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The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) are providing a €259.57 million ($284.341 million) financing and guarantees package to Beo Čista Energija for a landmark waste-to-energy project in Belgrade that will clean up one of Europe’s largest uncontrolled landfills.

The Belgrade Waste-to-Energy project is a public-private partnership (PPP) that involves the closure and remediation of the saturated landfill in Vinča, a suburb of Belgrade, and the construction of a new EU-compliant sanitary landfill as well as a waste-to-energy facility and a facility for processing construction and demolition waste.

The project will enable the use of municipal waste and landfill gas to generate renewable heat and electricity. Construction is expected to take up to three and a half years.

IFC’s financing includes an ‘A’ loan of up to €72.2 million; a parallel loan from Oesterreichische Entwicklungsbank (OeEB) of up to €35 million; a ‘B’ loan of up to €35 million; and a concessional senior loan of up to €20 million from the Canada-IFC Blended Climate Finance Programme.

It is part of a wider package that includes an EBRD loan of up to €128.2 million.

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MIGA guarantees of €97.3 million are being provided for up to 20 years against non-commercial risks, including breach of contract. The guarantees are covering up to 90% of investor equity in Beo Čista Energija.

Mitsuaki Harada, managing director of Beo Čista Energija, said: “We are pleased to cooperate on this project to address one of Serbia’s biggest environmental and social problems—closing and remediating the Vinča, dumpsite.

“The new facilities will provide electricity equivalent to the total power consumption for approximately 30,000 households and 80% of the heat needed by the City of Belgrade during winter, replacing fossil fuels and helping to reduce greenhouse gas emissions.”

The project will be delivered under a long-term PPP contract awarded in 2017 to Beo Čista Energija, a special-purpose vehicle formed by global utility company Suez, the Japanese conglomerate Itochu Corporation, and Marguerite Fund II, a pan-European equity fund.

IFC’s PPP transaction advisory department acted as the City of Belgrade’s lead transaction advisor from 2014 to structure and tender the project—the first large-scale environmental infrastructure structured as a PPP in the region.

“This is one of the first large-scale, bankable, private sector projects in the waste-to-energy sector in emerging markets,” said Thomas Lubeck, IFC regional manager for Central and Southeast Europe.

Lubeck added: “This landmark project in the City of Belgrade has the power to become an example of a sustainable solution for cities in other emerging markets to solve pressing waste management challenges using the technology and efficiency of the private sector.”

Elena Palei, MIGA Global Head for Infrastructure, said: “MIGA guarantees are playing a vital role in enabling long-term private sector investment into this crucial project. By backstopping the obligations of Belgrade city, we are helping provide comfort to investors without the need for a sovereign guarantee, which has a positive impact on Serbia’s fiscal space.”