China Eximbank provides $445 million preferential buyer’s credit for Preljina-Pozega Section of the Highway E-763 Construction Project

Project narrative

On September 6, 2018, the Government of the Republic of Serbia approved a $445 million preferential buyer's credit (loan) application to China Eximbank for the Preljina-Pozega Section of the Highway E-763 Construction Project. Then, on April 25, 2019, China Eximbank and the Government of the Republic of Serbia signed a $445 million preferential buyer's credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2019) 2 TOTAL NO. (486)] for the Preljina-Pozega Section of the Highway E-763 Construction Project. The loan (PBC) carries the following borrowing terms: a 3% interest rate, a 0% default (penalty) interest rate, a 20-year maturity, a 5-year grace period, a 0.5% commitment fee, and a 0.5% ($2,225,000.00) management fee. The proceeds of the PBC were to be used by the borrower to finance 85% of the cost of a $523,530,000 commercial contract (#401-00-829/2017-01) between the Government of the Republic of Serbia, Public Enterprise "Roads of Serbia”, and China Communications Construction Company Ltd., which was signed on November 27, 2017. The lender made disbursements worth $89,000,000 in 2019, $5,840,000 in 2020, and $63,040,000 in 2021. The loan’s (principal) amount outstanding was $89,000,000 as of December 31, 2019, $94,840,000 as of December 31, 2020, $157,880,000 as of December 31, 2021, and $250,542,000 as of September 31, 2022. The purpose of the project is to construct a 31 kilometer two-way four-lane highway, including 3 tunnels, 35 bridges, and 3 interchanges. The design speed of the highway is 120 km/h. The 31 km Preljina-Pozega section of the E763 highway is divided into three sections: (1) from Preljina to Prijevor along Cemernica River and in the small part of the Western Morava (up to 8.3 km); (2) paved roads from Prijevora to Lucani (15.51 km), 20 bridges (longer than 3 km), and the construction of Laz tunnel (1,750 meters); (3) from Lucani to Pozega (7 km), three bridges, a tunnel (2,040 m), a loop in Lucani, and a bridge over the river Bjelica. Nearly a third of the route on the future road segment from Preljina to Pozega is made up of planned bridges and tunnels. The larger E-763 highway will stretch for more than 250 kilometers from Belgrade to the country’s border with Montenegro. China Communications Construction Company Ltd. is the EPC contractor responsible for implementation. Construction began on May 17, 2019 and the project was expected to reach completion within 3 years (May 17, 2022). The President of Serbia conducted an on-site project inspection on June 12, 2020.