23rd February 2023, Skopje – Government of the Republic of North Macedonia provided EUR 36.2 million aimed at making new investment in the energy sector, thus expanding the lifespan of six major hydropower plants, while increasing their installed capacity, as well as the electricity generation from domestic sources. Funds have been provided, as a loan amounting to EUR 25 million from the Credit Bank for Reconstruction – KfW, EU grant within WBIF in the amount of 11.2 EUR, and EUR 0.2 million from the German Government.
Investment will be realized within the next 2-year period, which will cover revitalization od six major hydropower plants (HPP Vrutok, HPP Vrben, HPP Raven, HPP Tikvesh, HPP Spilje and HPP Globochica), providing between 20% and 30% of the total electricity generation in our country. This investment will provide for increasing their installed capacity by additional 13.5 MW, while the electricity generation will be increased by approximately 47.5 GWh annually. Moreover, the investment will contribute to reducing the maintenance costs and increased both reliability and stability of the system, as well as protecting the environment. It is a matter of a third phase of revitalizing these hydropower plants. The previous two phases were also financed with loans, with the first phase being financed with a World Bank loan, while the second phase was funded with a loan from the Credit Bank for Reconstruction – KfWE and they both have been successfully completed.
On Thursday, in Skopje, for the purpose of realizing this investment, Loan Agreement was signed between the Credit Bank for Reconstruction – KfW and AD ESM – Skopje, as well as Guarantee Agreement between the Republic of North Macedonia represented by the Ministry of Finance and the Credit Bank for Reconstruction – KfW, separate Agreement between the Credit Bank for Reconstruction – KfW and AD ESM – Skopje, and Grant Agreement within WBIF between the Credit Bank for Reconstruction – KfW and AD ESM – Skopje. Guarantee Agreement was signed by Minister of Finance, Fatmir Besimi and Head of Energy and Mobility Division in SEE and Turkey at KfW, Pablo Obrador Alvarez, while the other agreements were signed by the Head of Division Energy and Transport Southeast Europe and Turkey Pablo Obrador Alvarez, and the Director of ESM, Vasko Kovachevski. The signing ceremony was also attended by the EU Ambassador, David Geer and the Deputy Ambassador of Germany in Skopje, Otto Graf.
“These Agreements provide for making an investment worth EUR 36.2 million, which Republic of North Macedonia will realize with the support extended by our partners. Thus, we are making significant steps forward in ensuring energy independence through investments in renewable sources of energy. Investments in the energy sector, as well as the infrastructure are one of our top priorities. They imply investing in our country’s development, boosted competitiveness of the economy, higher living standard, and improved quality of life. They all define the future of investing. Therefore, EUR 800 million are projected in this year’s Budget, as capital projects, predominated by infrastructure and energy projects”, Minister Besimi at the signing ceremony.
He went on that the funds have been provided under favourable terms and conditions, whereby the realization of such investment will imply boosted domestic production, stability in providing electricity, as well as energy independence. Providing the citizens and the companies with electricity from domestic sources proved to be particular significant amidst energy crisis times.
According to Obrador Alvarez, the Agreements signed today are part of the German commitments under the framework of the Berlin Process, as well as the EU Energy Package to support the green transition of the energy sector of WB6“.
EU Ambassador Geer stressed that investments in green energy are key for North Macedonia to improve its long-term energy security and meet its climate-change commitments.
“The rehabilitation of existing Hydro Power Plants are part of this strategy as they should help boost the production of green energy. To this end, the EU is providing EUR 11.2 million investment grant (through the Western Balkan Investment Framework) to complement a loan provided by KfW and German grant funding. We will continue to work with the national authorities, the private sector and our international partners to help North Macedonia advance on the implementation of the Green Agenda, which is a priority for us all.” – EU Ambassador Geer said.
“Germany and the EU are supporting North Macedonia to increase energy security, a goal that we all share. The new KfW credit will enable the rehabilitation of hydro power plants and contribute to ESM’s renewable energy capacities. This is a great examples how our two governments cooperate to ensure that energy is available at reasonable prices”, Deputy Ambassador of Germany, Otto Graf said.
General Director of ESM, Kovachevski, assessed that the third phase of the revitalization of the 6 major hydroelectric power plants is of crucial importance, since replacement of the obsolete and dilapidated equipment will provide for shortening the recess time due to the planned and unplanned maintenance, entailing 100% availability of the plants on an annual basis upon completing the Project.
He added that the Project is in line with the obligations of the Green Agenda for the Western Balkans, geared towards transition to clean energy, thus contributing to the implementation of the Energy Development Strategy of the Republic of North Macedonia until 2040, aimed at reducing greenhouse gas emissions by 61% compared to 2005, as well as the share of renewable energy sources in the gross consumption of final energy to 45%.