September Mongolia joins the EBRD as a country of operations ISSUE 6 CONTENTS

Transcription

1 ISSUE 6 September 2006 Outreach & NGO Relations Team, EBRD ngo@ebrd.com This sixth edition of the EBRD-NGO Newsletter focuses on two broad themes that the EBRD has worked on recently - the Bank s support for energy efficiency improvements and the development of the SME sector in our countries of operations. This new issue also informs you that the EBRD has begun operations in another country Mongolia. CONTENTS Page Mongolia joins the EBRD as 1-2 a country of operation Promoting energy efficiancy 2 in Bulgaria Upgrading Russia s hydropower generation Refurbishing the Enguri hydropower plant in Georgia News from the micro, 4-5 small and medium-sized enterprise sector Forthcoming events Transition: 15 years of building the future CEI conference in Tirana Other information Meetings with NGOs in Kazakhstan and Armenia Launching new BAS operations Ukraine and Kazakhstan country web pages in Russian Timetables and contacts Schedule of Board consultation visits Country strategy schedule Contacts Comments and suggestions We welcome your suggestions concerning issues and topics to include in the NGO Newsletter. Please contact the Outreach & NGO Relations team at: ngo@ebrd.com You can also find out about the forthcoming conferences in November 15 Years of Transition which is to mark the 15th anniversary of the EBRD in London and the Central European Initiative Summit in Tirana. Also, there is a roundup of the EBRD s meetings with NGOs in Almaty and Yerevan and Mongolia joins the EBRD as a country of operations The EBRD is shifting the borders of its activities further east, following acceptance by all of its shareholders to admit Mongolia as a country of operations. The admission will allow the EBRD to start financing projects in this vast, landlocked country of 2.8 million people bordered by Russia and China. The EBRD plans to work with the Mongolian government and the business community, specifically with the aim of helping to finance the development of private enterprise and the process of privatisation. As in other Early Transition Countries (ETCs), SMEs and microfinance will be a priority. Another key goal will be to strengthen the financial sector. The Bank will also seek ways to help finance the improvement of Mongolia s infrastructure. the inauguration of two new BAS offices. Finally, we inform you about the forthcoming country strategy schedule and Board Consultation Visits (BCVs) and invite you to visit the new Russian-language country web pages for Ukraine and Kazakhstan. Ulaanbaatar

2 Dialogue with the government will aim to continue the process of reform and liberalisation and to maintain progress in improvements to the investment climate in Mongolia. Mongolia s admission as a recipient country of the EBRD comes as a natural continuation of the work the Bank started in central and eastern Europe 15 years ago. The Bank will use its experience and expertise to help the process of economic and political transformation of the country move forward. As a prelude to its becoming a country of operations, the EBRD has already been working with Mongolia to secure grants from donor countries to help finance the transition to a market economy, including legal reform. The Mongolian Cooperation Fund (MCF) was set up in March 2001 with total funds from donors of 10.3 million. So far, the Bank has worked on 45 projects, committing 8.5 million of MCF funds to provide technical support in areas such as financial institutions, aviation, telecommunications and power. Via its TurnAround Management programme, the EBRD has also provided management advice on restructuring and improving technical and financial performance in various business sectors. The EBRD already has a representational office in Ulaanbaatar and will have a fully operational office by later this year. The head of the EBRD s office in Ulaanbaatar is John Chomel-Doe. Promoting energy efficiency in Bulgaria The EBRD is lending Raiffeisenbank (Bulgaria) 20 million to help promote energy efficiency and renewable energy projects in private businesses across Bulgaria. The loan falls under the Industrial Energy Efficiency and Renewable Energy Framework Extension. The loan will enable the bank to on-lend financing to private-sector industrial enterprises to improve energy efficiency or implement a renewable energy project. Eligible energy efficiency projects target better energy consumption, automation, control and heat recovery systems while eligible renewable energy investments include biomass, biogas, wind, run-of-the-river hydro, geothermal and solar generators. The first Energy Efficiency and Renewable Energy Framework was launched in 2004 by the EBRD together with the Kozloduy International Decommissioning Support Fund (KIDSF) and the Energy Efficiency Agency of Bulgaria. This 50 million framework comprised EBRD financing extended to six participating banks. In 2006 the Bank approved a 55 million extension to the framework. Financing is complemented by 20 million in grant funding used for providing rebates to clients who successfully complete projects from the KIDSF, set up in 2000 and administered by the EBRD. Under the Energy Efficiency and Renewable Energy Framework, clients for energy efficiency projects will be eligible for a rebate of 7.5 per cent from KIDSF on the loan amount, while clients investing in renewable energy projects will for eligible for a 20 per cent rebate on the loan amount.

3 Upgrading Russia s hydropower generation Hydropower generation is the main source of renewable energy in Russia, providing 20 per cent of all the power produced. Hydropower stations that are owned and operated by HydroOGK account for nearly 10 per cent of Russia s power supply. The cascade of power stations on the Volga and Kama rivers is the one of the largest renewable energy sources in south western Russia. However the power station equipment is more than 40 years old and completely exhausted. The EBRD is lending 6.3 billion roubles ( 185 million) to rehabilitate some of Russia s most important hydroelectric power stations in the Volga river region. This loan will help extend the lives of these renewable sources of energy by another 25 years reflecting the Bank s pledge under its new Energy Policy to increase investment in green energy projects. The loan to HydroOGK, which by the end of the year will be the world s second-biggest hydropower utility after Hydro-Quebec in Canada, is part of the Bank s long-term commitment to help modernise Russia s power sector. Doing so requires not just nuts-and-bolts equipment but also less-visible yet equally important improvements in the electricity network s organisation and management, from generation through to transmission to distribution. Together with the EBRD loan for the Volga-Kama cascade refurbishment, the EBRD has secured grant financing from the Spanish government to develop a regulatory framework for windfarms in Russia. Refurbishing the Enguri hydropower plant in Georgia Since 1997 the EBRD and the European Commission (EC) have been helping to unpick the knots in Georgia s energy supply, in part by investing in the Enguri hydropower station, the country s main power source. Improvements at Enguri will help Georgia to reduce imports of expensive natural gas used for power generation and improve the security of supply by replacing it with renewable domestic hydropower. Enguri was built in 1978 to provide peak electricity to the then Soviet Enguri hydropower station Union. By the time the Soviet Union disintegrated in 1991, the plant urgently needed rehabilitation following years of no maintenance. The plant s unit three shut down completely in 1993, depriving the country of 10 per cent of its power supply; other units were operating below capacity. Refurbishment of the plant appeared to be impossible as the state was unable to fund it, and the plant is situated on a disputed internal frontier. In 1997, the EBRD agreed to lend the Georgian government US$ million to rehabilitate Enguri; the EC offered a grant of 9.4million. The plant was shut down completely in March 2006 so that repairs could start. Beneath the reservoir is a series of huge galleries, one on top of the other, containing equipment essential to plant operations. About 5.3 kilometres of water-flooded galleries were refurbished. Three out of five energy generating units have been restored thanks to the EBRD loan and together they now produce enough to supply a quarter of the country s needs. The project has improved the safety of the dam, the workers and the region and it has brought reliable electricity to the people of Georgia. About 140 members of staff were trained thanks to a Swiss government grant, a road linking the power house with the dam was rebuilt and the workers houses were refurbished in Potskho, the village of the dam. Five hundred people live there, of whom 300 are involved with refurbishing the dam. The three power units came back on stream on 14 July The Enguri hydropower plant is essential to Georgia as it provides for 40 per cent of its total energy consumption. The EBRD is now considering extending the loan to cover refurbishment of the remaining two energy generating units.

4 News from the micro, small and mediumsized enterprise sector One of the EBRD s key priorities has always been support for micro, small and medium-sized enterprises across its countries of operations. To date the EBRD has committed over 620 million to 80 financial institutions in its region, supporting more than one million micro and small businesses including 14 specialised microfinance banks. There are several facilities that cater for this, one of the most successful being the EU/EBRD SME Finance Facility which combines EBRD loans with EU grants in the form of technical cooperation and financial incentives. It has been operational since 1999 and has operated in the eight recent accession countries as well as recently being extended to include the aspiring accession countries - Bulgaria, Croatia and Romania. Twice a year, representatives from the EBRD and European Commission (EC), as well as the European Investment Bank and Kreditanstalt für Wiederaufbau who are now partners in the programme meet up to discuss the strategic direction for the facility. This year the EBRD hosted this meeting, and this proved to be an excellent opportunity for our new First Vice President, Varel Freeman, to meet and discuss this important facility and other initiatives with senior counterparts from the European Commission and our EC Director Vassili Lelakis. The EC has always been a supporter of a strong Bank focus on the SME sector and is very pleased to be involved in this facility, which plays a central role within the bigger picture of extensive EC/EBRD cooperation in the region, says Mr Lelakis. This facility is still going strong although the new member states have now graduated and projects there have been successfully completed there is a strong pipeline of new projects in the accession countries, and a planned contribution of 24 million from the EC this year. In line with current EBRD priorities of moving south and east there are more facilities of this type planned to include the countries of southeastern Europe which are not yet covered. Other SME facilities across the region, such as the Russia Small Business Fund (RSBF), and Kyrgyz MSE Finance Facility II (KMSEFF II) are also going from strength to strength. A loan of 10 million to OTP Bank Romania takes the cumulative amount committed by the EBRD under the EU/EBRD SME Finance Facility over the 1 billion mark. This latest loan is a good example of the philosophy behind the facility, which aims to create a dynamic and sound SME sector by providing financial and technical assistance to financial intermediaries in the region, encouraging their entrance into the SME finance business. Sustainability is one of the cornerstones of the facility, so in addition to the EBRD loan, OTP Bank Romania will receive a 1.5 million grant from the European Commission to help implement the project and support, for example, the training of SME loan officers. Volksbank (VB) Leasing Romania will also be lent 10 million under the EU/EBRD SME Finance Facility to give entrepreneurs more access to lease finance. The loan will be complemented with technical assistance for training and management improvements and with performance fees funded by the European Commission. The facility supports the development and growth of entrepreneurs by facilitating their access to finance. VB Leasing, already a strong supporter of SMEs in Romania, is growing strongly in the lease finance sector. The EBRD loan help will the company build on that by exclusively financing more leases to micro and small enterprises up to 30,000 and 125,000 respectively. Some examples of other recent loans made for SME development can be seen on the following page.

5 Albania - EBRD loan gives SMEs more access to longer-term finance A 5 million loan to Banka Popullore, under the Western Balkans SME Finance Facility, to increase SME access to finance. The loan will enable Banka Popullore to develop its activities with the SME clients further by offering longer maturities, fulfilling the growing demand for loans of between three and five years. Behar Male, Chairman of the Supervisory Board at the Albanian bank, said our bank is one of the fastest growing in the country and we are in an institution dedicated to its customers needs The EBRD loan is helping to build on our strengths to further reach out to more and more clients. Bosnia and Herzegovina - EBRD provides 8 million loan to MIKROFIN Micro and small enterprises (MSEs) are set to benefit from an 8 million EBRD loan to MIKROFIN for on-lending. MIKROFIN is the largest non-bank microfinance institution in Bosnia and Herzegovina. The EBRD loan falls under the recently established Micro, Small and Medium-sized Enterprises Finance Framework (MSMEFF) for the Western Balkans and Croatia which aims to facilitate access to finance for smaller business clients. It will be complemented by a tailor-made technical assistance programme to assist MIKROFIN in its transformation into a shareholding company and its adaptation to the commercial sector. Bosnia and Herzegovina - EBRD loan helps strengthen EKI lending capacity The EBRD is lending to Mikrokreditna Organizacija EKI, the third largest non-bank microfinance institution in Bosnia and Herzegovina, 6 million to enable owners of micro and small enterprises to gain more access to finance to expand or build their businesses. Chikako Kuno, EBRD Director for Small Business, said EKI, with the majority of its clients in the rural and agribusiness sectors, is playing a crucial role in helping to develop areas beyond major towns and cities. It is an important institution that is helping entrepreneurs across rural Bosnia and Herzegovina to gain more access to finance, and its business plan to transform into a countrywide commercial micro credit company within the next 3-5 years is welcomed by the Bank. Kyrgyz Republic - EBRD works with Kyrgyz banks to boost small businesses A US$3 million credit line to the Kyrgyz Investment and Credit Bank (KICB) to support its lending to MSEs. Sub-loans between US$500 and US$100,000 will be on-lent by KICB to existing and new small business clients to help them to set up new businesses or expand existing activities. KICB will receive the funds under the Kyrgyz MSE Finance Facility II (KMSEFF II), a US$30 million facility that provides funds to commercial banks for on-lending to MSEs. KMSEFF II is also supported by technical assistance funds from USAID, the EU and the multi-donor ETC fund. This financing supports institution-building and the development of efficient MSE lending procedures. Serbia - EBRD equity creates Opportunity for Serbian micro-businesses The EBRD is paying 3 million for an 18.2 per cent equity stake in Opportunity Bank Serbia a dedicated microfinance bank which will be set up as a result of conversion of Opportunity Stedionica, a Serbian microfinance institution. Opportunity Stedionica currently operates as a savings bank. Following the new Law on Banks adopted in December 2005, the institution will apply to the National Bank of Serbia for a full banking licence. As and when the licence is granted (which is a condition of the EBRD investment), owners of micro and small businesses will benefit from an increased range of financial services and products allowing them to build new or develop existing businesses. Russia - EBRD loan to promote leasing in Siberia, Russian Far East and Sakhalin US$18 million for DeltaLeasing to boost the capability of a well-managed, established leasing company to provide longterm lease finance to private enterprises in the region. This loan will complement the Bank s existing Russia Small Business Fund operations and separate on-lending programmes for banks helping small businesses. DeltaLeasing specialises in providing leasing to SMEs to help them invest in new and used equipment and vehicles. The company maintains a network of offices throughout the Russian Far East and Siberia and is currently expanding operations into the Urals. This facility will thus improve the access of small businesses to medium-term funding across a large swathe of Russia s regions.

6 Forthcoming events Transition: 15 years of building the future A one-day conference to mark the 15th anniversary of the founding of the European Bank for Reconstruction and Development will be organised by Chatham House and the EBRD on 28 November 2006 at the EBRD s offices in London. Over the past 15 years, the transition from planned to market economies has brought economic growth, political freedom and a new way of life for many. But even in the most advanced countries, there are still parts of society, the country and the economy that have not prospered to the same extent as those in cities and industries that have led the transition. The conference will present new insights into the current situation and examine the social, political and economic factors which will facilitate the continued transition, with a wide range of experts from across the regions. To apply for a place or receive further Iformation on this Conference, please send an to conferences@chathamhouse.org. uk. To find out more information about the conference programme, key speakers and some important questions that will be discussed please visit Chatham House s dedicated web page for the event at php?id=5&cid=104. CEI conference in Tirana The ninth Central European Initiative (CEI) Summit Economic Forum (SEF) will take place on November 2006 in Tirana, Albania. The forum is the annual flagship event of the CEI, organised in parallel with the Roundtable of Economic Ministers and the meeting of the Heads of State of the 17 member countries of the Initiative. The forum serves as a platform to support and promote the CEI strategy of fostering regional cooperation, European integration and economic transition in central and eastern Europe. The event will attract industry leaders, senior government officials, regional, national and international organisations, financial institutions, professionals, consultants, lawyers and hundreds of businessmen. Around 800 participants are expected to attend. This year, the SEF will focus on reforms and investments for stimulating business development with particular attention to infrastructure, finance investments, innovation for competitiveness, entrepreneurship, regional integration and trade promotion. Seminars and discussions will address and analyse current economic challenges faced by the region and will be complemented by presentations of related project proposals. A special panel session titled Social sector, business and CSR: working with local civil society will take place on 22 November. The speakers will be representatives of local NGOs and businesses. The panel will cover the experience of NGOs in providing business services to the private and public sector in Albania, the watchdog role of NGOs in scrutinising and constructively engaging with commercial enterprises, particularly in terms of curbing corruption; it will also examine the issues surrounding corporate social responsibility (CSR). The panel will be moderated by Darcie Nielsen, Head of Governance, Economic and Environmental Issues Department of the OSCE presence in Albania. You can download the programme from the CEI s web site: SEF06Titetablegraphic.pdf. Registration is open online at www. ceinet.org/forumregistration.php. Further information can be found on the CEI web site:

7 Other information Meetings with NGOs Kazakhstan In the context of the review of the EBRD s Kazakh country strategy, a delegation from the EBRD visited Kazakhstan on 31 August 01 September A meeting was held between the EBRD s delegation and representatives of several Kazakh NGOs in Almaty on 1 September. Local NGOs which took part in the meeting were: Kazakhstan International Bureau for Human Rights and Rule of Law (KIBHR), Kazakhstan Revenue Watch / Soros Fund, Eurasia Foundation and Ecological Society Green Salvation. The EBRD s participants were: Olivier Descamps, Business Group Director for Southern and Eastern Europe, Caucasus and Central Asia, Erik Berglof, Chief Economist, Rika Ishii, Economist and André Küüsvek, Director of the Almaty Resident Office. NGO representatives concentrated mostly on the new Public Information Policy (PIP) of the EBRD but also discussed minority rights, environmental issues, EBRD NGO dialogue and the Bank s role in political and economic reforms in Kazakhstan. Representatives of Kazakh NGOs and EBRD agreed to enhance mutual cooperation further in the future. Armenia As part of the EBRD s Policy Dialogue with stakeholders, the Yerevan Resident Office organised an annual meeting between the head of the RO, Mr Michael Weinstein, and a group of Armenian NGOs on 14 September Local NGOs which participated in the meeting were: Eurasia Foundation, Open Society Institute Assistance Foundation, Union of Manufacturers and Businessmen of Armenia, Environmental Public Advocacy Centre, Association for Foreign Investment and Cooperation, NGO Centre, Corporate Governance Centre, International Centre for Human Development, Armenian Tree Project and Armenian Forests NGO. The NGOs were interested in the EBRD s work in Armenia, mainly in the development of sound business practices and environmental due diligence in the Bank s projects. Other issues raised include the efforts towards better local business climate, in particular matters related to improved transparency and corporate social responsibility. The meeting was organised by Mrs Angela Sax, Senior Analyst at the Yerevan RO who also acts as the NGO liaison in the resident office. Launching new BAS operations The EBRD s Business Advisory Services (BAS) started operating in 1995 and has undertaken over 5,200 projects in 19 countries with over 57 million in Donor funding. Currently BAS operates in 15 countries from central Europe to central Asia, through 27 offices. New BAS programme in Albania In September 2006 a new BAS programmes was launched in Albania, financially supported by the government of the Netherlands. Considerable number of major stakeholders were present at the BAS opening ceremony in Tirana from both public and private sectors, showing a great interest in the new project. Mr. Jemin Gjana, Minister of Agriculture and Food, pointed out a strong commitment of the Albanian government in supporting Albanian SME-s, especially in agro-business, and in this respect a clear interest in newly launched BAS programme. New BAS programme in Serbia The BAS programme in Serbia, financially supported by the government of the Netherlands, has been set up in July 2006 and is now fully operational. The official opening ceremony of the BAS office in Belgrade will follow in the fall of New BAS programme in Romania The BAS programme in Romania, financially supported by the government of Austria, has been set up in summer of 2006 and the programme is fully operational. The official opening ceremony of the BAS office in Bucharest will follow in October.

8 Ukraine and Kazakhstan country web pages in Russian Two of the EBRD s Resident Offices - Ukraine and Kazakhstan - have now launched web pages in Russian. Potential clients, the public, the government, non-governmental organisations, press and other stakeholders have gained, through these pages, easy access in a local language to useful information about the activities of the EBRD in Ukraine and Kazakhstan. You are welcome to visit Ukrainian web pages at: If you have any questions, comments or suggestions regarding the website, please contact Mr Anton Usov, Communications Adviser, at UsovA@kev.ebrd.com. Likewise, we invite you to visit Kazakhstan country web pages at and send your views and queries about the website to Ms Lena Ni, Personal Assistant, at NiL@ata.ebrd.com COUNTRY COUNTRY STRATEGY STRATEGY SCHEDULE SCHEDULE FOR 2006 Contacts Country Slovenia Kazakhstan Serbia Montenegro Kyrgyz Republic Dates 7 November 7 November 6 February 6 February 6 February Doina Caloianu Manager Outreach & NGO Relations Tel: Fax: ngo@ebrd.com Biljana Radonjic Ker-Lindsay NGO Advisor Tel: Fax: radonjib@ebrd.com Newsletter production board consultation visits 2006 Countries Dates Romania 9-13 October Anthony Martin Editorial Manager Helen Warren Editorial Assistant Bryan Whitford Layout and design Azerbaijan October