The European Investment Bank (EIB), the long-term financing arm of the European Union (EU), provides a EUR 90 million loan to Plinacro d.o.o. (Plinacro), the Croatian state-owned gas transportation company.

The project forms part of an overall plan for the expansion and modernisation of the gas transmission system covering the period 2002 to 2011, which was approved by the Ministry of Economy in August 2002. The plan will assist Croatia to further diversify the source of gas supply with a new link to offshore gas fields in the Adriatic Sea, expanding the gas transmission system to connect to new regions in Southern Croatia, and rehabilitating/modernising the existing transportation system. The project includes a new high-pressure gas pipeline from Pula to Karlovac (40-km south-west of Zagreb), that will connect the offshore fields to the existing gas transmission system, and an extension of this line from Zagreb to Slavonski Brod, to supply the Slavonia region and connect to the Okoli underground gas storage of the Posaniva region. The project will also facilitate the distribution of natural gas in western Croatia.

The total project cost is estimated at EUR 186.6 million. Construction work of the various pipeline sections is expected to start shortly with the project's completion scheduled for 2006.

In 2002, the European Investment Bank, the European Union's long-term financing institution, stepped up its lending in the Western Balkans to a total of EUR 425 million (an increase by 30% of the EUR 320 million lending in 2001).

Having mainly supported the transportation sector since starting operations in the Western Balkans in 1999 within the framework of the Stability Pact, and having diversified its lending in the region in 2001 to provide increased support for the private sector, the EIB made in 2002 its first large private sector operation in the region in support of Foreign Direct Investment in the region. This was a EUR 25 million loan for the Lukavac Cement Factory, promoted by an Austrian company.

EIB will in the coming years remain an important source of finance for the Western Balkans Countries, in cooperation with the European Commission, the European Agency for Reconstruction, and other international donors, including the World Bank and EBRD. Plans for 2003/04 foresee EIB maintaining the annual lending level of some EUR 400 million.

As mentioned in EIB Medium Term Strategy for Western Balkans published recently three new sectors will also increasingly receive the EIB support in the coming years: Private sector (including foreign direct investment), health and human capital resources, including innovation and R&D, as well as environment (EIB is finalising significant rehabilitation investments in infrastructure related to streets, communications and water utilities in the individual cities and municipalities in all the countries of the region).