Narrative
Full Description
Project narrative
On May 16, 2022, the first Memorandum of Understanding was signed for the financing of the Brčko-Bijeljina Road Project. On February 22, 2023, China Construction Bank, China Overseas Engineering Group Co Ltd., China Tiesiju Civil Engineering Group Co Ltd., and Public Enterprise ‘Autoputevi Republika Srpska’ d.o.o. signed an EPC Plus Financing (EPC+F) contract for the 17 km Brčko-Bijeljina Road Project. Under the terms of the contract, China Construction Bank agreed to provide a $190 million loan to a consortium of EPC contractors consisting of China Overseas Engineering Group Co Ltd., China Tiesiju Civil Engineering Group Co Ltd. The EPC contractors agreed to use the proceeds of the loan to finance their EPC contract with Public Enterprise ‘Autoputevi Republika Srpska’ d.o.o. The loan carries the following borrowing terms: a 15-year maturity, a 3-year grace period, and a 5-year guarantee. The purpose of the project is to construct a 17-kilometer section of highway from Brčko to Bijeljina. Upon completion, the road segment is expected to connect the region's main town of Banja Luka with the Serbian capital Belgrade. China Overseas Engineering Group Co Ltd. and China Tiesiju Civil Engineering Group Co Ltd. are the EPC contractors responsible for project implementation. Construction began in September 2022. The project was originally expected to reach completion in the fall of 2026.
Staff comments
1. This project is also known as Lot 2 of the Brčko-Bijeljina-Rača Highway Project. The Chinese project title is 布尔奇科-比耶利纳高速公路项目. The Serbian project title is Лот Дионица Брчко – Бијељина. 2. Under most EPCF (EPC+F) contractual arrangements, a loan is extended to the EPC contractor but with a sovereign guarantee from the host government. Therefore, AidData assumes that the loan issued to China Overseas Engineering Group Co Ltd. and China Tiesiju Civil Engineering Group Co Ltd. is backed by a repayment guarantee from the Government of Republika Srpska (i.e. a sovereign guarantee). 3. One source (https://seenews.com/news/chinese-group-to-start-works-on-brcko-bijeljina-motorway-in-apr-1265216) suggests that construction was not scheduled to commence until April 2025. This issue merits further investigation.