The European Bank for Reconstruction and Development (EBRD) is providing a €1.5 million loan to Kreditimi Rural i Kosoves LLC (KRK) – the third largest non-bank microfinance institution in Kosovo by total assets – for on-lending to businesses and the residential sector, to be directed towards investments in energy efficiency and renewable energy projects.
The loan is being provided under the Kosovo Sustainable Energy Projects Framework (KoSEP), approved by the EBRD Board of Directors on 1 May 2013, which will make available up to €12 million for investments in energy efficiency and renewable energy projects.
The framework is focused on supporting rational energy utilisation and assisting small and medium-sized enterprises (SMEs) and residential borrowers in mitigating increasing energy prices and reducing the high intensity of energy use in Kosovo. KoSEP addresses currently untapped resources and aims to increase public awareness of potential energy efficiency gains.
KRK is a commercially organised microfinance institution with a strong shareholder base, including the European Fund for Southeast Europe, FMO and Credit Cooperatif, which together own 71 per cent per cent of KRK’s shares. KRK is focused on serving the rural area – predominantly the agricultural sector – but also services other economic activities.
KoSEP is complemented by grant funds provided by the EU to the amount of €3 million for investment incentives to sub-borrowers and administration fees, as well as technical cooperation to support the development of individual projects. Additional technical cooperation funding of €325,000 is provided by the New Norway Cooperation Fund.
Anton Kobakov, the EBRD’s Head of Office in Kosovo, said: “We are very happy with the favourable response the new framework has found in the market. We are confident that it offers an attractive opportunity to address the urgent needs of Kosovo’s energy sector by improving efficiency, and to support the development of a viable and sound financial sector through which our funds are being channelled.”
Lulzim Sadrija, the CEO of KRK added: “We are very thankful for the support provided to us by the EBRD in our many year of cooperation, including funding, technical assistance and so on, and hope for fruitful cooperation going forward. We believe this energy efficiency loan product we are launching with the funding from the EBRD will facilitate environmentally friendly investments of our SME clients as well as households, leading to cost savings and improvements in the quality of life.
Kosovo became a member of the EBRD on 17 December 2012, and on 1 May 2013 the EBRD adopted its first full country strategy for Kosovo. However, private sector projects in Kosovo have been eligible for EBRD support since 1999, via dedicated, externally managed regional funds and projects, and via the Bank’s regional facilities for the western Balkans. Within this framework, since 1999 the Bank has signed some 30 projects in Kosovo, with a cumulative EBRD investment value of around €70 million.