The EBRD is lending Bulgarian pulp producer Svilosa €18mn, as part of an overall €28mn package, to help double its production capacity and strengthen its position as a regional leader in the pulp sector. The Nordic Investment Bank is expected to lend the remaining €10mn.

The loan will also support substantial energy efficiency investments enabling Svilosa, which is based in Svishtov in northern Bulgaria, to make significant energy savings. It will also help the company achieve compliance with European Union environmental standards.

The loan is in line with the EBRD’s new strategy for Bulgaria, expected to be approved this month, to provide long-term financing to help domestic companies become more competitive, and to meet EU environmental requirements. Olivier Descamps, EBRD business group director for southern and eastern Europe, says this loan will help the Svilosa pulp mill expand and become more competitive on a domestic, regional and international level, especially important for the country as the EU accession date nears.

The project is also expected to have a significant demonstration impact. A key challenge for local businesses in Bulgaria is gaining access to long-term financing. This project should demonstrate that local companies with consolidated transparent corporate structures and who work in accordance with sound corporate governance principles can and should be considered for ten year financing, says Descamps.

Pulp and paper, a traditional sector in Bulgaria, has for years been experiencing a decline. The loan is expected to support its revival by doubling production at the mill, and help develop regional trade through exports to countries including Turkey and Greece. The loan will maintain local employment as the company expands, and local suppliers such as the wood harvesting companies will benefit too.

The EBRD is the largest single investor in Bulgaria, having committed more than €1.1bn in 57 projects.