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Funds from EBRD to restore electricity in Bosnia and Herzegovina, helping to create employment
Electricity supply across the territory of Bosnia and Herzegovina, severely impaired by years of war, is to be restored and improved with a DM 27.5 million (ECU 12.5 million) loan provided by the European Bank for Reconstruction and Development (EBRD). The sovereign loan to Bosnia and Herzegovina will benefit the existing utilities in various parts of the country, both in the Federation and in Republika Srpska*. This loan is part of an international effort, coordinated by the EBRD, to channel emergency funds into the power system.
"The restoration of electricity will enable displaced people to return to homes and businesses. It will also allow major industrial facilities to restart, bringing employment to a vast number of people," said Jacques de Larosière, President of the EBRD, at the signing in Sarajevo. "An additional benefit will be the introduction of modern accounting systems to help strengthen the utilities' financial management and overall performance."
Proceeds of the loan will be used to improve the electric power generation, transmission and distribution system. Significant local participation will be required to implement the project, creating direct employment opportunities. The project is expected to promote exchanges of power supply between the utilities and foster co-operation and co-ordination between the Federation and the Republika Srpska.
The EBRD has been involved in the reconstruction of Bosnia and Herzegovina since early 1995. In particular, the Bank was designated by the international community to coordinate the international effort to reconstruct the power sector. In fulfilling this role the Bank has taken a leading position in preparing projects and coordinating funding. This particular project includes 16 other sources of funds, mostly grants and concessionary loans, totalling ECU 142 million.
The EBRD is also signing a DM 8 million (ECU 4.1 million) loan for Sarajevo Brewery today, to finance its modernisation and expansion programme into soft drinks and a new range of packaging.
Existing EBRD projects in Bosnia and Herzegovina comprise one infrastructure project to rebuild the transport system (signed in December 1996) and three private sector investments in local banks (Hrvatska Banka signed in May 1997, Market Banka signed in November 1997 and the Microenterprise Bank which opened in November 1997). The EBRD is also investing US$ 5 million in an equity fund to strengthen the supply of equity capital to private small and medium-sized enterprises.
* Under the Dayton Peace Accords, Bosnia and Herzegovina consists of two entities: the Federation of Bosnia and Herzegovina and the Republika Srpska.
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