IFC approves loan for Serbia’s largest biomass CHP project to decarbonize paper industry

IFC facilitated a loan package of EUR 106 million for Serbian tissue paper producer Drenik ND. The company will use a share of the proceeds to build the country’s first large-scale captive cogeneration plant, which will use biomass.

The International Finance Corp. – IFC approved a EUR 60 million type A loan and facilitated a syndicated package of EUR 46 million as the implementing entity for Drenik ND. The company will develop a captive biomass-fired combined heat and power (CHP) plant in Serbia, refinance debt and strengthen its working capital, according to the documentation.

Drenik is the largest tissue paper producer in the country. It operates a factory on the outskirts of Belgrade, in an industrial zone in Krnjača, where it plans to install the cogeneration system, and another facility in neighboring Hungary.

The CHP project consists of 8 MW in electricity generation capacity and 16 tons of steam per hour

In addition, IFC will provide advisory support to improve the company’s corporate governance and elevate environmental and social management systems, the announcement adds. The CHP plant for own use, set to become the largest of its kind in Serbia, would have 8 MW in electricity generation capacity alongside 16 tons of steam per hour. The idea is to replace grid electricity usage and reduce natural gas consumption.

The cogeneration system is envisaged to require 12.45 tons of wood chips per hour or 90,000 tons per year, IFC said in an earlier update. It was supposed to be commissioned by the end of this year. Drenik intends to buy the biomass from Serbia’s forest management agency Srbijašume, the project page shows. It would consist of non-commercial timber from forest maintenance and forest sanitation as well as the maintenance of public green spaces.

IFC is a global development institution, part of World Bank Group, focused on the private sector in emerging markets. The latest investment will support Serbia’s transition to a resilient, low-carbon economy, it said.

The first biomass-fired CHP system in the country was commissioned in 2019 in Boljevac in the east. Green Energy Point has 2.4 MW in electricity capacity and 8.3 MW for heat.