WBIF Monitoring Report Published
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MONITORING REPORT May 2021 MONITORING REPORT Abbreviations and acronyms AFD Agence Française de Développement KfW kfW Development Bank bn Billion MD Main Design CBA Cost-Benefit Analysis m Million CD Concept Design PD Preliminary Design CEB Council of Europe Development Bank PFG Project Financiers’ Group CF Co-financing / Investment Grant PFS Pre-feasibility Study DD Detailed Design PIU Support to Project Implementation Unit EWBJF European Western Balkans Joint Fund PSD Public Sector Development EBRD European Bank for Reconstruction and RBMP River Basin Management Plan Development REEP/REEP Plus Regional Energy Efficiency Programme for EBRD SSF EBRD Shareholder Special Fund the Western Balkans EFA Economic and Financial Appraisal SC Steering Committee EIA Environmental Impact Assessment SD Sector Development EIB European Investment Bank SDP Sector Development Project EFSE European Fund for Southeast Europe SIA Social Impact Assessment ESIA Environmental and Social Impact SOC Social Sector Assessment SOW Supervision of Works ENE Energy Sector TA Technical Assistance ENV Environment Sector TMA Technical and Management Assistance EU European Union ToR Terms of Reference EWBJF European Western Balkans Joint Fund TRA Transport Sector FAA Financial Affordability Analysis WB EDIF Western Balkans Enterprise and Innovation FS Feasibility Study Facility GGF Green for Growth Fund WBG World Bank Group ID Identification WBIF Western Balkans Investment Framework IFI International Financial Institution WWTP Wastewater Treatment Plant IPA Instrument for Pre-Accession Assistance IPF Infrastructure Project Facility IRS Interest Rate Subsidies This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of the Western Balkans Investment Framework and can in no way be taken to reflect the views of the European Union. 2 Contents Executive summary .............................................................................................................. 4 Introduction .......................................................................................................................... 5 Overview of the portfolio ..................................................................................................... 6 Status of the Joint Grant Facility ......................................................................................... 17 Status of the Joint Lending Facility ..................................................................................... 28 Analysis of the project portfolio .......................................................................................... 31 Annexe: 2008-2020 WBIF grants by beneficiary .................................................................. 34 Subotica Wastewater Treatment Plant in Serbia WBIF Secretariat DG NEAR, Unit D5 © Western Balkans Investment Framework, 2021 Reproduction is authorised provided that the source is acknowledged. EUROPEAN COMMISSION www.wbif.eu [email protected] 3 MONITORING REPORT Executive summary This report examines the composition of the portfolio, the progress achieved with the implementation of the grants awarded under the JGF and towards financing and realising supported projects. Over a period of 12 years WBIF has reached €1.4bn in grants, contributing to €22.4bn estimated investments in the Western Balkans. Net of cancellations, WBIF approved a total of is 361 grants for 210 projects. The grants maintain a reasonably balanced distribution per beneficiary, with Bosnia and Herzegovina (€312.4m) and Serbia (€225.6m) at the top of the ranking, followed by Montenegro (€194.9m), Kosovo* (194.3m), Albania (€188.3m) and North Macedonia (185.2m). By sector, transport is the dominating sector with €962.9m in grants, followed by energy with €246.9m and enviroment with €149.7m. Social infrastructure and private sector development are lagging behind with €52m and €8.5m respectively. Digital infrastructure is an eligible sector since December 2017 and received €8.5m for technical assistance. Most of the funding has been allocated for technical assistance (TA) and investment grants for infrastructure projects, with €311.5 (22% of total) and €1,007m (71% of total) respectively. Two investment facilities, the Western Balkans Enterprise and Innovation Facility (WB EDIF) and the Regional Energy Efficiency Programme (REEP and REEP Plus), have been put in place as well and benefited from €90.1 million in grants. The WBIF has also funded sector development studies and interest rate subsidies. The blending principle underpinning the success of WBIF has generated an increase in signed loans from lead IFIs, which reached a cumulative total of €6.5bn for €12.8bn investments at the end of 2020. The average financial leverage effect is 5x and varies from 3 to 24 times the grant component, depending on sector, beneficiary and project specifics. To date, 187 grants (48%) totalling €238m have been completed, 172 grants (44%) of €1,188m are ongoing, 2 grants (1%) of €2.1m are on hold pending decisions on their implementation, and 28 grants (7%) worth €25.4m have been cancelled. Of the 210 projects supported, 41 projects (20%) have been completed: 21 infrastructure projects for €913m investments and 20 studies worth over €14m. A further 62 projects (30%) for €9.5bn estimated investments are under implementation or tendering for works, and 107 projects (51%) for €12bn estimated investments are at various stages of preparation. __________________ *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. 4 Introduction The Western Balkans Investment Framework (WBIF) is a regional blending platform supporting EU enlargement and socio- economic development in the Western Balkans through provision of financing for strategic investments. Established in 2009, it involves the European Commission (EC), 6 financial institutions (CEB, EBRD, EIB, KfW, WBG and AFD) and 20 bilateral donors. WBIF has become a major source of funding for infrastructure projects and development in the region and is the main vehicle for deployment of the investment package made available by the EC under the Economic and Investment Plan for the Western Balkans in October 2020. WBIF is a process of multilateral coordination that selects, prepares, implements and monitors a portfolio of priority projects. It provides funding by blending internationally funded grants with loans and domestic finance through the Joint Grant Facility (JGF) and the Joint Lending Facility (JLF). The JGF gathers grant resources and blends them with loans and other sources of financing from participating financial institutions. The JGF resources originate from the (i) European Western Balkans Joint Fund (EWBJF), which pools contributions from the EU's IPA programme, bilateral donors and EIB; (ii) IPA grant funding allocated by the EC for IPF technical assistance and 2008 IPF Municipal Window; and (iii) grant funding allocated by IFIs outside the EWBJF. The JLF is a source of loans and complements the JGF as the second pillar of the blended financing package offered by WBIF. The WBIF grants finance technical assistance and co-finance infrastructure projects. They are provided for specific projects where an IFI intends to co-finance the investment with a loan, with the exception of regional studies and investment facilities where other forms of financing are also available. Currently, six beneficiaries are eligible for WBIF support: Albania, Bosnia and Herzegovina, North Macedonia, Kosovo, Montenegro and Serbia. This latest monitoring report examines the composition of the portfolio, the progress achieved with the implementation of the grants awarded under the JGF and that towards financing and realising supported projects. The purpose of the report is to provide an overview of the WBIF portfolio to the members of the Project Financiers’ Group and to the Steering Committee. It looks yearly at what has happened in the implementation of the portfolio, but unlike an evaluation, it does not examine why something has occurred and does not issue recommendations. The strucuture of the report includes • an overview of the composition of the portfolio; • a review of the status and the use of the grants awarded under the JGF; • a review of the progress towards financing and implementation of projects under the JLF; • leverage, achieved and expected results of supported projects. The report reviews the status of the portfolio using information and data availbale in the WBIF MIS on 27 May 2021. All grant amounts include implementation fees. 5 MONITORING REPORT Overview of the portfolio The WBIF portfolio has developed through 30 rounds of grants awarded to finance project preparation, investment grants and incentives to financial intermediaries over 12 years. The WBIF portfolio consists of 361 grants of €1,428m which support 210 projects with a total estimated value of €22.4bn. The total number of grants approved is 389, but considering that 28 grants (7%) were cancelled after approval, the actual total is 361. The WBIF grants fund projects in six eligible sectors: digital infrastructure, energy, environment, social, transport and private sector development. Currently, six beneficiaries are eligible for WBIF support: Albania, Bosnia and Herzegovina, North Macedonia, Kosovo, Montenegro and Serbia. Croatia was eligible for WBIF grants until 1 July 2013. The ratio of grants