Croatia Efficient Maritime Transport Project

pipeline

The project is an Investment Project Financing (IPF) operation supporting Jadrolinija, Croatia’s state-owned ferry operator, with disbursement of funds linked to the achievement of governance and sectoral reforms through a set of Performance-Based Condition (PBCs). The financing envelope combines EUR 150 million from IBRD to support reforms and the acquisition of green vessels on public service obligation (PSO) routes, and EUR 80 million from IFC, which will finance vessels for commercial routes and restructure or refinance Jadrolinija’s commercial debt under more favorable terms, while adding value on sustainability and Environmental and Social (E&S) standards. Disbursements from the IBRD tranche will only be made once key corporate governance and sectoral reforms are implemented, ensuring financial support is tied to Jadrolinija’s long-term sustainability and modernization. The overall project’s development objective aims to improve the operational efficiency and financial sustainability, reduction of the carbon footprint, and introduction of international corporate governance standards of Jadrolinija The project has two main components: Component 1 will finance acquisition of green fleet (i.e., six dual-fuel methanol ferries, three 49m electric passenger vessels as well as piloting of efficiency enhancement measures for selected vessels in Jadrolinija’s fleet and Component 2 will strengthen corporate governance and increasing the efficiency and safety of Jadrolinija. This component supports policy/legal actions for a stronger corporate governance framework for Jadrolinija, and it funds technical assistance to increase the efficiency and safety of the enterprise. It also aims to strengthen corporate governance in Jadrolinija, aligning it with international standards, corporatizing the company as a joint stock company, and revising the PSO framework to favour cleaner vessels.The project adopts a hybrid approach that applies the IFC Performance Standards and the World Bank’s Environmental and Social Framework (ESF). This approach reflects the dual nature of the project, where the majority of activities are assessed as Private Sector Activities, while select activities under the Performance-Based Conditions (PBCs) fall under government responsibility. In this context, Jadrolinija qualifies as a private entity under OP 4.03: Performance Standards for Private Sector Activities. Accordingly, the management of E&S aspects for activities under Jadrolinija’s responsibility – covering Component 1 (entirely) and Component 2 (partially) – will be governed by the IFC Performance Standards. PBC 4 - establishing a long-term investment planning framework for Jadrolinija - falls under the remit of Jadrolinija is therefore expected to be governed in accordance with the IFC Performance Standards.Government-led activities that will be governed by the Bank’s ESF are: PBC 1 - implementing a transparent and merit-based process for Jadrolinija’s board and CEO appointments, PBC 2, which involves operationalizing a revised PSO framework aligned with the 2022 Maritime Act bylaws and introducing a technical scoring system that rewards green or clean vessels fall under the purview of the government; and PBC 3, which entails corporatizing Jadrolinija as a joint-stock company and repealing the Jadrolinija Law of 2006. These PBCs will fall under the responsibility of the Ministry of Sea, Transport, and Infrastructure (MSTI).