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EBRD extends support for Croatia’s sugar industry
Bank invests €40 million to modernise Viro Tvornica Secera and help privatise Sladorana
The EBRD is providing €40 million loan to Viro Tvornica Secera, Croatia’s leading sugar producer to help the company improve its operations by cutting costs and introducing energy efficiency measures, making it more competitive on the local and EU markets. Part of the loan may be used to consolidate Viro’s operations by acquiring a state-owned sugar refinery.
The project is part of the EBRD’s drive to increase investments in the agricultural sector and help boost production against a backdrop of spiralling world food prices. At least half of the €40 million loan will be co-financed by Raiffeisen Zentralbank Oesterreich AG (RZB).
Around €20 million will be used to invest in the modernisation of Viro’s production facilities, including a comprehensive energy efficiency programme and the installation of the new raw sugar processing equipment. The loan will also support the modernisation of sugar beet cultivation in Viro’s facilities in Slavonia, the country’s main agricultural area. This eastern Croatian region was the most adversely affected by the conflict in the 1990s and still lags behind the rest of the country in economic development.
An EBRD-commissioned energy audit, funded by the Italian Cooperation Fund, found that the energy efficiency investments should reduce the company’s carbon emissions by 20 percent and achieve significant energy savings. Productivity increases and cost reductions as a result of these investments will bring the company’s operating performance closer to EU standards ahead of Croatia’s anticipated EU accession.
The remaining €20 million of the Bank’s loan is available for Viro should it be successful in its bid for privatization of the state-owned sugar refinery Sladorana. The loan would then finance the restructuring and improvement of Sladorana’s operations and introduction of modern management practices. The investment would help Viro double its production of sugar from sugar beets and increase its processing of raw sugar, thus introducing economies of scale. The privatization of Sladorana by Viro as a strategic investor would consolidate Croatia’s sugar sector, which is essential for future successful competition of the local sugar industry in the EU markets.
Gilles Mettetal, EBRD Director for Agribusiness, said that the introduction of energy saving equipment and new sugar processing methods will bring new standards and practices to the still inefficient production of sugar in Croatia. Additionally, the development of the real economy will be further enhanced by this investment in Viro, which has a successful record of working with small and medium-sized farmers and cooperatives and transferring of know-how.
“For Viro, the development of its business means not only the expansion of production capacities but also their efficient utilization. The EBRD loan will enable us to achieve optimal production results and improved energy efficiency,” Ċ½eljko Zadro, Viro’s CEO, said.
Viro is Croatia’s leading sugar processing company, with sales of €102 million and a 68 percent market share in Croatia.
The EBRD has invested more than €1.8 billion in Croatia in a total of 85 projects across all sectors of the economy, with a concentration on the financial sector and on infrastructure. In addition, the Bank helped mobilise €5 billion from other sources. In the agribusiness sector, the EBRD has directly committed more than €4.6 billion in over 320 projects across central and Eastern Europe and the Commonwealth of Independent States.
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