The European Investment Bank (EIB), the European Union's financing institution, is advancing a EUR 25 mln loan to Alas Bosna for the modernisation and capacity extension of the Lukavac Cement Factory. Promoter of the operation, which is the first in the private sector the EIB concludes in the region, is the Austrian company Asamer & Hufnagl. The loan, advanced on a risk-sharing basis, is co-financed with the IFC and underlines the EIB's commitment in supporting foreign direct investment and private sector employment market in Bosnia and Herzegovina.

The project, which will increase FCL's domestic market share by replacing the current high level of expensive cement imports in the two regions, will enable the company to reduce production cost, while increasing the plant's production efficiency and labour productivity, bringing it in line with sound and sustainable industry standards. The plant, located in Lukavac, North-East of Bosnia, some 80 km North of Sarajevo.

The new cement mill is expected to be operational at the end of 2003, while the construction of the new clinker production line should be fully operational beginning 2006.

The EIB is a lead player in implementing the European Union's priority objectives. In 2001, EIB financing for projects supporting European Union policy objectives totalled EUR 37 billion. EUR 31 billion went to projects within the EU Member States and close to EUR 3 billion to those in the Accession Countries. Lending in other countries ran to EUR 3 billion. To fund these activities, the EIB borrowed EUR 32 billion on the world's capital markets.

In South-East Europe, the EIB operates under the EU Mandate for Central and Eastern Europe (2000-2007), which provides for EIB lending of up to EUR 9.28 billion. To underline its commitment to future post-war reconstruction in the Balkans, the EIB played an active role in the preparation of the reconstruction investment programme, in cooperation with the Commission and other multilateral financing institutions. The list of potential infrastructure projects comprises a total of 85 projects totalling EUR 4 billion.