The European Bank for Reconstruction and Development (EBRD) is providing a EUR65m loan for the construction of the Boskov Most hydropower plant in FYR Macedonia.
The hydropower facility, which will have a generation capacity of 70MW, will be built near the town of Debar in the western part of the country.
The financing will be extended to the state-owned power producer AD Elektrani na Makedonija which will develop the Boskov Most plant.
EBRD said the hydropower project will enable FYR Macedonia to cut the country's carbon intensity by an estimated 95,000 tonnes of CO2 per year.
EBRD director for power and energy Nandita Parshad said the construction of the new hydropower plant is a landmark project for FYR Macedonia that will increase the security and stability of the country's electricity system.