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EBRD focuses on needs of Yugoslav power and rail sectors
Bank commits €157 million to support long-term essential upgrades
To support the rehabilitation and long-term commercial operation of the power and rail systems in the Federal Republic of Yugoslavia, the European Bank for Reconstruction and Development today signed two loan agreements totalling €157 million ($141 million).
A €100 million loan to the power-company Elektroprivreda Srbije will finance a series of priority investments to improve the reliability and efficiency of electricity generation and distribution in the country. A separate loan of €57 million to ZTP Belgrade, the national rail-company, will help with track maintenance and the upgrading of locomotives, as well as support of the overall restructuring of the rail sector. Both loans are guaranteed by the Federal Republic of Yugoslavia.
In Belgrade today, Johan Bastin, the EBRD's Director for the Infrastructure Group, said that modernisation and development of efficient and user-oriented infrastructure is essential for creating the basic conditions for a properly functioning market economy that improves the conditions of daily life for the people. He noted that investment in infrastructure needs to be underpinned by policy reform and strengthening the financial, institutional and managerial system through which infrastructure is provided. "Our support to these important projects not only helps address immediate and urgent investment needs, but will also help lay the foundation for the long-term sustainability of electricity supply and railway services," Mr Bastin said.
In the power sector, the EBRD will focus on developing the country's high-voltage transmission system and rehabilitating three Serbian power stations, including a hydro plant. The power system is currently unable to meet demand and blackouts are a potential problem. The EBRD's finance will strengthen the infrastructure and institutions that underpin a reliable power sector designed to meet long-term demand and reduce costs to the consumer, Mr Bastin said.
Work in the rail sector will concentrate on the main north-south railway line that forms part of the Pan European Corridor "X", one of 10 routes highlighted by the European Commission as important trans-European rail links. Corridor X runs south from Budapest, in Hungary, and Croatia's capital Zagreb, in to Yugoslavia where the line then divides and runs on to Greece and Turkey respectively. Mr Bastin said: "The EBRD-financed project will help ensure that this important railway link remains a viable international connection for Yugoslavia. It will facilitate regional trade."
Mr Bastin said preparatory work for both projects had commenced and that disbursements of the loans would start early next year, reflecting the priority nature of the projects.
Earlier this year the EBRD committed €60 million to the City of Belgrade to improve urban transport, complete construction on a water treatment plant and promote energy saving initiatives. In total the EBRD has now committed €225 million of investment to Yugoslavia. This includes several private-sector initiatives, including support to the Micro-Finance Bank, as well as the creation of a special facility to provide working capital to large industrial companies. Mr Bastin said: "The private sector will have to be the true engine of sustainable economic growth in Yugoslavia. But to function efficiently, the availability and reliability of power, transport and municipal infrastructure are key."
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