Drenik Serbia

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IFC is proposing a financing package comprising a corporate loan of up to €60 million (the A Loan) and a Managed Co-Lending Portfolio Program (MCPP) Trust Loan of up to $50m equivalent in € (the B Loan) to Drenik ND d.o.o. (“Drenik” or, together with its subsidiaries, “the Group”).The Group (http://www.dreniknd.com) is the largest tissue paper producer and distributor in the Western Balkans with two factories in Belgrade and Szolnok (Hungary). Annual production capacity is over 110,000 tons of hygienic paper, which is processed into toilet paper, kitchen towels, napkins, handkerchiefs, universal towels, and industrial towels. The IFC financing would allow the Group to develop a captive 8 MW Combined Heat and Power (CHP) biomass power plant in Serbia, refinance its existing debt and support its permanent working capital needs (the Project).A substation of 16 MW capacity, owned by Drenik, is located on the Belgrade factory site and will enable the connection of the power plant to the transmission network of the paper factory and the grid.Both existing Drenik production and new CHP sites are in the established industrial zone of Krnjaca, in the outskirts of Belgrade. The nearest residential district Zage Malivuk is 750 meters to the north-west of the project site.The CHP plant will ensure stable energy supply for Drenik’s plant in Serbia and materially reduce its CO2 footprint. The plant will require 12.45 t/h of wood chips and will be the first biomass-fueled CHP plant in the country. Construction is expected to start in 2023 and the plant is planned to be commissioned by the end of 2024. Approximately 90,000 tons of wood chips per year will be needed to operate the CHP plant. This biomass will be purchased by Drenik from the Serbian Forest Management Agency, Srbijašume, and will consist of non-commercial timber resulting from regular annual forest maintenance and forest sanitation activities, as well as maintenance of public green spaces. Srbijašume’s timber products are certified under the Forest Stewardship Council (FSC), which promotes responsible management of the world's forests via timber certification.