China Eximbank provides $301 million preferential buyer’s credit for Obrenovac-Ljig Section of the Highway E-763 Construction Project (Linked to Project ID#67010)

On August 20, 2009, the Government of the People’s Republic of China and the Government of the Republic of Serbia entered into an Agreement on Economic and Technical Cooperation in the field of Infrastructure, which entered into force on June 25, 2010. Then, on April 26, 2012, the Government of the People’s Republic of China announced that it had set up a 10 billion U.S. dollar line of credit to support cooperative projects with Central and Eastern Europe. The credit line would be partially in the form of preferential loans and would fund projects in the infrastructure, technology and green economy sectors. On August 26, 2013, China Eximbank and the Government of the Republic of Serbia’s Ministry of Finance and Economy signed a preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK NO. PBC (2013) 36 (280)] worth $301,000,000 for the Obrenovac-Ljig Section of Highway E763 Project. The PBC carried the following borrowing terms: an interest rate of 2.5%, a default (penalty) interest rate of 0%, a maturity of 20 years, a grace period of 5 years, a 0.25% commitment fee. and a 0.25% management fee. The Government of the Republic of Serbia’s Ministry of Finance and Economy subsequently signed an on-lending agreement with Serbia’s Ministry for Construction and Urbanism for the Obrenovac-Ljig Section of the Highway E-763 Construction Project. The proceeds from this on-lending agreement were used to finance 85% of the $333,747,540 cost of a commercial contract [number 351-03-326/2012] between Serbia’s Ministry for Construction and Urbanism, Koridori Srbije d.o.o. Beograd (a project company and wholly owned subsidiary of the Government of the Republic of Serbia), and China Shandong International Economic and Technical Cooperation Group Ltd. of Shandong Hi-speed Group Co Ltd., which was signed on May 13, 2013. The borrower made principal repayments worth approximately $20,067,000 in 2020, $20,067,000 in 2021, and $20,066,000 in 2022. The loan’s (principal) amount outstanding was $267,681,000 as of December 31, 2018, $290,967,000 as of December 31, 2019, $270,900,000 as of December 31, 2020, $250,833,000 as of December 31, 2021, and $230,767,000 as of September 31, 2022. This project involved the construction of a new highway (A2 or E-763) segment from Obrenovac to Ljig that measures 62.7 km in length. It had three components: the construction of a 26.23 km road segment from Obrenovac to Ub; the construction of a 12.5 km road segment from Ub to Lajkovac; the construction of a 23.98 km road segment from Lajkovac to Ljig. The 62.7 km highway is 28.4 meters wide and it was designed for speeds of 130 km per hour. The project also involved the construction of 42 bridges and overpasses, and the installation of 200 km of guardrails for safety purposes. China Shandong International Economic and Technical Cooperation Group Ltd. was the EPC contractor responsible for implementation. Its work was supervised by Koridori Srbije d.o.o. Beograd. Construction began on June 30, 2014 and was reported to progress smoothly. The highway was opened to traffic on August 18, 2019.

Additional details

1. This project is also known as the Corridor 11 Obrenovac-Ub and Lajkovac-Ljig Project, the Construction of Highway E763 (Section Obrenovac-Ljig) Project, and the Obrenovac-Ljig Section of the Belgrade-South Adriatic-Corridor XI Project. The Chinese project title is E763高速公路奥布雷诺瓦茨—利格段项目. The Serbian project title is Коридор 11 - Обреновац - Уб, Лајковац - Љиг. 2. The Overseas Development Finance Dataset published by Boston University’s Global Development Policy Center in December 2020 identifies a $301 million China Eximbank loan for the Corridor 11 Highway Construction Project and a $334 million China Eximbank loan for the Obrenovac-Ub and Lajkovac-Ljig Road Project. The latter appears to be an error (based on the $333,747,540 value of the commercial contract that the Government of Serbia financed with the proceeds from the $301 million China Eximbank loan). 3. This is part of the E-763 highway, which is detailed in Project IDs: #66978, #67010, #67009, and #42330. 4. The loan agreement can be accessed in its entirety via https://www.documentcloud.org/documents/20488769-ser_2013_438.

Number of official sources

21

Number of total sources

27