Clarion Partners - Owner's Engineer

Contract signed for Chinese loan for power plant

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Infrastructure Minister Milutin Mrkonjic and Chinese Ambassador Zhang Wanxue signed on Thursday a loan agreement for the overhaul of a Serbian power plant.

The money will go toward the first phase of the project, specifically workd that will be done on blocks B1 and B2 of the Kostolac thermal power station, located in eastern Serbia.

The project is worth USD 344.63mn, 85 percent of which will be financed from the loan of the Chinese Exim Bank.

A total of 53 percent of the project’s value will be covered by Chinese construction material, and the remaining 47 percent will be provided by Serbian companies.

Serbian President Boris Tadic, who attended the signing of the agreement, stated that this event confirms that strategic partnership between Serbia and China yields notable economic results as well.

Recalling that, prior to this, an agreement was also signed with the Chinese side on the construction of the Zemun-Borca bridge across the Danube in Belgrade, Tadic said there is room for the two countries’ economies to intertwine and for large Chinese companies to invest in Serbia.

“Serbia is always open for Chinese investments and technology, and today we are not only discussing infrastructure and energy, but also investments in new technologies and electronic industry,” Tadic underlined.

Serbia and China signed a strategic partnership agreement in 2009, and according to Tadic, it took time for the agreement to obtain concrete economic results.

Tadic stressed that the revitalization of the Kostolac thermal station will increase its capacity by 35 megawatts, adding that this will be one of the biggest projects in the domain of environmental protection, taking into account that a state-of-the-art desulphurization system will be installed.

The Chinese Ambassador said that the Kostolac B project is the first large energy project which reflects the strategic partnership relation between Serbia and China in the area of economy and trade.

Conditions were created today for an official start of the project, Zhang stressed, pointing out that the Chinese government pays special attention to the development of economic and trade relations with Serbia.

He expressed expectation that all Chinese projects in Serbia, namely the construction of the Zemun-Borca bridge and revitalization of the Kostolac B thermal plant, will be completed according to plan and will benefit the Serbian people, and that they will encourage the arrival of new Chinese investments in Serbia.

The agreement envisages a USD 176.31 million rehabilitation of the existing blocks Kostolac B1 and B2, a USD 130.5 million worth construction of the desulphurization plant, while USD 15.86 million will be spent for construction of the port on the Danube River and another USD 21.96 million for railway infrastructure.

The Exim Bank loan was approved to Serbia at a fixed annual interest of 3 percent, 15-year loan period, including a 5-year grace period and 10-year maturity.

The project is planned to be completed within 30 months from the date of coming into force of the agreement, and the works are expected to begin in the first half of 2012.

The project will help prolong the lifespan of existing blocks by another 150,000 hours.

The construction of desulphurization blocks will be the biggest environmental protection project in the past 25 years, performed in accordance with the European standards.

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