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Signature of a Loan and Project Agreements for the Financing of the Nemila – Donja Gracanica Road Project in the Bosnia and Herzegovina
A Loan Agreement was signed today in the city of Sarajevo between Kuwait Fund for Arab Economic Development and Bosnia and Herzegovina, whereby Kuwait Fund will make a loan of Kuwaiti Dinars KD 11.6 million (equivalent to about US$ 39.44 million) to assist in financing Nemila – Donja Gracanica Road Project. A Project Agreement relating to the Loan was also signed between JP Autoceste Federacije Bosne i Hercegovine d.o.o. Mostar and Kuwait Fund. It is worth mentioning that in extending its loans and developmental assistance, Kuwait Fund depends exclusively on its own resources.
His Excellency Mr. Vjekoslav Bevanda, Minister of Finance and Treasury signed the Loan Agreement on behalf of Bosnia and Herzegovina, while Mr. Adnan Terzic, Chief Executive Officer of the JP Autoceste Federacije Bosne i Hercegovine d.o.o. Mostar signed the Project Agreement on behalf of the said Company. Mr. Marwan Al-Ghanem, Deputy Director-General for Operations of Kuwait Fund for Arab Economic Development signed both the Loan and Project Agreements on behalf of Kuwait Fund.
The project aims at enhancing and promoting the socioeconomics of Bosnia and Herzegovina through the improvement of transport connections between BiH and middle/eastern Europe, and increasing the efficiency of the road infrastructure along the road section (Nemila- Donja Gracanica) located north of Zenica Town, which is a vital section of the corridor Vc crossing BiH from North to south. It aims also at eliminating traffic bottlenecks, reducing vehicle-operating costs, saving travel time, reducing traffic accidents, and enhancing road links of the project area with the rest of the country.
The Project consists of the construction of road section Nemila-Donja Gracanica, of the Corridor Vc Motorway, of about 17.70 km long, provision of required consultancy services and land acquisition. The section is divided into three sub-sections namely (i) Nemila – Vranduk; (ii) Vranduk- Ponirak; and (iii) Ponirak - Donja Gracanica. The road is a two-lane dual carriageway with width of 3.75 m per lane, emergency lanes 2.5 m and shoulders of 1.5 m, with a central reserve of 4.00 m.
The total cost of the Project is estimated at about Convertible Marks 585.5 million, equivalent to about K.D. 94 million, of which about K.D. 24.7 million, are in foreign exchange, representing about 26% of the total cost of the Project, and the Fund's loan covers about 12.3% of its total costs. The Project will also be financed , together with the Fund , by the OPEC Fund for International Development with a loan in the amount of about K.D. 15.38 million representing about 16.4% of the total cost of the Project, the European Investment Bank with a loan in the amount of about K.D. 15.7 million representing about 16.7% of the total cost of the Project , and The European Bank for Reconstruction and Development with a loan and a grant in the amount of about K.D. 28.9 million representing about 30.8% of the total cost of the Project, while the government of Bosnia and Herzegovina will provide the rest of the project costs.
The term of Kuwait Fund Loan is 20 years, including a grace period of 5 years, which has started upon receipt of the first withdrawal order from the first Loan. The Loan is to be amortized in 30 semi-annual installments, the first of which will be due on the 1st date on which any interest or other charge on the loan shall fall due, after the elapse of the above-mentioned grace period. The Loan bears interest at the rate of 2% per annum in addition to a service charge of 0.5% per annum for meeting administrative costs and the expenses of implementing the Loan Agreement.
The Loan represents the fifth loan by Kuwait Fund for the financing of projects in Bosnia and Herzegovina, as Kuwait Fund already made 4 loans to it of a total amount of about Kuwaiti Dinars 24.8 million, equivalent to about U. S. Dollars 84.3 million, for the financing of projects in banking, transportation, communications and water sectors. The Fund has also provided Bosnia and Herzegovina with two grants, one in the amount of KD 313,000 to finance the preparation of technical and economic feasibility studies for a project in the water and sanitation sector, and the second in amount of KD 28,000 to finance technical and economic feasibility studies for a project in the transport sector.