EBRD adopts strategy for Kosovo, focusing on infrastructure and energy

By bne IntelliNews May 10, 2013

The EBRD said it has adopted its first full strategy for Kosovo, pledging support to the country's private sector, energy and mining projects and infrastructure. Kosovo became an EBRD member at the end of 2012.

The three-year strategy starts by acknowledging the key growth-hindering aspects of Kosovo's economy and the institutional set-up and then outlines the activities the bank plans to carry out, aiming to promote the country's sustainable economic development.

  • Private sector assistance

Though Kosovo is largely committed to applying free-market principles, its private sector is still relatively small. Unfavourable business environment, lack of investment and management shortcomings hinder the sector's progress. Accordingly, the EBRD plans to increase its support for the privatisation of state-owned enterprises, provide financing to existing private companies and assist financially the small and medium-sized companies, with focus on the processing industry, services, trade and the agribusiness. The bank's general goal is to increase Kosovo's competitiveness.

  • Infrastructure improvement

Kosovo suffers from underdeveloped infrastructure, which limits commerce and manufacturing in the country. The transportation network is relatively small and water supply outages are frequent. The EBRD plans to promote bigger involvement of the private sector in infrastructure projects, thus decentralising the municipal management of relevant services. The bank pledges to provide loan financing for the expansion and upgrade of roads, motorways and the railways network. It says it will support the commercialisation of water supply and wastewater utilities.

  • Sustainable energy and mining sectors

At the moment Kosovo's energy sector is highly inefficient. Electricity production in the country is characterised by huge technical and commercial losses, while at the same time much of the electricity is used by households for heating purposes. In addition, almost all of it is generated by two highly polluting lignite-fired power plants. On top of that, power outages occur regularly. The EBRD will help ensure security of energy supply by engaging in the rehabilitation of the Kosova e Re (Kosovo C) project. The bank will also assist renewable energy projects through loan financing. Technical and financial help to Kosovo's transmission company, KOSTT, is also part of the EBRD's strategy.

Moreover, the EBRD will support the restructuring of the mining sector by assisting the country's privatisation agency in the marketing of state-owned mining enterprises.

The Bank's priorities in the energy sector will comply with its Environmental and Social Policy (ESP). Thus, they are to be in line with the EU environmental legislation, which is in the process of adoption by Kosovo.

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