The European Bank for Reconstruction and Development (EBRD) announced that it is investing €46m in a new local heat and power plant in the Bosnian city of Zenica.
The investment is expected to help in improving air quality in the Bosnian city of Zenica, apart from assisting the facility to replace heavily polluting coal.
Zenica forms the fourth largest city in Bosnia and Herzegovina and has a population of more than 160,000. The new combined heat and power (CHP) plant Toplana Zenica, is expected to supply power to Zenica along with its largest employer, the ArcelorMittal steel plant.
ArcelorMittal Zenica, the City of Zenica, KPA Unicon (Finland) and Finnfund (Finland) have formed a joint venture through which the project is to be implemented and the project is expected to result in major environmental improvements along with more cost efficient production of energy.
The project is financed with a €46m loan package, where EBRD is providing €28m loan from its own account and a €18m loan provided by Banca Intesa Sanpaolo.
The EBRD said that it has arranged its portion with €23m from the Bank and €5m of concessional financing from the International Cooperation and Development Fund (TaiwanICDF).
The steelworks’ CHP plant used to be the sole external provider of heating in the winter which relies on coal for nearly half its fuel input and is a prime source of SO2 pollution in the city, and the outdated equipment suffers frequent disruptions.
The plant’s existing coal boilers will be replaced by modern EU-compliant gas-fired boilers and an old steam-driven blower with a modern high-efficiency electric blower, resulting in a cost-effective and efficient use of resources.
The new steam boilers are designed to run exclusively on recovery gases from the steelmaking plant, while coal will be phased out completely.
Zsuzsanna Hargitai, EBRD Director, Western Balkans said: “We are pleased to sign this investment today which combines our strength as a financial institution with our goal to promote the green economy. It is also an excellent example of how improvements of economic and environmental performance can, and have to, go hand in hand.”