Skopje, 23 July 2024 (MIA) – The European Bank for Reconstruction and Development (EBRD) and the Macedonian Transmission System Operator AD (MEPSO) signed Tuesday in the Government a €26.4 million loan agreement aimed at strengthening the transmission network.

The agreement was signed by the President of the EBRD, Odile Renaud-Basso, and the Director of AD MEPSO, Zuhdi Enuzi. The signing ceremony was also attended by the EU Ambassador, David Geer, and the Minister of Energy, Mining, and Mineral Resources, Sanja Bozhinovska.

The financing will be used within the framework of the project for constructing a substation near Miletkovo and renewing a 110 kV transmission line between Valandovo and Strumica, which will allow for the connection of 1,170 MW of renewable energy sources currently not connected to the grid.

The total project cost is €34.7 million, with €26.4 million being provided by an EBRD loan, €7.6 million from the Western Balkans Investment Fund (WBIF), and €0.5 million grant from the Climate Investment Fund Accelerating Coal Transition.

EBRD President Renaud-Basso underscored that this project will have a significant impact by reducing transmission losses by 14.5 gigawatts and cutting CO2 emissions by up to 8,158 tons annually, which will transform the energy landscape of North Macedonia.

“A key point I would like to highlight is that the project will enable the connection of an additional 1.2 gigawatts from renewable sources that currently cannot be connected due to outdated substations in the southeast region. Besides this benefit, the project will also foster human capital development. We will assist MEPSO in establishing a training center in the southwest region, which will focus on training network operators and other sector workers affected by the transition to green energy, equipping them with green skills for the future,” Renaud-Basso said, expressing satisfaction with the continued collaboration with MEPSO and the Government to advance the green transition agenda.

The project, Renaud-Basso added, also includes support for developing a master plan for networks, which will identify key investments needed for integrating new renewable sources and ensuring a smooth transition to green energy. This master plan will also feature a just transition platform through the EBRD, which will facilitate the shift from old to new networks, providing support to communities affected by this transition.

According to EU Ambassador Geer, investing in transmission lines and introducing smart grids is a crucial project in North Macedonia, given that the networks in the country are decades old and many need to be replaced, with a shortage of new connections.

“Without such investments, there will be no possibility of fulfilling the decarbonization plan that the country has set in its green agenda. In short, we cannot have a transition without transmission. The EU will continue to contribute to this process through investments from the Western Balkans Investment Framework and the new Growth Plan, helping to build stronger regional connections and ensure sustainable development. These actions will assist North Macedonia in achieving its goal of generating 66 percent of its energy from renewable sources by 2030,” Geer said, announcing continued support for the country as investment in energy infrastructure drives regional development and economic growth.

Energy Minister Bozhinovska noted that one of this Government's priorities is strengthening electrical transmission capacities through the reconstruction and revitalization of existing power lines. She assured that everything agreed upon and signed will be fully respected and implemented to the fullest extent.

"Everything that will be agreed upon and signed now will be respected and executed as promised; we will uphold our commitments as a Government. We aim to work on grid security. I cannot comment on what happened and why things were not done since 2018 or earlier; we will see that in time, as we will review what is revealed. From today onwards, we can promise that things will be different and that we will strive to fulfil all our obligations under every agreement we have and will sign in the future," said Bozhinovska when asked if the EBRD loan agreement includes penalties, given that MEPSO paid around €800,000 in penalties in 2018 for a loan taken but not utilized, meaning unrealized projects.

She announced that a review of all energy capacities, including MEPSO, will follow, as discussed with the state auditor. A plan is being developed for this to be implemented in September of the following year, with some reviews already completed. Minister Bozhinovska requested patience from the public, noting that the Ministry is in the process of being set up.

The EBRD is considered a key partner for MEPSO, financing several crucial projects such as the interconnection with Bulgaria and Albania, the rehabilitation of the high-voltage network, and supporting the corporate governance action plan as well as the development of procurement capabilities. The EBRD also announced that a contract will be signed with the banking sector in the country for financing some of the products offered by banks.

Photo: MIA