The European Investment Bank (EIB), the European Union's financing institution, is advancing a EUR 70 million loan to the Federal Republic of Yugoslavia (FRY) for the priority rehabilitation and upgrading of electricity infrastructure in the Republics of Serbia and Montenegro. The funds will be onlend to the constituent Republics as follows: Serbia (EUR 59 million) and Montenegro (EUR 11 million).

The project, whose promoters are the Electric Power Industry of Serbia (EPS) and the Electrical Power Company of Montenegro (EPCG), represents the EIB's first operation in the Yugoslav energy sector for more than a decade. Benefits of the project include increased capacity of the power system to deliver electricity to consumers - by reducing losses, removing bottlenecks and allowing better use of existing generation capacity - as well as reduced costs by improving operational efficiencies of the system.

The project consists of two separate parts, one for each promoter, and includes the studies, design, engineering, manufacturing, commissioning and operation of the following:

  • Serbia: Construction, expansion and rehabilitation of ten 400 kV and 220 kV substations, replacement of 15 400kV circuit-breakers in various substations, and rehabilitation of two 110 kV overhead lines (in total 160 km);
  • Montenegro: Replacement of electro-mechanical equipment in the two main hydropower plants and of high voltage equipment at the main transmission substations at various locations, such as circuit-breakers, disconnectors, measuring and power transformers.

The EIB loan will make a substantial contribution to the rebuilding of the Yugoslav electricity infrastructure and help secure the longer-term sustainability of the sector. Potential regional benefits for the Balkan power system include the facilitation of the reconnection of the Yugoslav power system to the Union for Coordination of Transmission of Electricity (UCTE).

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 (up 13% on 1999). EUR 31 billion went to projects within the EU Member States and close to EUR 3 billion to those in the Accession Countries, while 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.

In FRY, since the beginning of its operations end of 2001, EIB has already committed a total of EUR 330 million for four rehabilitation projects in the transport sector and an operation in favour of SMEs.

For all matters relating to procurement, the promoter should be contacted directly.