ISO & TRANSCO Loan Novation Project

complete

Supply and installation of a SCADA/EMS system for the electricity transmission network in the Federation of Bosnia and Herzegovina and Republika Srpska. Following the signing of this loan in November 2000, a further loan of €20 million for environmental investments at four thermal power plants (Tuzla, Kakanj, Gacko and Ugjlevik) is being considered. The project will re-establish Bosnia and Herzegovina's interconnection with the Union for the Coordination of Transmission in Europe (UCTE), thereby increasing and facilitating power trade in the region. It will also help reduce environmental pollution in the region through investments in four power plants. Under the project, the international financial institutions will provide assistance in the formulation and implementation of power sector restructuring in Bosnia and Herzegovina. The loan was initially lent directly to the State of Bosnia and Herzegovin with two on-lending agreements signed between the State and the two Entities, as well as three on-lending agreements between the Entities and each of the three utilities operating in the power sector, namely: Elektroprivreda Republika Srpska (EPRS), Elektroprivreda Hrvatske Zajednice Herceg-Bosne (EPHZHB), and Elektroprivreda Bosne i Hercegovine (EPBiH). With the establishment of Transco and ISO, respectively the owner and operator of the high voltage transmission network, the loan obligations will be redirected from the Elektroprivredas to the newly created companies. The EBRD has provided €50 million, and with additional €20 million, in the form of a sovereign loan. The project is part of a larger investment programme for the Bosnian power sector, being financed in parallel by the World Bank, EIB and bilateral donors. Approximately US$ 231 million (€272 million). The project was initially screened as "C1". The project will help to increase the reliability and efficiency of electricity transmission and will reduce line losses and associated emissions from power generation. In addition, the loan increase (screened as B/1) will help decrease dust emissions as well as reduce the risk of polluted water discharges, thereby improving the local environment. None.