The European Bank for Reconstruction and Development (EBRD) said it plans to provide a loan of €218mn to Albanian state-owned power producer KESH for implementing reforms in the company and the energy sector in general.
KESH supplies almost 70% of Albania's electricity demand through own generation. State-owned hydropower plants produced around 75% of the total net domestic production. KESH is facing lack of finance lately due to debts, which forced the company to transfer some of its non-essential services to private companies.
The general objective of the project that will be financed by the EBRD is the reforms and restructuring of KESH and the Albanian energy sector to achieve long term sustainability, which has been lacking, the EBRD said in a statement on March 22.
The EBRD loan proceeds will be used to refinance and lengthen the tenors of short term sovereign guaranteed overdrafts which KESH has entered into with commercial banks on an emergency basis. The loans were necessary to alleviate critical cash shortages created by hydrology conditions and sector organization.
The EBRD €218mn sovereign guaranteed loan will be divided into two tranches. Involvement of commercial banks for co-financing will be used, mainly for the second tranche.
The loan is pending a final approval by the EBRD board.
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