The air quality in the Bosnian city of Zenica will improve “significantly” thanks to plans to replace a coal-fired power plant with a cleaner natural gas-fired combined heat and power plant, according to the European Bank for Reconstruction and Development (EBRD).
The bank has arranged a €46 million financing package to enable construction of the Toplana Zenica CHP plant, which will supply energy to Zenica, the fourth largest city in Bosnia and Herzegovina with a population of over 160 000, and also to its largest employer, the ArcelorMittal steel plant.
The project will be implemented by a joint venture formed by ArcelorMittal Zenica, the City of Zenica, KPA Unicon and Finnfund. It will result in “major environmental improvements as well as more cost efficient production of energy”, EBRD said in a statement.
The project will be financed with a €46 million loan package, comprising a €28 million loan for the EBRD’s own account and a loan of up to €18 million provided by Banca Intesa Sanpaolo S.p.A. The EBRD portion includes €23 million from the Bank and €5million of concessional financing from the International Cooperation and Development Fund (TaiwanICDF).
The steelworks’ existing CHP plant is Zenica’s sole external provider of heating in the winter. It relies on coal for nearly half its fuel input. It is a major source of SO2 pollution in the city, aggravated by the city’s weather conditions and geographical location in a natural basin.
In addition, the outdated equipment suffers frequent disruptions, EBRD said. The plant’s existing coal boilers will be replaced by gas-fired boilers and an old steam-driven blower will be replaced by a modern high-efficiency electric blower.