiency, financing of renewable energy sources (RES) such as hydro power plants, and rehabilitation and expansion of existing distribution and transmission assets.
The final energy intensity in Bosnia and Herzegovina is almost twice as much as in Croatia and more than three times as much as in Austria, Krkoska said. “The largest potential in terms of energy efficiency improvements is in the built environment, with the largest scope for improvements in the residential, commercial and industrial sectors.”
In Bosnia’s private sector, EBRD will focus on supporting, directly or through credit lines to local banks, small and medium enterprises, and offering assistance for their investments to improve energy efficiency and to increase their export potential. It will also back the expansion of large local enterprises and the entry of new investors on the market. In addition, Krkoska said the bank is prepared to support any of the remaining large scale privatisations in the country.
The EBRD is ready to provide assistance to Bosnia for effective utilisation of its natural resources and competitive advantages, the official noted.
“Both the energy sector and wood processing are areas where the country has great potential to create new jobs and establish strong, financially viable enterprises focused on exports. The EBRD will, of course, ensure that all the projects it finances are implemented in accordance with best international standards including environmental and social standards.”
In November, Bosnia’s Serb Republic said it has issued an environmental permit for the planned Ulog hydro power plant to UK-based energy firm EFT, which has applied for EBRD financing.
The Republic, which makes up Bosnia together with the Muslim-Croat Federation, signed a 30-year concession contract with EFT for the construction of Ulog at the end of 2009. The Ulog power plant, to be sited on the Neretva river, will have a capacity of 35 megawatts and an average annual output of 86 gigawatthours, the Republic said at the time. The construction works are expected to take four years.
Krkoska said the project is at an early stage of preparation and has just passed the first stage of EBRD's approval process. “The bank is presently working on its due diligence for the project which will include all aspects of the project, including technical, economical, environmental and social."
The official noted the significant reform progress in the energy sector in both the Republic and the Federation in terms of laying out a feed-in tariff policy for renewable energy sources.
“In the Federation the relevant energy ministry is developing the whole set of required energy laws, including the electricity law, the RES law, the energy efficiency law, and the gas and oil law, all of which should be covered by an umbrella energy law,” Krkoska said.
The EBRD expects all those laws to be finalised by the middle of next year. There is a parallel process and efforts for the opening up of the market and all consumers except residential will be gradually moved to the market by 2015. There is also an ongoing process in developing a new concession law which should allow easier entrance of private investors and more efficient banks involvement into the process.
In the Serb Republic, the energy, electricity, gas and oil laws have already been adopted and the energy ministry is planning to develop RES and energy efficiency laws.
“As in the Federation, there is also an ongoing process for the development of a new concession law that should allow easier entrance of private investors and more efficient bank involvement into the process. The situation with the electricity market opening is similar to the Federation and in that context the Republic plans to open the market for all participants - except residential, next year.”
The EBRD is following the process closely and is ready to provide support to both the authorities and the investors in the implementation of the reforms outlined above. The bank expects the reforms to facilitate much higher volume of investments in the sector in the near future and is ready to provide necessary financing to strategic investors.
In Krkoska’s view, the RES with the strongest potential in Bosnia and Herzegovina are hydro and wind.
“Although many concessions have been awarded in the last few years for hydro power plants, very little new capacity has been installed so far. We believe that recent reforms and significantly improved regulatory framework will help the development of both new generating capacity and a RES industry for construction and maintenance of power plants in Bosnia.”
($=0.7669 euro)
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