World Bank will lend Poland $250 million to increase its gas production.
The loan will finance development and rehabilitation of gas fields, evaluation of recent gas discoveries, expansion of transmission lines and storage units, and adoption of new technologies in gas processing and desulfurization.
Technical assistance and staff training will be provided to Polish energy agencies to help them improve management and increase efficiency.
The loan is for 15 years, including 5 years' grace, with a variable interest rate, currently 7.75%, linked to cost of the bank's borrowings. It also carries a commitment charge of 0.25%/year on the disbursed balance.
The European Investment Bank is providing $60 million in cofinancing for the project.
World Bank said, "As Poland moves toward a market economy and as the country's new industries emerge, demand for gas and oil is expected to increase, while demand for coal-which produces large quantities of air pollution-is expected to decrease. Increased production of gas is also expected to reduce household use of coal for heating and result in a further decrease in air pollution."
Supporting the project, the bank's Energy Sector Management Assistance Program (Esmap) and the United Nations Development Programma will conduct studies on energy sector restructuring, gas prices, gas sector development, and the environmental effect of Poland's energy use.
Esmap also will help prepare a contractual framework to facilitate participation of foreign and domestic private sector enterprises in developing the petroleum sector. The bank said the Polish energy sector employs 5% of the labor force, contributes 13% to gross national product, and represents 12% of total exports.
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