The European Bank for Reconstruction and Development (EBRD) on Thursday said it was providing a €25m credit line to Raiffeissen Bank to finance energy-saving investments by local councils in Hungary.
The loan will be used for lending to Hungarian municipalities, municipal companies as well as energy-saving companies providing services to municipalities in order to support the upgrade of the energy efficiency of municipal infrastructure, including rehabilitation of heating and power distribution systems, replacement of outdated boilers and improvement of thermal insulation of buildings, the EBRD said. This facility will help Hungarian municipalities reduce energy consumption by up to 150 GWh per year, about the same amount of electricity consumed by Győr, Hungary's sixth-biggest city.
The loan is part of a European Union - EBRD program to promote medium and long-term funding for energy efficiency improvements in the municipal sector through commercial partner banks.
To enhance the effectiveness of investments, the EBRD credit line is complemented by grant funds from the European Commission, which will be used to help the municipalities assess energy saving potential and financial feasibility of infrastructure rehabilitation projects, as well as to provide investment incentives to borrowers who successfully implement projects. The incentives will be based on estimated level of energy savings and will amount to up to 20% of the loans.
Since the beginning of its operation in Hungary, the EBRD has invested over €1.9 billion in more than 100 projects. (MTI-ECONEWS)