China Eximbank provides $988.3 million preferential buyer’s credit for Novi Sad-Subotica-State Border (Kelebija) Section of the Hungarian-Serbian Railway Project (Linked to Project ID#67020 and #68443)

On November 24, 2015, the Chinese, Hungarian, and Serbian governments signed several cooperation documents for the Project of Modernization and Reconstruction of Hungarian-Serbian Railway Line (匈塞铁路). Then, on November 5, 2016, China Eximbank and the Government of Serbia signed a Memorandum of Understanding on the financing of the Project of Modernization and Reconstruction of Hungarian-Serbian Railway Line on the Territory of the Republic of Serbia. On April 25, 2019, China Eximbank and the Government of Serbia signed a $988,388,500 preferential buyer’s credit (PBC) agreement [CHINA EXIMBANK PBC NO. (2019) 4 TOTAL NO. (487)] for the Novi Sad-Subotica-State Border (Kelebija) Section of the Hungarian-Serbian Railway Project. The loan (PBC) carries the following borrowing terms: a 2% interest rate, a 0% default (penalty) interest rate, a 20-year maturity, a 5-year grace period, a 0.25% commitment fee, and a 0.25% ($2,470,971.25) management fee. The proceeds of the loan were to be used by the borrower to finance 85% of the cost of a $1,162,810,000 commercial contract between the Government of the Republic of Serbia’s Ministry of Construction, Transport and Infrastructure, the Joint Stock Company for Public Railway Infrastructure Management “Infrastructure of Serbian Railways”, and a joint venture consisting of China Railway International Co. Ltd and China Communications Construction Company Ltd, which was signed on July 7, 2018. The lender made disbursements worth $247,097,000 in 2021 and $22,631,000 in 2022. The loan’s (principal) amount outstanding was $0 as of December 31, 2020, $247,097,000 as of December 31, 2021, and $269,728,000 as of September 31, 2022. The purpose of the project is to construct a 108.1 km segment of the Hungary-Serbia Railway between Novi Sad and Subotica. Upon completion, the 350 km Hungary-Serbia Railway will run from Budapest, the capital of Hungary, to Belgrade, the capital of Serbia, including 166 kilometers of railway in Hungary and 184 kilometers of railway in Serbia. The railway is designed to accommodate speeds of up to 200 km per hour. China Railway International Co. Ltd and China Communications Construction Company Ltd are the EPC contractors responsible for the implementation of the Novi Sad-Subotica section of the railway [also known as the Novi Sad-Subotica-State Border (Kelebija) Section]. A groundbreaking ceremony took place in November 2021 and the project is expected to reach completion by the end of 2024.

Additional details

1. This project is also known as the Project of Modernization and Reconstruction of Hungarian Serbian Railway Connection in the Territory of the Republic of Serbia, for Section Novi Sad-Subotica-State Border (Kelebija). The Chinese project title is 诺维萨德-苏博蒂察段高速铁路 (匈塞铁路). The Serbian project title is Пројекат модернизације и реконструкције мађарско-српске железничке везе на територији Републике Србије, за деоницу Нови Сад – Суботица – државна граница (Келебија). 2. This China Eximbank-financed project is linked to Project ID#67020, which captures the China Eximbank PBC for the Belgrade-Stara Pazova Section of Hungarian-Serbian Railway Project. It is also linked to Project ID#68443, which captures the China Eximbank loan for the Hungary section of the Hungary-Serbia Railway. 3. The $988 million China Eximbank PBC that support this project is not recorded the China’s Overseas Development Finance Dataset, which Boston University's Global Development Policy Center published in December 2020. 4. The China Eximbank PBC (loan) agreement [CHINA EXIMBANK PBC NO. (2019) 4 TOTAL NO. (487)] can be accessed in its entirety via https://www.dropbox.com/s/zfq67m03wsm0y7w/2019%20China%20Eximbank%20loan%20agreement%20for%20Project%20of%20Modernization%20and%20Reconstruction%20of%20HungarianSerbian%20Railway%20Connection%20in%20the%20Territory%20of%20the%20Republic%20of%20Serbia%2C%20for%20Section%20Novi%20Sad-Subotica-State%20Border%20%28Kelebija%29.pdf?dl=0. 5. The Serbian section of the railway was divided into three sections. The first section, Belgrade-Stara Pazova, is 34.5 kilometers long. The second section from Stara Pazova to Novi Sad is 40.5 kilometers long, and the third section from Novi Sad to Subotica is 108.1 kilometers long. The first section and second sections of the railway are being constructed by the consortium formed by China Communications Construction and China Railway International, while the second section of the railway is the responsibility of Russian Railways International.

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63