The European Investment Bank (EIB) is lending EUR 80 million for upgrading power generation and distribution in Latvia. The loan to Latvia's power company SJSC Latvenergo will help upgrade a combined heat and power plant in Riga and the transmission and distribution networks throughout Latvia.

The long-term finance contract between the state owned joint stock company Latvenergo and the European Investment Bank (EIB) was signed in Luxemburg today.

The investments will allow Latvenergo to improve reliability of power supply by installing a modern combined-cycle gas turbine and by renewing some 3000 substations and 4000 km of overhead lines.

Commenting on the loan, EIB Vice-President Wolfgang Roth said: 'Reliable energy supply is important for proper economic development. The substitution of heavy fuel oil by gas will also have significant environmental effects as it will help reduce pollution in Riga and this should be seen as a further advantage in addition to better supplies of heat and power in the capital. But business and household consumers throughout Latvia will benefit from the growing reliability of power supplies following the completion of investments in generation and distribution capacity. '

The EIB is the European Union's long-term financing arm and has provided nearly EUR 300 million for projects in Latvia since 1994. Projects supported relate to priorities in the fields of transport (railways, ports, airport), energy infrastructure (hydropower project), telecommunications and environmental and municipal infrastructure, including a credit line to support small- and medium scale environmental and municipal projects, as well as global loans for the financing of small and medium-size enterprises and small infrastructure in the country.

Since 1990, the EIB has lent some EUR 17 billion to projects in the ten Central European countries which have applied for EU membership. Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary, Slovenia, Romania and Bulgaria.