The European Bank for Reconstruction and Developement (EBRD) is supporting Macedonia's drive to improve the security and quality of its energy supplies and promote renewable sources of energy generation with a EUR65 million sovereign loan for the construction of the Boskov Most hydropower plant.

The financing will be extended to the state-owned electricity generation company AD Elektrani na Makedonija (ELEM). The new Boskov Most hydropower plant, to be built near the town of Debar in the western part of the country, will have a generation capacity of 70 MW.

Boskov Most will help ELEM meet Macedonian power demand, which is volatile and characterised by high peaks. Macedonia relies on electricity imports for almost a quarter of its consumption needs. Over 75 per cent of the country's generation is currently provided by the ageing lignite-fired Bitola power plant.

The construction of the hydropower plant will enable Macedonia to reduce electricity imports as well as cut the country's carbon intensity by an estimated 95,000 tonnes of CO2 annually.

"The construction of the new hydropower plant is a landmark project for Macedonia that will increase the security and stability of the country's electricity system. The EBRD is pleased to support this important project, which will be developed and built in line with the best environmental practices and will contribute to further reforms in the Macedonian energy sector, said EBRD Director for Power and Energy Nandita Parshad.

"Boskov Most is the biggest investment of this type in Macedonia's energy sector for the last decade. The Government will continue to invest in projects that will contribute towards the improvement of the economic structure, competitiveness of the national economy, economic growth and more balanced economic development," Vice-Premier and Finance minister Zoran Stavreski said.

Boskov Most is included in the National Strategy for Energy Development as well as the National Strategy for the Development of Energy Renewable Resources to improve the quantity and structure of electricity generated in Macedonia, JSC ELEM General Manager Vlatko Chingoski said.

"The realisation of this project shall contribute to achieving the EU criterion of 20 per cent of total electricity generation from renewable energy resources by 2010," he added.

The EBRD loan is complemented by EUR 340,000 in grant financing from the EBRD Shareholder Special Fund for technical and environmental due diligence.

To date the EBRD has invested over EUR715 million in the Macedonian economy through projects in the corporate, financial, infrastructure and energy sectors. The EBRD funds have attracted additional investments worth EUR700 million from other sources.