China Eximbank provides $198.6 million preferential buyer’s credit for Surcin-Obrenovac Section of Highway E-763 Construction Project (Linked to Record ID#66978)

Project narrative

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 November 5, 2016, 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 (2016) 32 (420)] worth $198,618,888 for the Surcin-Obrenovac Section of the Highway E-763 Construction 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 0.35% commitment fee, and a 0.35% management fee. The Government of the Republic of Serbia’s Ministry of Finance and Economy subsequently signed an on-lending agreement with Public Enterprise “Roads of Serbia” (a wholly owned subsidiary of the Government of the Republic of Serbia) for the Surcin-Obrenovac Section of the Highway E-763 Construction Project. The proceeds from this on-lending agreement were used to finance 85% of the $233,669,280 value of the commercial contract [number 351-5684/2016-2] between the Government of the Republic of Serbia’s Ministry of Construction, Transport and Infrastructure, Public Enterprise “Roads of Serbia”, and China Communications Construction Company Ltd. (CCCC), which was signed on June 18, 2016. The borrower made principal repayments worth approximately $6,621,000 in 2022. The loan’s (principal) amount outstanding was $115,815,000 as of December 31, 2018, $172,998,000 as of December 31, 2019, $197,543,000 as of December 31, 2020, $198,619,000 as of December 31, 2021, and $191,998,000 as of September 31, 2022. The project involved the construction of a new highway (A2 or E-763) segment from Surcin to Obrenovac that measures 17.6 km in length. It is significant in that it will establish a direct connection between Corridor 11 and Corridor 10, and between the city of Belgrade and the Corridor 11. CCCC is the EPC contractor responsible for implementation. Its work was overseen by Public Enterprise “Roads of Serbia”. The China Eximbank PBC entered into force in February 2017. A formal groundbreaking ceremony took place on March 1, 2017. However, construction did not begin until May 5, 2017. The expected duration of the construction period is 32 months. On March 30, 2018, an opening ceremony was held for the Blanchic tunnel along the E-763 highway (one component of the project). As of May 4, 2019, the Sava River Bridge had achieved a 94% completion rate. The originally expected completion date of the project was December 19, 2019. However, the project was finished ahead of schedule and the road segment opened to traffic on December 17, 2019.