The Project Sponsor is EVN AG, Austria''s second largest integrated utility company providing electricity, gas, heating, water, and waste incineration services in Austria and 20 other Central Eastern European countries and Russia, reaching over 3.6 million customers. EVN was partially privatized in 1990 and is currently owned 51% by the Province of Lower Austria, 32.5% by the German electricity supplier EnBW and 16.5% free float. As of October 17th, 2011, EVN AG has a market capitalization of EUR1.9 billion.

90% of EVN Macedonia (the Project Company) is owned by EVN AG, and 10% is still state-owned. The privatization took place in 2006, where EVN purchased 90% of the Company.

Estimated Total Project Cost and Amount are given here below:

Estimated Project Cost (2012)
(in EUR millions)	Amount	Percentage
Capital Expenditures	23.9	77.3
Working Capital Need	7.0	22.7
Total Estimated Project Cost	30.9	100.0
Proposed Financial Plan
(in EUR millions)	Amount	Percentage
Internal Cash Generation	23.9	77.3
IFC Straight Senior Loan	7.0	22.7
Total Debt	30.9	100.0
Total Proposed Financial Plan	30.9	100.0%

We are defining the Project here to include all the planned needs for capital by the Company in 2012, excluding debt repayment. The proposed investment which will be equally amortizing up to EUR 7 million Straight Senior Loan will have the same repayment schedule as the already disbursed EUR 35 million loan. Thus the long term tenor will enable the Company to replace part of its current short term loans with long term financing resulting in a more sustainable balance sheet.


No mobilization is envisaged.

9.06 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	9.06
Equity

* These investment figures are indicative

Operating through an existing network the Company is located in FYR Macedonia -a land-locked country situated at the heart of the Balkans. EVN Macedonia is headquartered in Skopje, the capital of the country. The Company is active throughout the country, and its supply territory has an area of around 25,713 km2 and about one third of the distributed electricity is supplied in the Skopje area. EVN Macedonia is the sole distribution and supply company in the country, serving more than 640,000 customers and a population of two million.

The Project''s expected development impacts are as follow: (a) Supporting the Company during the power sector deregulation by providing long term financing, (b) Continue supporting EVN with their turnaround strategy that essentially focuses on increasing bill collection rates and reducing energy losses that will lead to significant electricity savings for FYR Macedonia, and (c) Promoting proper sector reform and the development of a competitive power market in the country.

IFC''s additionality in this project will include; (i) providing debt financing with adequate maturity as long term financing is unavailable in the Macedonian market, (ii) helping the Sponsor with their turnaround of the Company, (iii) Bringing IFC''s global experience in financing electricity distribution projects in markets where deregulation is taking place, (iv) mitigating regulatory risk given the limited track record of the Regulator (ERC) and the new regulatory framework that is being introduced, and (v) continuing to offer a ''stamp of approval'' regarding the Company''s environmental and social action plan, in line with WBG requirements.

The previous project (ESM Macedonia #26093) has been supervised by IFC and its Environmental and Social Risk Ratings have been "Satisfactory" in 2008 - 2011. As part of this previous project, Environmental Action Plan (EAP) was agreed and covenanted in the Loan Agreement. The EAP included various actions typical to electricity distribution sector such as screening and monitoring of PCBs contaminated oils and equipment, handling of wooden poles, monitoring of soil and groundwater contamination, occupational health and safety management. A health and safety action related to the Company''s existing small hydro power plants were also included in the EAP. Some actions of the EAP were delayed but the overall implementation status has been satisfactory to IFC. Since the new project is to provide financial support to meet the company''s working capital needs, no additional environmental or social risks beyond the findings of the previous project''s due diligence are expected. IFC will update the Environmental and Social Review Summary based on the latest information obtained through IFC''s supervision activities of the previous project and will continue to monitor the implementation of the EAP. This new project is also a category B project, to be consistent with the category of the previous project.