The loan will be on-lent to BH-Gas, state-owned operator of gas network in the Federation of Bosnia and Herzegovina and the largest gas transport operator in the country.

The proceeds of the EBRD loan will be used to build a new 40 km high pressure natural gas transport pipeline, from Zenica to Travnik, which will supply gas to four municipalities in Central Bosnia Canton.

The new gas pipeline, which is expected to become operational in 2012, will provide clean and efficient alternative fuel to households, industrial customers and district heating companies in the towns of Travnik, Vitez, Busovaca and Novi Travnik. The project will bring considerable environmental benefits by switching away from the more polluting oil, coal and wood burning, currently used in the region.

Through this loan the EBRD is supporting the first stage of the Bosnia and Herzegovina’s gas network development programme, which also includes gasification of the rest of the Central Bosnia Canton and the construction of a gas transmission pipeline in the Una Sana Canton in northwest of the country in the next three years.

The Bank’s investment will promote implementation of reforms in the natural gas sector in Bosnia and Herzegovina, including unbundling of the sector in line with EU directives establishing an independent regulator for the gas market in the Federation of Bosnia and Herzegovina.

“The EBRD loan is the first investment in the gas sector in Bosnia and Herzegovina since the 1980s. This project will support the country’s ambitious gasification programme, which will bring natural gas to remote towns of Bosnia and Herzegovina. Moreover, it will stimulate implementation of the necessary reforms in the sector, leading to its liberalisation,” said Varel Freeman, EBRD’s First Vice President.

“We are pleased to sign this important project and that the EBRD continues to invest in the development gas sector in Bosnia and Herzegovina. Such investments represent the key preconditions for economic development of the country. Furthermore, this investment has large environmental benefits, offering an alternative to the usage of conventional fuels”, said Dragan Vrankić, Minister of Finance and Treasury of Bosnia and Herzegovina.

“Through its investment the EBRD is endorsing the importance of this project both for the Central Bosnia Canton and for BH Gas. We are planning to continue the cooperation with the EBRD in the future on similar projects in other parts of the country”, said Almir Becarevic, Director of BH Gas.

Since the beginning of its operations in Bosnia and Herzegovina, the EBRD has committed over €1 billion in various sectors of the country’s economy, mobilising additional investments worth more than €1.6 billion.