Contacts
In Pristina: Edon Vrenezi (381) 38-249-459
evrenezi@worldbank.org
In Washington: Andrew Kircher (202) 473-6313 Akircher1@worldbank.org Miriam Van Dyck (202) 458 2931
mvandyck@worldbank.org WASHINGTON, October 12, 2006—Kosovo moved one step closer today to developing the potential of its large energy reserves after the World Bank’s Board of Executive Directors approved a $8.5 million grant aimed at supporting development in Kosovo, which suffers from high unemployment and chronic electricity cuts. “With the Kosovo government and donors now agreed on a strategy for energy sector development, the way is open for inviting in private investors in a transparent and competitive way to build a new power plant and open a new lignite mine in a socially, environmentally and financially sustainable manner,” said Orsalia Kalantzopoulos, World Bank Country Director for Southeast Europe. “This investment is expected to bring numerous benefits and a more steady electricity supply to Kosovars, who struggle on an average annual income of 1,300 euros and who cope with regular blackouts in cold winter months. Another benefit will come through the export of power to an integrated and growing Southeast European electricity market, providing Kosovo over time with resources to pay for new schools and health clinics, and for building roads, bridges and improved water supplies. While this grant is good news for Kosovo, it will not solve all of Kosovo’s economic problems. Kosovo must continue improving the business climate with the aim of attracting investment, boosting economic growth, creating jobs, and unleashing the strong entrepreneurial spirit.” The $8.5 million Lignite Power Technical Assistance Project grant from the World Bank’s International Development Association (IDA) comes in response to a request by the Kosovo Provisional Institutions of Self-Government (PISG), which asked the World Bank, the European Commission (EC) and several bilateral donors to support Kosovo’s development agenda by facilitating investments in key sectors of the economy with high growth potential. The grant will help the PISG to put in place the right regulations and laws to allow private investors to start bidding in 2007, begin construction in 2008, and complete the power plant in 2012. “The grant will enable the Kosovo government to establish the enabling framework for qualified strategic investors to invest in a new power plant and mine,” said Peter Thomson, Director of the Sustainable Development Department in the World Bank’s Europe and Central Asia Region. “The opening of the mine in particular would not come a moment too soon. The two mines currently operating are expected to run out of lignite by 2008 so a new mine will need to be opened soon to meet ongoing needs.” Development of Kosovo’s energy reserves would give an urgently needed boost to the economy, which declined during the conflict period and has hit Kosovo’s 2 million people hard. Today, 37 percent of Kosovars are classified as “poor” and almost 40 percent of the labor force is without a job, with unemployment even higher among women and people under the age of 24. The ageing Kosovo electricity system, meanwhile, has acted as a brake on the economy and prevented businesses from reaching their potential and creating jobs. Surveyed companies in Kosovo have pointed to the unreliable electricity supply as the main barrier to their operations, reporting 90 days of power outages a year, with each blackout lasting an average four hours a day. Energy exports will also strengthen the poor trade links to Kosovo’s neighbors in Southeast Europe, which have suffered since the breakup of the former Yugoslavia. “The lignite development grant will help Kosovo in achieving its goal of changing the energy sector from being a constraint to an opportunity. Furthermore, the regional potential of the project will enhance closer integration and cooperation with Southeast Europe and the EU,” said Kanthan Shankar, World Bank Representative in Pristina. “The urgency for Kosovo to boost its economic growth and reduce poverty is growing, and the energy sector has the potential to become one of the main pillars of economic growth in Kosovo’s medium and long-term development strategy.” On the environmental front, the grant will enable Kosovo to lay the regulatory framework for a private investor to build a new power plant that uses state-of-the-art technology that meets EU standards for emissions. This, in turn, will allow for the eventual shutting down of the antiquated and highly polluting Kosovo A power plant, which was built outside Pristina in the early 1960s. Since 2000, the World Bank has approved 22 grants totaling $95 million for Kosovo. The new IDA grant builds on a series of three previous IDA technical assistance projects in the energy sector in Kosovo and also a $5.5 million grant in the spring of 2006 aimed at cleaning up the vast ash heaps near the Kosovo A power plant and turning over the reclaimed land for farming and other purposes. ### For more information on the World Bank’s work in Kosovo, please visit http://www.worldbank.org/kosovo |
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