EBRD to provide loan for gas supplies through TAP to North Macedonia and Serbia

To diversify natural gas supplies through the Trans Adriatic Pipeline (TAP) to North Macedonia and LNG terminals in Greece, as well as to ensure gas supplies to Serbia, the European Bank for Reconstruction and Development (EBRD) plans to provide state-owned company NOMAGAS with a loan under a state guarantee in the amount of 98.59 million euros, Report informs referring to the EBRD.

The approval of the loan by the bank’s Board of Directors is expected on April 24. The total cost of the project is 140.190 million euros.

The loan proceeds would be used for construction of 100% hydrogen ready natural gas interconnection pipeline with Greece (66km; interconnection) and two natural gas transmission pipelines, Gostivar to Kicevo (34km; Section 1) and Sveti Nikole to Veles (28km; Section 2) in North Macedonia.

“The investments will supply gas to North Macedonia. This enables an accelerated transition away from coal and towards renewable energy by decommissioning existing coal fired Thermal Power Plants (TPPs) by 2030. It is expected that 1.7 GW of renewable energy will also be deployed, which will result in net 82% reduction of Green House Gas emission by 2030. Furthermore, the Project will significantly reduce air pollution by displacing inefficient forms of heating in the commercial and residential sectors and use of petroleum products and solid fuels.

The Project is also 100% hydrogen ready and does not prevent the entry of low carbon solutions into the end use markets. The Project facilitates the diversification of gas supply to North Macedonia through the Trans Adriatic Pipeline (TAP) and LNG terminals in Greece, also providing possibility to supply neighboring Serbia. This will improve the competitiveness of private sector businesses and reduce gas prices, through increasing gas supply by 2.5 times (from existing 0.8 bcm to 3.6 bcm) and thereby further support the decarbonization of the energy sector at lower cost of supply,” reads the report.

North Macedonia has adopted the Just Transition Roadmap in June 2023, ensuring protection of vulnerable people and communities. This was recognized and supported by the Climate Investment Funds (CIF) and North Macedonia became pilot country for the Accelerating Coal Transition (ACT) Program. In this line, the EBRD helped to develop and signed at COP 28 a Joint Declaration with the Government of North Macedonia and other partner institutions, for in-country platform for North Macedonia to ensure just and accelerated coal transition.

The Ministry of Environment and Physical Planning of North Macedonia (MoEPP) issued an environmental approval for the Interconnector in January 2021 prior to the Client submitting the financing request to EBRD. An Environmental Impact Study (Elaborate) was prepared for Svete Nikole-Veles pipeline in 2021 and submitted to the MoEPP, which was approved it the same year.

Both pipelines avoid physical resettlement and minimize the use of private land. For the Interconnector, about 75 percent of the land needed permanently and about 80 percent of the land needed temporarily, is state-owned. For the Sveti Nikole-Veles Section, the state owns about 71 percent of the land needed permanently and about 70 percent of that needed temporarily.

The Bank has mobilized 216,000 euros of non-reimbursable technical assistance funds from Shareholder Special Fund to assist with the project preparation, including a technical and energy sustainability assessment for North Macedonia gas transmission development, comprehensive E&S Assessment and Disclosure Pack, as well as Baseline Study for Gas Pipeline Section Gostivar i Kicevo and GAP Analysis.

NOMAGAS is a joint stock state owned company and licensed gas transmission system operator (TSO), established in June 2022 from the merger between the two-state owned TSOs, National Energy Resources (NER) and JSC GA-MA Skopje (GAMA).