The European Investment Bank (EIB) provides a loan of EUR 40 million to JSC Latvenergo, the state-owned energy company. Latvenergo is the country's largest enterprise and major supplier of electricity.

The loan serves to finance Latvenergo's investment programme, and in particular the replacement of the TEC-2 thermal power plant in Riga by a new and state-of-the-art combined heat and power plant fuelled with natural gas. The new power plant will have an electricity generation capacity of 400 MW and provides 270 MW for district heating. The project, which will meet EU environmental standards, is particularly important in contributing to reduction of atmospheric emissions by improving generation efficiency.

The loan signed today further strengthens the long-standing relationship between the EIB and Latvenergo, being the third EIB operation with Latvenergo following the loans for the rehabilitation of the Daugava hydropower plants signed in 1996 and for the modernisation of Latvenergo's power generation (modernisation of the TEC-1 thermal power plant in Riga), transmission and distribution facilities signed in 2002.

The EIB, the European Union's long-term financing institution, has provided EUR 561 million, including the loan being signed today, for projects in Latvia since its independence, covering many economic sectors ranging from transport, energy and environment to support for small and medium-sized enterprises (SMEs) and public entities through local financial institutions. EIB lending in Latvia in 2005 has been particularly strong as new operations, including the one being signed today, have reached EUR 210 million.