EBRD lends 75 million Euro for Bosnian roads

Loan to improve important links in primary road network in the country

London, United Kingdom – The EBRD is lending €75 million to the state of Bosnia-Herzegovina for the rehabilitation and reconstruction of key sections of the primary road network across the country. The loan will increase the efficiency of the road transport services by improving important links in the road network and by upgrading maintenance operations through the introduction of pilot contracting methods and better business and financial planning practices.

The facility will be on-lent to the two Bosnian entities and their relevant road authorities – the Federation of Bosnia-Herzegovina will receive €45 million and Republika Srpska €30 million.

The project consists of a comprehensive five-year maintenance and rehabilitation programme for the road companies in the two entities, which would bring the road network to maintainable standards. In total, it includes 110 road sections in the Federation with a total length of 1,200km and 55 road sections in Republika Srpska with a total length of 1,100km.

In addition, the loan will be used to introduce an innovative procurement practice – performance-based road maintenance contracts – which are aimed at improving road conditions on a more sustainable basis and reducing maintenance costs. The long-term goal of this new practice is to assist the road companies in the introduction of good quality business planning and road management systems developed to international standards.

Signing the project, EBRD President Jean Lemierre said that development of better road infrastructure plays a key role in supporting the transition process towards a better economy. As well as connecting towns and cities, they support trade and tourism and make the region more attractive for investment, Mr Lemierre said.

Bozo Ljubic, Bosnia-Herzegovina Minister of Communications and Transport, stated that this loan will not only help upgrade important links of the road network, but will also improve the quality of service to road users. Bosnia-Herzegovina welcomes EBRD’s assistance with implementation of transport sector reforms, which would ultimately bring the country in line with best EU practices.

This project follows on from the Bank’s $32.7 million loan in 1996 for emergency road reconstruction in Bosnia, which was part of the large international campaign responding to post-war emergency reconstruction needs. Another 70 million were provided in 2004 for the development of the regional network in the country, including construction of the Sarajevo bypass and a new road from Banja Luka to Gradiska on the Croatian border.

The overall project – whose total cost is €231 million – is being co-financed and implemented in parallel with the European Investment Bank and the World Bank. An additional €500,000 of technical cooperation funds from by the EBRD-Western Balkans Fund will be provided for assistance with effective financial planning and reporting.

The project will not only prevent further deterioration of the road infrastructure but would improve the quality, including much needed safety of traffic. Roads are the preferred mode of transport for citizens in Bosnia-Herzegovina. In 2005, about 24.8 million passengers travelled the roads, amounting to 1.6 billion passenger kilometres.

The EBRD is the largest institutional investor in Bosnia-Herzegovina, having invested €594 million in 56 projects in a number of important sectors, including national and municipal infrastructure, the financial sector and the private corporate sector, especially small and medium size enterprises.