Prilep in North Macedonia to finance solar panels with municipal bonds

The Municipality of Prilep intends to sell bonds to get EUR 5 million for four projects. Three are for city infrastructure and the fourth would be developed to produce renewable electricity with solar panels.

Urban planning chief of the Municipality of Prilep Branko Neškoski said the projects are aimed at developing the city. Additionally, renewable electricity production is a global economic trend, he added. The city administration is planning to set up solar power panels on all elementary and secondary schools.

Drage Zvezdakoski, head of the finance department, said the initial calculations have been completed. In his words, Prilep has the ability to pay off the debt within seven years. In that case, the annual interest would be EUR 240,000 and the principal would be paid back at the expiration of the period.

Before the municipal council reaches a decision on taking on debt, it is obligated to hold a public consultation to allow all stakeholders, both legal and natural persons, to express opinions on the proposed projects.

Debt would be within Prilep’s budget scope

In Zvezdakoski’s words, Prilep would take on debt that its budget can handle. According to the Law on Financing Local Government Units, a municipality can borrow an amount as high as its current-operational income to the previous year’s budget.

The income last year was EUR 5.93 million, he noted. Given that the municipality plans to borrow EUR 5 million, local officials expressed confidence that the Ministry of Finance would sign off on it.

“We believe that financing through bond issuance would enable us to invest in other capital projects in the years to come,” Zvezdakoski said.

Prilep Mayor Borče Jovčeski claims that funding through debt is necessary. He cited a report from the United Nations Development Programme, UNDP, that Prilep is one of ten most successful North Macedonian municipalities in managing its accounts.

“We have large debts from before and we are paying the installments. We are paying MKD 70 million [EUR 1.14 million] per year on account of the overall debt. We also have projects that we finance from the budget. The proposed projects cost a lot, and they are worthy of taking on debt. The energy crisis also affected this move,” Jovčeski said.

The bond would be offered in the securities market. The local authority is confident there would be sufficient interest among pension and investment funds, but also among citizens.