CONNECTIVITY AGENDA &RÀQDQFLQJRI ,QYHVWPHQW3URMHFWV LQWKH:HVWHUQ%DONDQV 2016 CONNECTIVITY AGENDA &RÀQDQFLQJRI ,QYHVWPHQW3URMHFWVLQWKH:HVWHUQ%DONDQVLQ

Dear Reader, Well connected transport and energy networks drive economic growth and jobs. They help attract investments and provide opportunities for businesses and people including youth. In the Western Balkans, they contribute to good neighbourly relations. Our connectivity agenda therefore aims to improve links within the Western Balkans as well as between the region and the EU. The European Union has set aside up to €1 billion for connectivity investment projects DQGWHFKQLFDODVVLVWDQFHIRUWKHSHULRG:HSURYLGHGWKHÀUVW½PLOOLRQ at the Western Balkans Summit in Vienna in August 2015 for ten priority projects. Johannes Hahn We expect to break ground on some of these in the coming months. This year we follow-up with approximately €100 million for three connectivity projects, as well as an European Commissioner DGGLWLRQDO½PLOOLRQIRUWKH5HJLRQDO(QHUJ\(IÀFLHQF\3URJUDPPHDQGWKH*UHHQ for Neighbourhood IRU *URZWK )XQG 7KHVH LQLWLDWLYHV ZLOO KHOS ÀQDQFH HQHUJ\ HIÀFLHQF\ PHDVXUHV LQ 3ROLF\DQG(QODUJHPHQW Negotiations residential buildings as well as hydro-projects. Connectivity is not merely about expensive infrastructure projects. New highways only make sense if existing networks are properly maintained, and there is little point in investing in expensive energy inter-connectors without willingness to pursue energy trading within the region. Such reform measures are relatively inexpensive, DQGWKHUHIRUHGRQRWSXWSUHVVXUHRQWKHOLPLWHGÀVFDOVSDFHRIWKHUHJLRQ7KLVLV why it is so important that WB6 leaders have agreed to step up efforts to implement reform measures to open markets, create a transparent regulatory framework that EXLOGVLQYHVWRUFRQÀGHQFHDQGUHPRYHEDUULHUVVRXWLOLWLHVDUHPDQDJHGHIIHFWLYHO\DQG HIÀFLHQWO\ These reform measures now need to be implemented without delay, so that we may provide added value to the infrastructure investments presented in this brochure. By working together to address shared challenges, the WB6 develop mutual trust which is so necessary for reconciliation, good neighbourly relations and the prosperity of the region. They are also key ingredients for the countries to advance on their path towards EU membership. I am pleased to share with you these examples of our commitment to help drive forward the connectivity agenda, as well as our efforts to help green the region and WKXVVXSSRUWRXUSDUWQHUVLPSOHPHQWWKHLU&23FRPPLWPHQWV &RQQHFWLYLW\$JHQGD Improving connectivity within the Western Balkans, as well as between the Western Balkans and the European Union, is a key IDFWRUIRUJURZWKDQGMREVDQGZLOOEULQJFOHDUEHQHÀWVIRUWKHUHJLRQ·VHFRQRPLHVDQGFLWL]HQV7KH:HVWHUQ%DONDQV6L[ :%  KDVPDGHWKHFRQQHFWLYLW\DJHQGDRQHRI LWVKLJKHVWSULRULWLHVZLWKDVSHFLDOHPSKDVLVRQWKHSUHSDUDWLRQDQGÀQDQFLQJRI  concrete regional infrastructure investment projects, but also on the implementation of technical standards and soft measures such as aligning/simplifying border crossing procedures, railway reforms, information systems, road safety and maintenance schemes, unbundling and third party access. 7KH1DWLRQDO,QYHVWPHQW&RPPLWWHHV 1,&V DUHUHVSRQVLEOHIRUGHÀQLQJDQGPDQDJLQJWKHSULRULWLVHG6LQJOH3URMHFW3LSHOLQHV DQGVHUYHDVDEDVLVIRUSURJUDPPLQJRI DOODYDLODEOHÀQDQFLQJVRXUFHV LQFOXGLQJQDWLRQDODQGRWKHUGRQRUV 7KH(XURSHDQ &RPPLVVLRQZLOOYLDWKH:HVWHUQ%DONDQV,QYHVWPHQW)UDPHZRUN :%,) FRÀQDQFHPDWXUHHQHUJ\SURMHFWVIURPWKH3(&,V OLVW 3URMHFWVRI WKH(QHUJ\&RPPXQLW\,QWHUHVW DQGPDWXUHWUDQVSRUWSURMHFWVIURPWKH7(17 7UDQV(XURSHDQ7UDQVSRUW &RUH1HWZRUNWRJHWKHUZLWKORDQVIURPWKHLQWHUQDWLRQDOÀQDQFLDOLQVWLWXWLRQV

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%,/$7(5$/'21256: Roadmap for a Regional Electricity Market for the Western Balkan 6

Electricity trading across borders is a key element of EU energy policy. Three regulatory packages have opened up formerly isolated EU markets and introduced cross-border trading through liquid spot markets, with a view to removing the barriers to an internal electricity market covering the entire EU. As Contracting Parties to the Energy Community Treaty, the Western Balkan six countries (‘WB6 countries’) have followed this development, including full implementation of the Third Energy Package by 1 January 2015. WB6 countries committed in Vienna in 2015 to implement a list of energy legal and regulatory measures, which are necessary to establish market-based electricity trading. These commitments remain valid. They include developing spot trading and regional market coupling, regional balancing and regional capacity allocation. They also include the removal of existing legal and regulatory barriers by, inter alia, full implementation of the Third Energy Package and additional market reforms. The recently signed Memorandum of Understanding of the WB6 on regional electricity market development (“MoU”) constitutes the basis for further regional market integration; it is a positive signal in the right direction. A central element is now how to continue national reform and regional market integration efforts, and to allow integration of the South East Europe (SEE) markets into the pan-European electricity market. However, the majority of the WB6 countries are still lagging behind in establishing organised market places as a precondition IRUHIÀFLHQWHOHFWULFLW\WUDGLQJ&URVVERUGHUHOHFWULFLW\WUDGHLVEHORZWKHUHJLRQ·VSRWHQWLDOUHÁHFWLQJWKHKLJKOHYHORI PDUNHW fragmentation. 7KHSRWHQWLDOEHQHÀWVRI OLTXLGVSRWPDUNHWVIRUWKH:%FRXQWULHVDUHVLJQLÀFDQW0DQ\RI WKH:%FRXQWULHVGRQRWKDYHWKH critical size to develop liquid markets in isolation. Liquid cross-border markets will lead to important cost savings for SEE energy consumers through more competition and more effective use of existing generation and transmission infrastructure in the region. This would also attract more investments. Regional power trading is also a pre-condition to organise electricity markets in a more environmentally-friendly manner. Aggregating generation and demand over larger trading regions will become a key condition for integrating energy from water, wind and sun. Expanding renewables in small isolated markets would require considerable investment into backup generation, which would further increase costs for customers. All of this market integration will also enhance security of supply. 8QEXQGOHGDQGFHUWLÀHGWUDQVPLVVLRQV\VWHPRSHUDWRUVDQGDUHJLRQDOO\FRRUGLQDWHGFDSDFLW\FDOFXODWRUDUHSDUWRI DIXQFWLRQLQJ regional trading system. Not all countries have implemented the necessary institutional changes yet. Since the WB6 region is physically closely linked with neighbouring EU Member States, it is crucial to develop an integrated SEE trading region, including WB6 and EU countries in order to overcome the limits of the small size of isolated national markets. The WB6 countries will support integration with the neighbouring EU Member States (MSs) which should take place in parallel to the implementation of the present Roadmap but not replacing it. In this respect, they take note of and will participate in the emerging “SEE Coupling Initiative”. National market reforms will also have to be executed in EU MSs neighbouring the WB6 countries WRDOORZIRUVXFFHVVIXOLPSOHPHQWDWLRQRI PDUNHWFRXSOLQJLQWKH6((5HJLRQ WREHIROORZHGXSE\(& 7KLVURDGPDSFODULÀHV content, addressees and implementation steps for implementing the soft measures relating to the development of spot trading and market coupling in the WB6 countries. It is an additional tool to enable implementation of those soft measures which are particularly important to prepare WB6 countries for integration with the EU markets. This roadmap neither replaces nor extends the Vienna Summit conclusions, which remain as commitments. The clearer description in this roadmap of the conditions to be IXOÀOOHGE\:%FRXQWULHVPD\UHGXFHWKHULVNRIIXUWKHUGHOD\VWRDFFHVV(8IXQGVIRUHQHUJ\LQIUDVWUXFWXUH By the signing up to this Roadmap, the WB6 countries reiterate their commitments made under the Energy Community Treaty and at the WB6 Summit in Vienna last year and ask the Secretariat of the Energy Community to help them coordinating and implementing the reform measures to be taken for that purpose and to monitor the implementation. 7KH IROORZLQJ IRXU NH\ FRQGLWLRQV QHHG WR EH IXOÀOOHG WR FRPSO\ ZLWK WKH REOLJDWLRQ WR LPSOHPHQW HOHFWULFLW\ VSRW trading:

1. Adhere to a power exchange 2. Develop trading/market coupling with one or more neighbours 3. Participate in MoU and SEE Coupling Initiatives and implement agreed measures 4. Ensure, and if necessary increase liquidity and monitor the progress with indicators.

1. Each WB6 country must adhere to a power exchange (IÀFLHQWWUDGLQJUHTXLUHVSRZHUH[FKDQJHV7KHGHOD\LQWKHHVWDEOLVKPHQWRI RQHRUPRUH6((SRZHUH[FKDQJHVIRUVSRWWUDGLQJLVDPDLQUHDVRQ IRUWKHPLVVLQJSURJUHVVLQ6(( VHHDOVR´VRIWPHDVXUHVµ,,  Procedure/element: • Submitting draft proposal containing details on when to couple which markets by January 2017 • Submitting draft proposal for establishing a national power exchange or which power exchange shall service the respective national markets by January 2017. 2. Each WB6 country must develop trading/market coupling initiatives with one or more EU neighbours and/or amongst themselves ,PSOHPHQWDWLRQSURMHFWVKDYHSURYHQWREHFUXFLDOIRUWKHLPSOHPHQWDWLRQRI FURVVERUGHUPDUNHWFRXSOLQJDVWKH\DOORZWRLGHQWLI\WHFKQLFDODQG UHJXODWRU\ERWWOHQHFNV VHHDOVR´VRIWPHDVXUHVµ,,  Procedure/elements: • 'HYHORSLPSOHPHQWDWLRQSURMHFWVWKURXJKWKHÀQDOLVDWLRQRIWKHSURMHFWLPSOHPHQWDWLRQDJUHHPHQWVIRUHVHHQLQWKH WB6 MoU until November 2016 • :LWKRXWGHOD\DOO7UDQVPLVVLRQ6\VWHP2SHUDWRUV 762V QHHGWRMRLQ&RRUGLQDWHG$XFWLRQ2IÀFHLQ6RXWK(DVW Europe (SEE CAO) • Develop implementation projects with EU neighbours (SEE Coupling Initiative) • Submit a plan for cross-border day-ahead market coupling projects by end 2016 • Start market coupling pilot project by July 2018 • Each TSO must allow the Electricity Transmission, System and Market Operator in * (KOSTT) to be connected to the European Network of Transmission System Operators for Electricity (ENTSO-E) and allocate capacity in its interconnectors with neighbouring countries in accordance with a Connection Agreement signed with ENTSO-E. 3. Each WB6 country must participate in MoU and SEE Coupling Initiatives and implement agreed measures 0DUNHW&RXSOLQJPXVWQRWEHGHYHORSHGLQLVRODWLRQEXWLQFORVHFRRUGLQDWLRQZLWK:%DQG(8QHLJKERXUVZKRIRUPRQH6((WUDGLQJUHJLRQ :LWKRXWSDUWLFLSDWLRQLQWKHUHOHYDQWFRRUGLQDWLRQHIIHFWLYHGHYHORSPHQWRI DWUDGLQJUHJLRQLVLPSRVVLEOH Procedure/elements: • Participate in work of MoU and SEE Coupling Initiative; implement agreed measures • Start early implementation of key elements necessary for regional market coupling • Take part in Capacity Allocation and Congestion Management (CACM) implementation and all related stakeholder groups • Ensure compatibility of new trading rules with EU regulatory framework. 4. Each WB6 country must ensure (and if necessary increase) liquidity and monitor progress with indicators (QHUJ\WUDGLQJUHTXLUHVUHPRYLQJUHJXODWRU\EDUULHUVDQGDSSURSULDWHUHJXODWRU\DQGFRQWUDFWXDODUUDQJHPHQWVZKLFKDOORZWKDWVXIÀFLHQWYROXPHV UHDFKWKHPDUNHWDQGQHZPDUNHWSDUWLFLSDQWVFDQHQWHU VHHDOVR´VRIWPHDVXUHVµ,, ,QFUHDVHGOLTXLGLW\LVDSUHFRQGLWLRQIRUFURVVERUGHU WUDGLQJDQGYLFHYHUVD3URJUHVVVKRXOGEHPHDVXUHGZLWKVSHFLÀFLQGLFDWRUV Procedure/elements: • Develop a plan describing national actions to ensure and, if necessary increase liquidity • 0HDVXUHOLTXLGLW\DWOHDVWXVLQJWKHIROORZLQJVSHFLÀFEHQFKPDUNV9ROXPHVWUDGHGGD\DKHDGPDUNHWUHVLOLHQFH PDUNHW robustness); churn rate (the total trade volume divided by the physically traded volume; a higher churn rate means a higher liquidity); bid-ask spread (difference between the best buying and selling rates - the smaller the spread, the higher the liquidity). *This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo Declaration of Independence. CORE NETWORK CO5RIDORS OF THE TRANS- EUROPEAN TRANSPORT NETWORK (TEN-T)

Medium-Term Transport Reform Measures (agreed in Vienna 2015)

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1. Opening of the transport market 1.1 Implementation of rail reform strategy

2. Establishment of competitive, reliable and safe transport system 2.1 Improvement of road safety 2.2 Trade and transport facilitation 2.3 Intelligent Transport System (ITS) deployment on the Core Network 2.4 Establishment of functioning maintenance system ensuring no section in poor/very poor condition by 2020

3. Increasing the effectiveness of Border Crossing Procedures 3.1 Effective Border Crossing Agreements 3.2 Implementation of Integrated Border Management (IBM) strategy 2015 CONNECTIVITY AGENDA PROJECTS Progress to Date

Financing Works Application Agreement Design Works Tender Contract Works Works 50% Works 100% Loan/Grant Approved Signed Complete Launched Signed Commence Complete Complete Disbursed

Albania – the former Yugoslav Republic 1 of Macedonia Power Interconnection (I): Early 2018 Grid Section in Albania – the former Yugoslav Republic of Macedonia Power Interconnection Mid 2017 2 (II): Grid Section in the former Yugoslav Republic of Macedonia

Trans-Balkan Electricity Corridor (I): Grid Late 2016 3 Section in Montenegro

Trans-Balkan Electricity Corridor (II): 4 Grid Section in Late 2017

Mediterranean Corridor: Bosnia and 5 Herzegovina – Croatia (CVc) Road Late 2016 Interconnection

Core Network: Bosnia and Herzegovina – 6 Croatia (R2a) Road Interconnection Early 2018

Orient/East-Med Corridor: the former 7 Yugoslav Republic of Macedonia – Early 2017 Kosovo* (R10) Rail Interconnection

Orient/East-Med Corridor: Montenegro – 8 Serbia (R4) Rail Interconnection Late 2016

Orient/East-Med Corridor: Serbia – the 9 former Yugoslav Republic of Macedonia Late 2017 (CX) Rail Interconnection

Orient/East-Med Corridor: (CX) Early 2017 10 Intermodal Terminal in , Serbia

*This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo Declaration of Independence. Regional Core Transport Network ,QYHVWPHQW3URMHFWV&RÀQDQFHGWKURXJKWKH,QVWUXPHQWIRU3UHDFFHVVLRQ$VVLVWDQFH Western Balkans Investment Framework1

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1 7KH7(17*XLGHOLQHVPD\EHIRXQGDWKWWSHFHXURSDHXWUDQVSRUWWKHPHVLQIUDVWUXFWXUHWHQWJXLGHOLQHVOHJDOEDVLVBHQKWP 5RDGQHWRUNFRPSOLDQFHKDVEHHQFDOFXODWHGDJDLQVWPRWRUZD\OHQJWKFRQVLGHUHGWREHLQYHU\JRRG ,QWHUQDWLRQDO5RXJKQHVV,QGH[ RUJRRGFRQGLWLRQ ,QWHUQDWLRQDO5RXJKQHVV,QGH[  35DLOZD\QHWRUNFRPSOLDQFHKDVEHHQFDOFXODWHGDVDQDYHUDJHRIHOHFWULÀFDWLRQD[OHORDGDQGRSHUDWLQJVSHHGFRPSOLDQFH RIWRWDOOHQJWK ZLWKWKH7(17 *XLGHOLQHV 2016 CONNECTIVITY PROJECT SERBIA Orient/East-Med Corridor: Serbia – Bulgaria CXc Rail Interconnection

Partners: The Orient/East-Med Corridor runs x Ministry of between Salzburg in Austria and Construction, in Greece. In Serbia, the Transport and Corridor accounts for 872 km of track, Infrastructure, Serbia i.e. approximately 23% of the entire x JSC Serbian railway network. It includes a Infrastructure 80 km-long Serbia – Bulgaria (Železnice Srbije interconnection along the CXc route, in Akcionarsko Društvo) between Sicevo and Dimitrovgrad, which has not been electrified. Moreover, the signalling and train Estimated cost: control system has been in use for x €84.4 million more than 50 years, slowing travel Existing Double-track Railway on Corridor X, speeds to 30 and 50 km/h and posing Serbia. serious transport safety risks. Results: EU contribution: 1 This investment project is part of the x €40.7 million (works Core Network Corridors of the Trans- x 80 km of CXc railway track and supplies) European Transport Network (TEN-T) upgraded to TEN-T standards, x €2.9 million (project extension into the Western Balkans including preparatory works for implementation and South East Europe Transport electrification and signalling and support) Observatory (SEETO)’s Core Network. telecommunication systems. It is thus included in the long-term x Increase in passenger and freight sustainable development plans of the travel speed from 30 km/h to 120 Estimated EIB loan: European Union and its partners. It km/h, as well as in freight capacity x €36.7 million covers the rehabilitation of the Sicevo to 22.9 tonnes axle load, to Dimitrovgrad railway track, including throughout the CXc Sicevo to preparatory works for electrification Dimitrovgrad section. and signalling and telecommunication systems.

Beneficiary contribution: x €4.1 million Transport View of Non-electrified Railway Track on Corridor Xc, Serbia. 1 Subject to a final decision by the budgetary authorities. Map of Sicevo to Dimitrovgrad Rail Interconnection.

Estimated start date: The investment will be executed in two The Dimitrovgrad – border with x Mid 2017 stages: a). Sicevo – Stanicenje (48 Bulgaria section was completely km); b). Stanicenje – Dimitrovgrad (32 overhauled in 2001 with assistance km). Preliminary designs and other from the European Investment Bank. Estimated end date: technical and financial documentation The successful completion of proposed x End of 2019 were prepared in 2008 and 2010 rehabilitation works on the Sicevo to respectively; any fine-tuning required Dimitrovgrad section as well as the by recent changes in Serbian execution of the two complementary Estimated loan Construction Law will be undertaken in investments will thus bring the entire repayment period: close cooperation with JASPERS by CXc route to modern, TEN-T x 15 years the end of 2016, so that tendering can standards. commence early 2017.

The rehabilitation works will not have Benefits significant social or environmental impacts as the new facilities will be x Approximately 550 new jobs built on the route of the existing rail created during construction as well track. as operation and maintenance periods. The project is complemented by two x Direct access to modern means of other investments: transport for more than 340,000 x Construction of the railway people living along the railway deviation around the City of Niš to route proposed for rehabilitation. the station in Sicevo, undertaken x Decrease in current pollution levels with assistance from 2011 IPA caused by diesel operations. (EU) funding. x Reduced operational and maintenance costs for railway x Completion of electrification and signalling and communication operators. Better opportunities for socio- works on the route from Niš to x economic growth for one of the Sicevo and from there to Stanicenje and Dimitrovgrad, for poorest regions in Serbia. Improved trade flows with countries which additional financial x in the region and thus a positive assistance will be sought from the Western Balkans Investment impact on the broader economy of Serbia. Framework in 2017. Transport 2016 CONNECTIVITY PROJECT ALBANIA Mediterranean Corridor: Montenegro - Albania - Greece Rail Interconnection

Partners: The Mediterranean Corridor links the x Ministry of Finance Iberian Peninsula with the Hungarian- and Ministry of Ukrainian border. Its extension into the Transport and Western Balkans includes the CVIII Infrastructure, Albania Tirana - Durrës rail section, which x Albanian Railways connects the former Yugoslav S.A. (Hekurudha Republic of Macedonia and the Shqiptare/HSH) Albanian mainland to Durrës and the Adriatic Sea. This section has not benefited of any major overhaul since Estimated cost: its commissioning and it currently x €81.5 million allows for travel speeds under 60 km/h. It has not been electrified and Durrës Railway Station, Albania. the telecommunication and signalling EU contribution: system is obsolete, causing frequent Results: x €32.9 million (works interruptions in traffic. As a result, and supplies) passenger services are seasonal and x 34.5 km of railway track, from x €2.5 million (project freight transport is inefficient. Tirana to Durrës, partly implementation 1 rehabilitated to modern, TEN-T This investment project concerns the support) standards, including signalling and rehabilitation of the Tirana - Durrës telecommunication (but excluding railway section and the construction of Estimated EBRD electrification). a new railway link to the international loan: x 7.4 km of new railway track built airport in the capital, including x €32.9 million between Tirana and Rinas signalling and telecommunication international airport. systems. It is part of the Core Network x Increase in passenger and freight Corridors of the Trans-European Beneficiary travel speed from 60 km/h to 120 Transport Network (TEN-T) extension contribution: km/h, as well as in freight axle load into the Western Balkans as well as x €13.2 million to 22.9 tonnes, throughout the South East Europe Transport Tirana - Durrës section. Observatory (SEETO)’s Core Network. Transport HSH Train nearby Durrës. 1 Subject to a final decision by the budgetary authorities. Map of Tirana - Durrës Rail Interconnection.

Estimated Start Date: The project is now at detailed design Yugoslav Republic of Macedonia and x Mid 2017 stage, with feasibility and Montenegro, as well further transport environmental impact assessment links with Greece and Bulgaria, along studies completed with previous WBIF the Mediterranean Corridor. Estimated End Date: financial assistance. Tender x End of 2019 documents are also under preparation Benefits as the detailed designs are due to be finalized by July 2016. The new x More than 1,375 new jobs created Estimated Loan development will not have significant during construction as well as Repayment Period: social or environmental impacts as operation and maintenance x 15 years most of the facilities will be built on the periods. route of the existing rail track, while the x Direct access to modern means of new section passes mostly through transport for more than 1 million agricultural areas. Detailed people living along the Tirana - environmental impact mitigation Durrës railway route. measures have been planned for x Reduced operational and during construction, including a noise maintenance costs for railway monitoring programme. operators active in Albania, estimated at more than €60 million. The project complements two other x Savings in cost of travel time, planned improvements on CVIII and estimated at more than €55 million. R2 sections on the Mediterranean x Improved environmental conditions Corridor, as follows: by reducing freight and passenger x R2 Durrës – Vora – Shkodra – transport by road. Hani Hotit/border with Montenegro x Improved trade flows with countries section (140 km) in the region and thus a positive impact on the broader economy of x CVIII Durrës – Vlore – Albania. Pogradec/border with the former Yugoslav Republic of Macedonia section (137 km). Once complete, these two additional sections will ensure interoperable and multimodal transport connections between Albania and the former Transport 2016 CONNECTIVITY PROJECT KOSOVO* Orient/East-Med Corridor: The former Yugoslav Republic of Macedonia – Kosovo – Serbia R10 Rail Interconnection

Partners: The Orient/East-Med Corridor crosses x Kosovo Railways JSC Kosovo from the north to the south, (InfraKos Sh. A.) from the border with the former x Ministry of Finance, Yugoslav Republic of Macedonia to Kosovo the one with Serbia, and constitutes Kosovo’s sole connection to the wider Estimated cost: region by rail. The entire track is in x €42.3 million poor condition, with serious structural constraints that limit traffic to 20 or EU contribution: 60km/h. R10 route is part of the Core x €17.2 million (works Network Corridors of the Trans- and supplies) European Transport Network (TEN-T) x €1.0 million (project extension into the Western Balkans implementation and South East Europe Transport support) Observatory (SEETO)’s Fushë Kosovë/ Railway Station. Comprehensive Network. Estimated EBRD Results: 1 contribution: This investment project will cover the x 35 km of railway track and 5 x €8.6 million loan rehabilitation of the Fushë Kosovë/ railway stations upgraded to x €0.5 million (project Kosovo Polje - Mitrovicë/Mitrovica rail modern, TEN-T standards, on the implementation section and associated railway stations Fushë Kosovë/Kosovo Polje to support) to modern, TEN-T standards. Whereas Mitrovicë/Mitrovica R10 route. it includes modern signalling and x Increase in passenger and freight Estimated EIB loan: telecommunications, the project travel speed from 20 km/h to 100 x €9.2 million excludes electrification. km/h as well as freight axle load to 22.5 tonnes.

Beneficiary contribution: x €5.8 million Transport View of Non-electrified Railway Track in Drenicë/Drenica, Kosovo. 1 Subject to a final decision by the budgetary authorities. *This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo Declaration of Independence. Map of R10, including the Fushë Kosovë/Kosovo Polje - Mitrovicë/Mitrovica Section.

This investment project concerns border with the former Yugoslav Estimated Start Date: Fushë Kosovë/Kosovo Polje - Republic of Macedonia section x Mid 2017 Mitrovicë/Mitrovica section, which following the receipt of WBIF technical constitutes Phase 2 of a larger assistance and investment grants as investment in rehabilitating the entire well as EBRD and EIB loans under the Estimated End Date: R10 route through Kosovo, from the 2015 WBIF co-financing round. The x End of 2019 border with the former Yugoslav Mitrovicë/Mitrovica – border with Republic of Macedonia to that with Serbia section is planned to be Serbia. rehabilitated by 2020 as well, to the Estimated Loan same TEN-T standards with the The feasibility study, preliminary Repayment Period: exception of electrification. designs and environmental impact x 20 years assessment for Phase 2 have been completed with previous Western Benefits Balkans Investment Framework (WBIF) assistance. The new x Secure and efficient development will not have significant for approximately 50% of the social or environmental impacts as the population of Kosovo. new facilities will be built on the route x More than 160 new jobs created of the existing rail track. during construction as well as operation and maintenance periods. Additional financial support for detailed x Passenger and cargo rail capacity technical project design and tender improved by more than 1.2 million preparation was granted by the WBIF people and respectively 1.2 million in 2015, as well, and the technical tonnes. assistance activities are currently x Improved trade flows with countries ongoing. Detailed designs are due to in the region and thus a positive be finalized by the first half of 2017. A impact on the broader economy of loan agreement for the entire R10 Kosovo. rehabilitation was signed with the European Bank for Reconstruction and Development (EBRD) in September 2015, followed by another agreement with the European Investment Bank (EIB) in December 2015. Major overhaul works are due to start on Fushë Kosovë/Kosovo Polje – Transport 2016 CONNECTIVITY PROJECT REGIONAL Regional Energy Efficiency Programme (REEP Plus) for the Western Balkans

Partners: The energy intensity of the six Western x European Bank for Balkan countries (WB6) is around Reconstruction and three times higher than the average for Development the European Union, often as the x KfW Group result of aged and obsolete energy x Commercial Banks infrastructure and poorly maintained and/or outdated energy-using capital Estimated total stock. leveraged Moreover, there is a growing need investment: amongst the WB6 for cleaner energy x €140 million while reducing dependence on imported energy sources. EU contribution: In order to address such investment x €30 million Mounting of New LED Lanterns in the Old (investment grants needs, the European Commission, in Town of Novigrad, Croatia and technical partnership with the Energy Results: assistance to WB Community Secretariat (ECS) and the governments, banks, EBRD, established the Regional x €140 million on-lent to finance and sub-borrowers) Energy Efficiency Programme (REEP) eligible investments. for the Western Balkans in 2013. x 20,000 households receiving Partner contribution: The additional, €30 million, finance. €110 million 1 x contribution from the European Union x 10 housing associations or housing will be used to support REEP in further management companies or advancing energy efficiency (EE) and technology/ services providers renewable energy (RE) investments in assisted with development of EE the region. projects at building level. Energy (EE and RE) Small Hydro Power Plant in Bistrica, Montenegro

1 Subject to a final decision by the budgetary authorities. Ternoves Hydropower Plant, Albania

REEP provides hands-on support to Benefits Estimated beneficiary countries with: x Improved energy efficiency both in Programme Start the commercial and residential a). Policy Dialogue and project Date: sectors and thus improved preparation support for Energy Service x End 2016 economic competitiveness and Company (ESCO) projects and growth. national Energy Efficiency Action Plan x Smaller energy bills for households implementation; Estimated and housing collectives. Programme End b). Credit line facility through local x Better living conditions. Date: financial institutions for projects in x Increased private sector x End 2023 private and public sectors (WebSEFF); involvement in the development c). Direct lending facility covering and financing of sustainable energy investments. public and private sector sustainable : New businesses and jobs Loan Tenors energy projects, including renewables x x Up to 12 years and ESCOs (WeBSEDFF) associated with energy services and buildings upgrade. REEP Plus will continue to address policy barriers and bring additional benefits through a combination of project preparation support and medium-term financing to households, public and private sector for energy efficiency and renewable energy investments with a main focus on the residential sector. It will follow a similar structure to the original REEP with the addition of a residential component under Window 2. The Direct Lending Facility will continue to cover both municipal and private sector investments in sustainable energy, including small renewable energy projects.

www.wb-reep.org Energy (EE and RE) 2016 CONNECTIVITY PROJECT REGIONAL Green for Growth Fund: Hydropower and other Renewable Energy Schemes for the Western Balkans

Shareholders: There is a recognized need in x European Investment Southeast Europe for both improving Bank (EIB) and energy efficiency in businesses and European Investment homes and generating new energy Fund from renewable resources. This will help the region meet its growing need x Kreditanstalt für for cleaner energy, while reducing Wiederaufbau (KfW) dependence on imported energy x German Federal sources and providing cost savings Ministry for Economic and efficiency gains. In order to Cooperation and address such investment needs, the Development Green for Growth Fund, Southeast x European Bank for Europe (GGF) was initiated by the EIB Reconstruction and and KfW in 2009, with key financial Development (EBRD) support from the European x International Finance Commission and the German Federal Corporation (IFC) Ministry for Economic Cooperation and Development. GGF thus became the x Oesterreichische first specialized fund intended to Entwicklungsbank Installing LED lighting in , the former (OeEB) advance energy efficiency (EE) and Yugoslav Republic of Macedonia. renewable energy (RE) in the region, x Nederlandse through innovative public-private Financierings- Results: partnerships. Funding has been Maatschappij voor x Up to EUR 100 million in new subsequently complemented by other investments in Western Balkans Ontwikkelingslanden financial institutions. The additional, (FMO) over the next five years €20 million, contribution from the x Estimated energy savings of x GLS Bank European Union1 will be used to 500,000 MWh/year x Finance in Motion support the Fund’s growth in Southeast x Estimated CO savings of 120,000 Europe and to successfully continue its 2 x Sal. Oppenheim tonnes/year. mission of fostering EE and RE investments in the region. Energy (EE and RE) Small Hydropower Plant in Librazhd, Albania.

1 Subject to a final decision by the budgetary authorities. Solar-powered Irrigation Drip S\VWHPLQ%HJHþ6HUELD.

Estimated total GGF provides refinancing and Given its lean structure and high leveraged technical assistance to financial specialization, the GGF is able to investment: institutions to enhance their quickly deploy its funds and enable its x €100 million participation in the EE and RE sectors. partners to on-lend them to achieve In addition, the Fund makes direct energy efficiency and CO2 savings. EU contribution: investments in renewable energy x €20 million projects or related innovative fields. Benefits Eligible RE investments include: solar, Fund contribution: small hydropower, biomass, x Employment generation and x €80 million geothermal, methane recovery, and economic growth by making small wind and biomass developments. households and companies more Estimated efficient and by channelling EE eligible measures include a diverse Investment Date: investments into productive assets, range of projects, from building x Late 2016 rather than into energy envelope to lighting and combined consumption heat/power systems. Estimated x More than 48% primary energy Investment Duration: The GGF Technical Assistance savings across the portfolio x 15 years Facility, operating hand in hand with x Up to 8% of the savings required the GGF, provides critical support to under the National Energy the Fund in achieving its goal of Efficiency Action Plans (NEEAPs) enhancing EE/RE and reducing CO2 of Western Balkan target countries. emissions. The majority of the Fund's investments are loans to financial institutions to support on-lending in retail loans for EE/RE purposes to private households and to small and medium enterprises. Complementing other initiatives financed by the EC, the GGF focuses on effective capacity building within Financial Institutions and engages in awareness raising, policy dialogue and infrastructure build up to mainstream EE/RE finance.

Energy (EE and RE) www.ggf.lu HFHXURSDHXQHLJKERXUKRRGHQODUJHPHQW