OREANDA-NEWS. The EBRD is strengthening the capacity of Bosnia and Herzegovina (BiH) as a major player in the renewable energy sector with a €35 million, non-sovereign loan to Elektroprivreda Bosne i Hercegovine (EPBiH), the largest power and energy utility in the country.

Of these funds, one tranche in the amount of up to €9 million will be invested in the rehabilitation of the Una hydro power plant, located near the municipality of Bihac. The plant currently has an installed capacity of 9.4MW. The rehabilitation programme will include the installation of an additional 6.4MW turbine, increasing the capacity of the plant to approximately 15.8MW. The new turbine is anticipated to produce an additional 21.4GWh per year.

The second tranche of the loan, in the amount of up to €26 million, will be provided for the financing of the Vranduk hydro power plant. Located in the municipality of Zenica, the plant has been designed as a run-of-river, diversion type hydro power plant, with an installed capacity of 20MW and an expected annual production of 95.8GWh. The investment costs for the construction are estimated to amount to €75 million.

The EBRD loan will finance a total of 26.4MW of new hydro generation capacity. It will lead to the generation of an estimated 115GWh of clean electricity per annum, avoiding emissions of 95,000 tonnes of CO2 annually. Technical Cooperation funds will support the drafting of a new energy law in the Federation of Bosnia and Herzegovina.

Libor Krkoska, Head of the EBRD Office in Sarajevo, said: “This loan marks a very important step for the energy future of BiH, and represents a breakthrough for the EBRD's efforts to secure the increased use of renewable sources of energy. The loan represents the first major renewable capital investment by EPBiH in over 30 years. Displacement of inefficient electricity generation units and energy sector reform remain the key economic transition challenges for BiH. This investment is designed to address both issues and will enable BiH to tap its excellent hydro potential.”

Elvedin Grabovica, General Manager of EPBiH, remarked: “The EBRD knows that in EPBiH they have a trusted partner. The approved credit facility represents the first non-sovereign guaranteed commercial loan between EPBiH and an international financial institution. The Bank's decision to finance the construction of EPBiH's new hydro generation capacities, and actively participate in the development of the electricity sector in BiH, will help the country realise the renewable production commitment it made towards the EU. This partnership will reinforce the credibility and enhance the reputation of our company on international financial markets, and help us with other capital investment projects.”

To date, the EBRD has invested more than €1.6 billion, in some 110 projects in Bosnia and Herzegovina, with a focus on infrastructure development, support for small and medium-sized enterprises, and strengthening the financial sector.