The EBRD is investing in the largest infrastructure project in Bosnia and Herzegovina to date by lending EUR 180 million to the state to construct key sections of the Trans-European Corridor Vc.
A key transport artery linking Bosnia and Herzegovina with the rest of Europe, Corridor Vc starts in Budapest, Hungary and ends in the Adriatic Port of Ploce in Croatia. It runs north to south through the centre of Bosnia and Herzegovina and is the most strategically important link for regional trade and economic development.
The EUR 180 million EBRD finance is part of an overall EUR 480 million investment in the priority motorway sections on Corridor Vc, which will be co-financed with the European Investment Bank. The priority sections include a 15.2 km section from Drivusa to Kakanj, 18.9km from Vlakovo to Tarcin, 21.4km from Pocitelj to southern border of Croatia and 10.9km from Odzak to the northern border with Croatia.
As part of the project, the EBRD is also providing institutional support to the recently established motorway directorate (FBHMD) and for the development of subsequent sections of Corridor Vc using private finance.
Technical assistance is being provided by the donors of the EBRD-Western Balkans Fund* to the amount of EUR 500,000 for institutional support, EUR 80,000 by the Central European Initiative for preparation of a resettlement action plan and a EUR 500,000 by EU's Infrastructure Preparation Facility for project implementation.
Signing the project, Peter Reiniger, EBRD's Business Group Director for Central Europe and the Western Balkans, said that as the largest infrastructure investment in Bosnia and Herzegovina so far, Corridor Vc will play a key role not only in providing a financial boost to the development of the Bosnia and Herzegovina economy, but it will also have significant impact on the region. As well as connecting towns and cities, the improved road infrastructure will support trade and development and make the country and the region more attractive for investment, Mr Reiniger added.
Dragan Vrankic, B&H’s Minister of Finance and Treasury, said that the introduction of a fuel levy for motorways, which already exists in some countries in the region, as a source of repayment, will not only enable debt to be serviced for this project, but also attract private investors for the construction of the remaining sections.
Sue Barrett, EBRD's Director for Transport, emphasized the Bank's continued commitment to supporting the development of the transport sector in Bosnia and Herzegovina and noted the significant impact this latest road project will have on institutional reform and encouraging greater involvement of the private sector in improving the country's road network.
Bozo Ljubic, B&H's Minister of Communications and Transport, emphasized that this project is a major step in B&H's integration into the regional transport network and that it demonstrates the ability of Bosnia and Herzegovina to embark upon large scale investments in the context of the EU accession.
To date, the Bank has invested more than EUR 270 million in the transport sector in Bosnia and Herzegovina, including EUR 23 million for post-war emergency road repair in 1996, EUR 70 million for the construction of a key regional road network in 2004 and EUR 75 million for road maintenance and rehabilitation of a key primary road network in 2007.
The EBRD is the largest institutional investor in Bosnia and Herzegovina, having invested EUR 779 million in 70 projects in a number of important sectors, including national and municipal infrastructure, the financial sector and the private corporate sector, including small and medium size enterprises.