Skopje, 29th December 2015 (MIA) – Government of the Republic of Macedonia and Government of Federal Republic of Germany, ELEM and KfW signed Intergovernmental Agreement, Guarantee Agreement, Loan Agreement and Separate Agreement for realization of the project for construction of a new central heating system in Bitola, Novaci, Mogila and Logovardi.

Under the Loan Agreement, KfW extends a loan in the amount of EUR 39 million to ELEM for the Project implementation, with fixed interest rate of 1.5%, being historically the lowest interest rate for construction of an infrastructure facility in Macedonia, including 15-year repayment period and four-year grace period. The low interest rate will provide for savings in the amount of more than EUR 3 million.

ELEM are to provide the remaining EUR 7.5 million for the Project realization from their own resources. The first phase envisages construction of a regional pipeline from REK Bitola (mining and energy plant) to Bitola, to be 12.5 km long, a sub-station and a distribution network in Bitola, as well as connections to the distribution networks in Novaci, Mogila and Logovardi, while the second phase covers construction of the distribution network in the three inhabited places, should there be any interest therefore.

– Yet another promise made by the Government of the Republic of Macedonia becomes a reality today. Agreements we have signed today with the Federal Republic of Germany and KfW provide for EUR 39 million out of the total of EUR 46.5 million necessary for the construction of the heating system in Bitola, Novaci and Mogila, Deputy Prime Minister and Minister of Finance, Zoran Stavreski, said following the signing ceremony.

He underlined that establishment of a central heating system in Bitola and its surrounding was an idea which existed for decades.

– What we promised the citizens in Bitola on the last local elections is now a reality, Stavreski said.

He emphasized that the Project envisages for the waste unused heat energy from REK Bitola to be used by constructing heat energy generation system, regional transmission hot water pipeline 12.5 km long, primary pumping station and heat exchangers in Bitola, distribution network in Bitola and connections for the settlement of Novaci, Mogila and Logovardi to their distribution networks.

– The first phase under the Project envisages 35 public facilities in the municipality to be connected to the hot water distribution network, in addition to the households in Bitola. The second phase would include construction of the distribution network in Novaci, Mogila and Logovardi, should the citizens be interested therefore, Stavreski said.

He pointed out that Bitola and the surrounding had huge benefits from the construction of a central heating system by eliminating many sources of environment pollution and significantly reducing the use of oil and firewood for heating.

KfW, as he said, has invested EUR 320 million in capital projects in Macedonia so far.

Deputy Head of Mission, Hans-Helge Sander, pointed out that the District Heating Bitola Project marks the fruitful cooperation between the German and the Macedonian Governments. He also underlined that ELEM would implement the Project in the coming four years, while KfW would extend EUR 39 million directly to the contractor to be selected at an international tender.

– Funds will be disbursed in installments after the works are completed and they will be retroactively reimbursed to the contractor for its costs incurred. Funds will not be disbursed in advance at all. International technical consultant will supervise the Project, who will also monitor the disbursement, Sander emphasized.

KfW Principal Manager, Rainer Suennen, underlined that main focus of the cooperation between Germany and Macedonia was placed on climate changes and environment protection.

– This is an important project, being continuation of our fruitful cooperation with our partners in Macedonia. We, together with ELEM, have implemented projects under the Energy Efficiency and Renewable Energy Program, by reconstructing six hydro power plants and constructing the Wind Park Bogdanci. Now we are launching the project in Bitola, which will contribute to greater energy efficiency at local level and broader. Citizens of Bitola will, in addition to environmental improvements and replacement of energy sources, have job opportunities, Suennen said.

ELEM CEO, Dejan Boskovski, said that today’s signing was yet another significant step towards constructing a heating system in Bitola, Novaci, Mogila and Logovardi, adding that, in the past period, ELEM prepared a feasibility study, prepared and revised the project and the technical documentation and adjusted the two thermal blocks in REK Bitola.

– We expect for the construction of the heating system to directly provide for reduction of emissions from the combustion of wood, oil, crude oil and fossil fuels in the small household furnaces, as well as the furnaces of both the public and the commercial facilities. This will also contribute to reduction of the emissions of sulfur dioxide, nitrogen oxides and carbon monoxide and dioxide, thus directly providing for increased quality of the ambient air and increased quality of the life of the citizens in the region, Boskovski said, pointing out that citizens in Bitola will have hot water heating energy for the 2018 – 2019 heating season.

By shifting to hot water heating system, he went on, consumption of electricity for heating during the winter period will drop, which, on the other hand, provides for increased energy efficiency and conservation of natural resources for electricity generation.

ELEM CEO underlined that, in the past period, it realized two capital projects with KfW – second phase of revitalization of six small hydro power plants and construction of Wind Park Bogdanci in the amount of EUR 92.1 million.

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