The intergovernmental Agreement, worth 60 million euro, was signed on 12 October 2009in Sarajevo, at the BiH Parliament building, between H.E. Mr Joachim Schmidt, Ambassador of Germany to Bosnia and Herzegovina and Mr Dragan  Vrankić, Minister of Finance and Treasury of Bosnia and Herzegovina. The Agreement entails 56 million euro loan and 4 million grant funds. The majority of the funds, 46 million euro, are allocated for the construction of “windpark”, electricity generation project in Herzegovina area, while the other part of the Agreement, 14 million euro will be used for the water supply project and waste water management project in Banja Luka.

„This Agreement is another major step in the development of our joint efforts in stimulating the infrastructure and economic productivity in BiH“, stated H.E. Mr Joachim Schmidt, who informed the participants that the funds allocated in this Agreement were almost doubled compared to the year 2007. „We have significant experience in the area of hydroenergy and therefore it is my pleasure that BiH also pays great importance to energy projects, which means greater energy security for BiH, reduction of gas emissions and, at the same time, a great impulse for the economy of Bosnia and Herzegovina“, emphasised ambassador Schmidt.

Mr Dragan Vrankić, Minister of Finance and Treasury of BiH, informed the journalists that “the conditions of the Agreement were favourable – 2,7 % interest with grace period of three years and payment period of 14 years. The funds from the Agreement can be used in an adequate and quality manner”, stated Mr Vrankić, who also signed the Agreement on Loan and Project, between KfW and Bosnia and Herzegovina, as well as with Republika Srpska and Municipality of Banja Luka, for the Project „Banja Luka Water Supply and Waste Water Management in Banja Luka“. The third Agreement which was signed was the Agreement on the financing of this project, while the fourth, the Special Agreement on the Implementation of the Agreement on Loan and Project, was also signed by Mr Johann Hesse, Head of Section Operations for Economic Development, Trade and Natural Resources within the Delegation of the European Commission to Bosnia and Herzegovina. He emphasised that the European Commission was pleased to be a partner in this project and to be able to contribute to the reconstruction of infrastructure in BiH.

„Our contribution for the reconstruction of water supply system in Banja Luka is 3 million euro. The European Commission will provide 2 million euro from the IPA Regional Funds, while the amount of 1 million euro was allocated from the National IPA Fund 2009. Overall, the national IPA 2009 anti-crisis package alone has allocated 39 million euro to various projects including the investments for environmental infrastructure development in Bosnia and Herzegovina”, emphasised Mr Hesse. He also stated that, in addition to being relevant to the economy, this project had a very important relevance for the environment, and specifically for the alignment of the environmental standards of Bosnia and Herzegovina with the standards of the EU.

Although the Banja Luka water project is an investment that contributes to the implementation of the EU legislation, notably the Urban Waste Water Driective,  Mr Hesse also emphasised three outstanding issues:

– The Urban Waste Water Directive is in the process of being transposed by BiH but this process is not completed.

– Bosnia and Herzegovina has currently no national investment programme and environmental financing strategy. This means in practice that investments go to municipalities who are more pro-active and are able to convincing in proposing their investment project.  As a result, investments do not necessarily go to places where they are most needed , for instance,  in the area of environmental pollution.

The Agreements were also signed by Tina Babo, Director of the Sector for BiH, Serbia and Montenegro, within the KfW, Gerald Kuhnemund, Director of KfW Office in Sarajevo, Dragoljub Davidović, Mayor of Banja Luka and a representative from the Ministry of Finance of Republika Srpska. All participants expressed their pleasure for cooperation and readiness to continue the projects which support Bosnia and Herzegovina, especially in crisis time.