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The following EBRD document is published without changes for informational purposes. For NGO related activities please refer to the Projects section of our web page.
EBRD Activities in Macedonia
As of 30 June 2004, the European Bank for Reconstruction and Development (EBRD) had signed 23 projects in FYR Macedonia, with commitments totalling € 325.8 million in support of projects with a total cost of € 812.8 million. 15 projects are in the private sector and 8 in the public sector. More specifically, eight are in the critical infrastructure sector (telecommunications, power, air transport and municipal services), seven are in the financial sector, and eight are in the private corporate sector.
Overview of EBRD activities and key objectives
In July 2002 the EBRD adopted its two-year Country Strategy for FYR Macedonia.
Significant transition challenges lie ahead for FYR Macedonia, in particular: (i) improving the business environment for investors, (ii) privatising or liquidating large loss-making companies and promoting post-privatisation enterprise restructuring and the development of institutional and financial support for small and medium size enterprises (SMEs); (iii) commercialising and privatising utilities, building upon the earlier success of the telecom privatisation and developing critical regional infrastructure; and (iv)strengthening and consolidating the banking sector and developing non-bank financial institutions.
At this critical moment of post-conflict recovery, the Bank is fully committed to provide direct support to address these challenges and is well positioned to mobilise new private investment. The Bank’s activities will focus both on advancing the implementation of existing projects and on developing new projects, along with institution-building initiatives, according to the following operational priorities:
Infrastructure
Energy - given the critical needs in the sector in the country and the region, support to the power utility is one of the Bank’s key priorities. The Bank is offering to assist the privatisation of the electricity company through pre-privatisation financing, providing both investment and institutional support.
Transport - the Bank’s priorities are to implement the Macedonian Regional Roads project under the Stability Pact and to support the modernisation of the air navigation system of the country, both projects having wider regional impact.
Municipal infrastructure – The Bank will focus on the implementation of its environmental programme in six cities and will seek to expand it to other regions.
Financial sector
Particular attention will be paid to active management of the portfolio of existing projects, especially the equity investments in local banks. The Bank will assist with banking sector strengthening and consolidation through possible new equity investments and explore the scope for projects in the light of the recently started pension reform and the new leasing legislation.
The Bank will continue its active policy dialogue with the Government on the much-needed improvement of the investment climate and will take the lead in promoting the establishment of an international investors’ association. The Bank will also place a strong focus on minimising environmental impacts and optimising environmental benefits associated with the Bank's prioritised areas of investment, particularly in the infrastructure sector, and on setting high standards for public consultation.
While implementing this strategy, the Bank will closely co-ordinate its actions with other international financial institutions and bilateral donors to ensure a complementary approach when providing financing, promote where possible co-financing and blending of loans with grant funding and mobilise technical assistance as needed.
The success of this strategy depends on the country's ability to build political stability and a broad consensus on reform targets and to demonstrate a sustained commitment to the acceleration of structural reforms, in line with the country’s aspiration for European integration. In addition, corruption and poor governance in the public sector have been major problems throughout the transition period and tackling them will remain urgent tasks for the Government.
Signed projects as at 30 June 2004
Private corporate sector
Migros Ramstore
Migros Turk AS, as the largest food retailer in Turkey, is expanding its business into FYR Macedonia with the help of an € 10.5 million loan from the EBRD. The eight-year loan is being used to finance the construction of a retail complex by Ramstore Macedonia, a local company majority-owned by a Bulgarian subsidiary of Migros Turk. The retail complex, to be constructed in Skopje, the country’s capital city, will include a shopping mall and a hypermarket.
Zito Luks
In February 2004 the EBRD extended a loan of € 8 million to Zito Luks, a baked goods producer, a subsidiary of ELBISCO Holding SA, Greece. The loan helps the company expand its business, refurbish existing outlets across the country and become more efficient. This is EBRD’s first loan in the agribusiness sector in the country.
Prilep Marble Kombinat
In December 2003 the EBRD signed a € 8 million loan to assist Prilep Marble Kombinat, majority owned by FHL Kyriakidis Marbles-Granites S.A. of Greece, to modernise its quarrying and processing facilities and to support the export expansion strategy of the company. Prilep Marble Kombinat is the first company from FYR Macedonia that completed a successful IPO and got listed on a stock exchange abroad.
Kimico Gardine Ltd., Struga
In November 2003 the EBRD invested € 2.2 million in the curtain manufacturer Kimico Gardine Ltd., Struga under the Bank's Direct Investment Facility (DIF). The investment will enable the company to expand the product range, increase its competitiveness in Southeast Europe and expand into the European Union.
Thessalonica - Skopje Crude Oil Pipeline
In December 2000, the EBRD signed a US$ 50 million senior loan for the construction of a new 214 kilometres crude oil pipeline, linking the Greek port of Thessalonica and the OKTA Refinery in Skopje. In 2001 EBRD successfully syndicated out almost half of this loan to the National Bank of Greece. The pipeline, which will carry up to 2.5 million tonnes of crude oil and petroleum products per year, will reduce current transportation costs and secure long-term supply of oil to the country. The total project cost is US$ 105 million. Hellenic Petroleum, the largest industrial company in Greece, together with Aegek, a Greek construction group, is contributing US$ 55 million. The pipeline, that also provides a more environmentally sound alternative to the current road and rail transportation, was commissioned in August 2002.
Emergency GSM extension and network modernisation project
In October 1999, the EBRD extended a loan to Makedonski Telekomunikacii, the state-owned company that provides telecommunications, data and mobile phone services. The € 14 million financing has enabled the company to double its mobile GSM network capacity and to modernise its information systems. This is the first EBRD loan extended to a state-owned Macedonian company without a sovereign guarantee.
Alkaloid A.D.
In July 1999 the EBRD extended a loan of € 8.7 million to Alkaloid A.D., a locally owned and managed company. The project was financed jointly with the IFC, which invested a further € 8.7 million. The loan is being used to upgrade, expand and modernise Alkaloid’s Skopje pharmaceutical plant, and to assist the company in meeting “good manufacturing practice” (GMP) standards.
Makstil A.D.
In October 1998 the EBRD extended a US$ 15 million loan to assist Makstil, a privatised steel producer acquired by Duferco of Switzerland, with its expansion programme. The loan is being utilised to modernise Makstil’s casting facilities and its Skopje plate-mill to restore integrated production capacity, thus increasing the plant’s overall efficiency.
Financial sector
ProCredit Bank
ProCredit Bank (PCB) is a newly established bank providing financial services to micro and small enterprises. The founding shareholders are the EBRD, Internationale Micro Investitionen AG and the International Finance Corporation. EBRD has contributed € 1.25 million in equity (20.8%). PCB started its operations in July 2003. It has opened branches in Skopje (two), Tetovo, Kumanovo, Gostivar, Bitola, Strumica and one is planned to be opened in Struga. In light of the rapidly growing business of this micro-finance bank, EBRD signed a € 5 million credit line agreement with PCB on 30 September 2003 that was extended by a further € 1 million in January 2004. Given its focus on the provision of financial services outside of the capital city and to new clients of the formal financial sector, institutional capacity in terms of a wide branch network and large numbers of lending staff are key. To this end the Government of the United States and the Netherlands have provided Technical Cooperation funds to cover part of the start up and expansion costs. Based on the rapid growth of the loan portfolio, which has surpassed €15 million and 4,000 current SME borrowers, the shareholders have decided to apply for a full banking license later this year and increase the capital base to €9 million accordingly.
Export & Credit Bank (ECB)
In May 2000 the EBRD invested € 3.1 million in ECB’s equity and acquired a 31 per cent stake in the form of ordinary and non-voting preference shares. The investment was made with the objective of developing Export & Credit Bank into a strong medium-sized bank, with a focus on the SME and retail sectors. In parallel, the EBRD has mobilised technical co-operation funds from Canada, Taiwan and Macedonia and appointed two banking experts to assist ECB to develop into a strong medium-sized bank.
Stopanska Banka (SB)
SB, the largest bank in FYR Macedonia, has been privatised with the National Bank of Greece (NBG) taking a majority stake in the bank. The EBRD and the IFC have jointly co-invested with NBG. The Bank invested a total of € 14 million in newly issued shares and acquired a stake of 10.5 per cent in SB’s total share capital. The additional capital infusion permits further asset growth and the implementation of SB’s investment programme that includes modernisation of its computer systems, branch network upgrading and personnel training.
SEAF Macedonia
In July 1999, the EBRD took a US$4 million equity participation in SEAF-Macedonia LLC, a US$ 13 million venture capital fund. Follow-on investments range between US$ 400,000 and US$ 1 million. The fund makes equity and quasi-equity investments in local SMEs and is managed by the Small Enterprise Assistance Fund. To date the Fund has made investments in 15 SMEs in the country.
Trade Facilitation Programme
In January 1999 the EBRD launched its new Extended Trade Facilitation Programme (TFP), which covers its 27 countries of operations. This programme facilitates intra and extra-regional trade by guaranteeing local enterprises’ letters of credit issued by local banks concerning export and import transactions of local enterprises. Currently, there are four Macedonian banks participating in the programme, including Stopanska Banka, Kome-rcijalna Banka, Tutunska Banka and Export Credit Bank, with an overall signed exposure limit of € 21 million. Until 30 June 2004, the EBRD had guaranteed export-import transactions for a cumulative total of €56 million under the programme.
Komercijalna Banka A.D.
In March 1996 the EBRD extended financing in equity and convertible loan to Komercijalna Banka A.D., totalling € 7.7 million (DEM 15 million). The funds were utilised for on-lending to private sector clients and to assist the bank in upgrading its operations and improving its information technology, management information systems and branch network. Complementary technical as-sistance components, funded by the United Kingdom Know How Fund, assisted Komercijalna Banka to implement environmental assessment procedures in accordance with the EBRD requirements and improve credit policies and procedures.
SME credit lines
In December 1995 the EBRD extended credit lines to five local banks for medium and long-term financing of private SMEs. The total credit line was € 20.1 million, with € 4.7 million allocated to Makedonska Banka A.D., € 7.7 million to Stopanska Banka A.D., € 3.1 million to Almako Banka A.D., € 3.1 million to Export–Import Banka A.D, and € 1.5 million to Export and Credit Bank. The loan facility was sovereign guaranteed, except that the sovereign guarantee for Stopanska Banka was lifted upon privatisation. A complementary technical assistance component funded by Japan assisted the participating banks to improve their credit procedures and implement environmental assessment procedures in accordance with the EBRD requirements.
Infrastructure
Macedonia – Bulgaria Transmission Line Project
The € 40.5 million EBRD loan to Elektrostopanstvo na Makedonija (ESM), the state-owned vertically integrated power utility will finance the construction of a 400 kV transmission line between Shtip (FYR Macedonia) and Chrvena Mogila (Bulgaria) as well as the installation of a new sub-station in Shtip. ESM is the borrower for the whole project, while NEK - its Bulgarian counterpart, will repay financing for the Bulgarian section of the transmission line through electricity supply to ESM. Project preparation was assisted by grants from the Governments of Canada and Switzerland.
The project, to be implemented in 2004-2006, will increase system stability in the eastern part of FYR Macedonia, decreasing system losses. It will also allow FYR Macedonia direct access to Bulgaria’s considerable generation capacity. The project will have benefits for Bulgaria too, giving it increased trading and reserve capacity as well greater system security. In general, the project will allow both FYR Macedonia and Bulgaria, and other countries in the region, to enjoy increased supply options resulting in greater overall efficiency and security. As such, it will help the establishment of a regional electricity market in south-eastern Europe.
Macedonian Regional Roads Project
The € 40 million EBRD loan to the Fund for National and Regional Roads, the state-owned road agency will help finance the second phase of the Skopje bypass-the western side of an 11 km section of road circling the city and 11 km section of the road from Smokvica to Gevgelija forming part of Pan-European Corridor X. Project preparation has been assisted by € 0.5 million grant funding from France, UK and Taiwan.
Project implementation will also benefit from technical assistance financed in the amount of € 0.5 by France, CEI and USAID. Such assistance will be provided, inter alia, to help in the preparation of an institutional strategy, which will form the basis of the government’s reform programme for the roads sector, as well as to successfully implement the Skopje bypass environmental component.
Civil Aviation Upgrading Project
In July 2002, the EBRD signed a sovereign loan of € 11.2 million. The loan will be utilised to complete the modernisation of the Macedonian air navigation services in compliance with the Eurocontrol standards as well as for runway resurfacing of the Ohrid Airport.
To compliment the investment project, technical assistance projects will be launched to advance institutional reforms under this project (e.g. separation of air navigation services from regulatory functions) and to support project implementation.
Water supply/treatment programme
In September 2000 the EBRD extended a sovereign loan of € 20.8 million to be on-lent to five Macedonian water utilities, financing investments in the construction, rehabilitation and extension of water and wastewater infrastructure. The five water companies are serving the municipalities of Kumanovo, Ohrid/Struga, Stip, Strumica and Veles. In addition, international grants and concessional loans of € 31.8 million and local contributions of € 5.1 million have been provided. Investment grants/concessional loans are being provided by Switzerland, Germany, Greece and Portugal. The total project cost is € 63 million.
The project aims to improve the quality and reliability of water supply and to reduce health hazards and pollution of surface water caused by the discharge of untreated waste water. The project also aims to strengthen the financial and operational performance of the water utilities involved.
Macedonian Telecommunications project
In March 1995, a loan of € 34.8 million was signed to modernise the local, long-distance and international telecommunications network. The objective was to connect about 78,000 new subscribers to the fixed telecommunications network and to provide digital exchanges that give commercial entities access to modern, high-quality services nationally and internationally. Complementary technical assistance components, funded by Italy, Netherlands, Japan, Norway, and Ireland assisted the Public Enterprise for PTT Traffic, “Makedonija” to develop its international traffic technical and management skills, tender evaluation skills, separate the postal operations, improve the finance, accounting and billing system, develop corporate strategy and prepare for future privatisation. In parallel, technical assistance was also provided to assist the Government to develop telecommunications regulatory framework, to establish the regulatory body and provide basis for sector liberalisation and privatisation. The loan was sovereign guaranteed.
Skopje Airport upgrading project
In December 1995 a loan of € 9 million was extended for an urgent safety-related upgrade of Skopje Airport. The loan has helped to improve the runway, taxiways and the lighting system to optimise the airport’s capacity. The project is helping the aviation authorities to maintain the improved facilities and to plan the airport’s long-term development. Project preparation was funded by Canadian technical cooperation funds of US$ 230,000. The US Trade and Development Agency provided funding of US$ 150,000 for the preparation of the airport development plan. The loan was sovereign guaranteed.
Air navigation systems upgrading
In October 1994, the EBRD provided financing of € 11.2 million to upgrade air navigation equipment and to provide comprehensive air navigation services to commercial aircraft flying in Macedonian airspace. The US Trade and Development Agency provided US$ 250,000 in grant funds for air traffic controller training and project implementation assistance.
Bitola - Skopje Transmission Line Project
In December 1993, the EBRD extended a loan of € 17.3 million to the national power corporation, Elektrostopanstvo na Makedonija (ESM). The construction of a 113.5 km transmission line between Bitola Thermal Power Station and Skopje, the main industrial centre, was financed with € 12.6 million. The balance was allocated to support the Government’s Energy Conservation Programme. A technical assistance component, funded by Italy, assisted ESM in the preparation of tender documents, tender evaluation and contract negotiations. In addition, technical assistance component funded by United Kingdom was provided to assist staff of the Energy Conservation Unit in identifying suitable energy conservation projects and on-the-job training to identify and evaluate energy conservation projects. As a part of institutional development role of the Bank, technical assistance granted by Japan was provided to assist ESM to introduce modern accounting and financial reporting systems.
Contact names
Olivier Descamps
Business Group Director for Southern and Eastern Europe and the Caucasus
Tel: +44 20 73 38 7164
Fax: +44 20 73 38 6599
Jean-Marc Peterschmitt
Director for Western Balkans
Tel: +44 20 73 38 6892
Fax: +44 20 73 38 6599
EBRD London
One Exchange Square
London EC2A 2JN
United Kingdom
Mr Kenji Nakazawa
Head of the EBRD Resident Office in Skopje
Tel: +389 2 32 97 800
Fax: +389 2 32 31 238
EBRD RO Skopje
Dame Gruev 14
Intex Business Centre (2nd Floor)
P.O. Box 202
1000 Skopje, FYR Macedonia