Representatives of Bank of (BGK) and the Ministry of Funds I Regional Policy (MFiPR) signed an agreement on 5 April for the implementation of the Loan supporting green transformation of cities. The instrument is financed by the National Reconstruction Plan and Enhancing Resistance (KPO). It will be used by, among others, local government units municipality companies. The funds can be used, for example, for investments in green areas whether thermomodernization and renewable energy sources (RES). The budget of the project is 40 billion.
–This is the money to make our small, medium and large towns, as well as metropolises said the minister of funds and regional policy Katarzyna Pelczynska-Nalecz during the annuality of signing the contract at a press conference in Poznan. The minister stressed that support can be used for a number of investments.
– These are huge funds for investments in warming buildings, sewage treatment plants, and, bicycle paths, parks, recreational places and on modern, clean energy that is, everything that makes the city clean, friendly, green, modern. The money will go primarily to local governments, but they can apply for it to cooperatives and housing communities, entrepreneurs. We create great opportunities for transformation in cities, as well as in their surroundings. Municipal associations will be able to apply for support, urban-rural communes, which are located in functional area of the cities- the minister of funds and regional policy explained.
Who will benefit and what can be financed?
Loans can be used by, among others, local governments, municipal companies, entities of the housing sector (e.g. cooperatives), universities or cultural institutions. In the first stage of the program- in the coming months-loans will be granted which do not constitute public aid. The loan will finance investments that will contribute to achieving the objectives set out in the European Green Deal and the NCP. These are projects that lead to climate neutrality reducing the negative impact of people on the environment.
From the loan can be financed: construction or revitalization of parks, preparation of green areas, investments in local governments. RES, zero-emission public transport (e.g. purchase of vehicles, construction of tram tracks) thermomodernization, water supply and sewerage networks. Example of the scope of investments that can be financed it is available on the BGK website. Support is for projects in cities. It may also cover investments in areas belonging to the urban functional area- for example, about the construction of tram tracks connecting the city with a suburban town.
Long-term financing will make repayment easier
The loan supporting the green transformation of cities is granted for up to 20 years. Its interest rate (depending on the project and the status of the entity applying for funds) Its interest rate is from 0 to 1 percent. In the event that the investment does not generate income and cost savings, 5 Percent of the loan capital will be written off. The grace period in repayment of the capital is up to 24 months from the date of completion of the investment. The loan does not involve a commission or fees for its granting and servicing. It can finance up to 100 percent of net eligible costs (excluding VAT), subject to having creditworthiness to repay it. Funding may only concern projects that comply with the principle Do No Significant Harm (DNSH), not doing significant environmental damage.
Applications will be taken by BGK
Loan applications should be submitted electronically to the regional branches of BGK. The minimum value of the application is 2 million zlotys and the maximum is 500 million zlotys. One application may cover several investments, which, in the case of a positive consideration, can be financed on the basis of separate loan agreements.
Important deadlines:
The loan agreement can be concluded with BGK until August 31, 2026.;
By the end of 2027, borrowers have time to withdraw funds, that is, they must meet all the requirements related to the launch of the loan;
The investment must be completed by 31 December 2030 at the latest. The loan can also finance projects already started or even completed, if their implementation did not start before 1.02.2020. The call for proposals is open and carried out on a continuous basis until the funds are exhausted. Details of the loan and the documentation needed to submit the application are available at BGK website
National Reconstruction Plan
The launch of the Loan supporting the green transformation of cities begins the implementation of the KPO in the loan part. The National Recovery and Resilience Plan is a program that consists of 55 investments and 55 reforms that will strengthen the Polish economy and make it easier to endure any crises. The total budget of KPO is 59.8 billion euros (268 billion zlotys), including 25.27 billion euros (113.28 billion zlotys) in the form of grants and 34.54 billion euros (154.81 billion zlotys) in the form of loans
Bank Gospodarstwa Krajowego is a Polish development bank, the only such institution in the country. BGK supports sustainable socio-economic development of Poland. It cooperates with the public and government sector. It supports housing construction, infrastructure development and entrepreneurship, including expansion of Polish companies. It finances investments of strategic importance of the security of the country. It is the operator of the government programmes, manages and distributes European funds. The bank has its representative offices in Brussels, London, Frankfurt am Main. In 2024, it celebrates the 100th anniversary of its existence.