The project concerns the modernisation of a combined heat and power plant supplying steam and electricity to Frantschach Swiecie SA, Poland's second largest pulp and paper producer. The main investment to be financed by the Bank consists of the construction of a new fluidised bed boiler, which will use biomass and coal as a fuel. Other components of the project, which forms a critical part of a larger overhaul of the existing paper mill with state of the art technology, are the overhaul of existing coal-fired boilers and the upgrade of electricity generation equipment.

The project will increase the reliability of the mill's energy supply, reduce production costs, and improve its competitiveness on the Central- and Eastern and Western European markets. Furthermore, the modernisation of the existing coal-fired combined heat and power plant will bring significant benefit to the environment through reduction of atmospheric pollution and use of renewable energy sources.

The promoters of the project are Frantschach Swiecie SA, controlled by Austrian Frantschach AG paper Group and Polish Energy Partners SA., an independent power producer specialising in the development of combined heat and power plants.

BRE Bank SA, a long-term partner of the EIB in Poland, will serve as an intermediary for the Bank's loan.

At today's signing of the loan, EIB Vice President W. Roth said: This foreign direct investment project brings foreign capital and technical know-how to a largely rural region of Poland; it helps to maintain the competitiveness of an important sector of manufacturing industry and to generate export revenues for the country; and it also produces significant environmental benefits. It is therefore typical of the type of project the Bank is keen to finance in Poland and of the good cooperation developed with the local banking community to promote financing foreign direct investment as it is a strong driver for economic modernisation and growth.

Since 1990 the EIB lent over 5.5 billion EUR to projects in Poland, more than in any other EU candidate country. Over 1 billion went to Trans-European road and rail networks (TENs), with emphasis on upgrading major international road and railway axes whilst telecommunications, gas and larger industry schemes also attracted substantial loans from the EIB. Small and medium-scale industrial investments as well as smaller energy or infrastructure projects are being furthered through credit lines (global loans) to commercial banks established in Poland. And the Bank also helped rebuild infrastructure damaged during the flooding of the Odra and Vistula river basins in 1997 and 2001.

Since 1990, the EIB has lent over EUR 17 billion to projects in the ten Central European EU accession countries and is the region's most important foreign source of finance.