Power Distribution Reconstruction Project

complete

The proposed project is aiming at modernising the electricity distribution systems of three regional utilities in Bosnia & Herzegovina, enabling the three local power utilities (or “Electroprivredas”) to improve the reliability of electricity supply and to increase energy efficiency by minimising losses of electricity. The Borrower, the State of BiH will on-lend to the three Electroprivredas that will implement the project on their own territories. Bank’s funding will be used for the supply and installation of new metering equipment, protective cables and for the rehabilitation of substations. The Project will directly support the electricity sector restructuring in Bosnia & Herzegovina by improving its financial and technical performances in particular in the field of electricity distribution paving the way to the future privatisation of these activities. Improvement of the efficiency and reduction of losses will have a substantial impact on the performances of the distribution sector making it commercially viable and attractive in the future for investors. The standardisation of equipment achieved through a common purchasing policy implemented through the project for the three Electroprivredas will reduce the maintenance cost while streamlining the management and operation of the sector. The State of Bosnia & Herzegovina will on-lend the proceeds of the Bank’s loan to the three state-owned regional power utilities: Elektroprivreda Hrvatske Zajednice Herceg-Bosne ( “EP Mostar” or “EPHZHB”), Elektroprivreda Republike Srpske (“EPRS”), and Elektroprivreda Bosne i Hercegovine (“EPBiH”). The Bank will lend EUR 50 million to the State; this amount will be equally split among the three regional power utilities. The total project cost is 60 million Euros including taxes and custom duties. Screened B/1. The project is likely to improve the safety and environmental standards of the distribution systems as well as increase energy efficiency by minimising losses of electricity. The existing facilities will need to undergo an Environmental Audit to identify and assess any contamination of soil with transformer oil, potentially containing PCB. The environmental monitoring of the previous projects has shown that the current environmental and health and safety management of the three regional power utilities requires strengthening. The due diligence will need to review the status of the implementation of existing Environmental Action Plans as covenanted in the loan agreements with the Bank and define measures for supporting the environmental management of the three regional power utilities. No other environmental issues to raise at this stage. Technical Cooperation funding in excess of 100,000 Euros was provided by the Greek Government for supporting the project preparation and due diligence.