China Eximbank provides EUR 164.6 million buyer’s credit loan for 29.18 km Obrenovac-Novi Beograd Heating Pipeline Project

On June 7, 2017, the Chinese Government and the Government of Serbia signed a Memorandum of Understanding on the 29.18 km Obrenovac-Novi Beograd Heating Pipeline Project. Then, on January 17, 2020, China Eximbank and the Government of the Republic of Serbia signed an EUR 164,685,800 buyer’s credit loan (BCL) agreement [ID#1420313022020210056] for the 29.18 km Obrenovac-Novi Beograd Heating Pipeline Project. The National Assembly of Serbia ratified the loan agreement in February 2020. The loan (BCL) carries the following borrowing terms: a 15-year maturity, a 3-year grace period, interest rate of 6-month EURIBOR plus a 2.7% margin, a 2% default (penalty) interest rate, a 0.5% commitment fee, a 0.5% (EUR 823,429) management fee, and an EUR 12,208,102.49 Sinosure insurance premium. The proceeds of the loan (BCL) are to be used by the borrower to finance 85% of the cost of an EUR 193,748,000 commercial (EPC) contract between Public Utility Company "Beogradske elektrane”, the City of Belgrade, and Power Construction Corporation of China (PowerChina), which was signed on November 27, 2017 and amended on July 9, 2019. The lender made disbursements worth EUR 32,937,000 ($37,265,000) in 2021. The loan’s (principal) amount outstanding was $0 as of December 31, 2020, EUR 32,937,000 ($37,265,000) as of December 31, 2021, and EUR 32,937,000 ($32,321,000) as of September 31, 2022. The purpose of the project is to construct a 29.18 km heating pipeline (heat transmission line) — with heat transfer capacity of 800MW — that connects the Termoelektrane Nikola Tesla (TENT) power plant near the city municipality of Obrenovac (exact locational coordinates: 44.65461414707668, 20.004822111741095) and the Novi Beograd (New Belgrade) thermal power plant (exact locational coordinates: 44.8005, 20.4099). The project also involves the construction of four pumping stations. The project will seek to use hot water, which is currently discharged from a power plant into the Sava river, for heating purposes. Upon completion, the heating pipeline is expected to generate annual savings of about EUR 43 million, or roughly one third of the EUR 140 million that the Belgrade district heating company spends on natural gas imports each year. Power Construction Corporation of China (PowerChina) is the EPC contractor responsible for implementation. Construction was originally scheduled to commence in June 2021. However, as of January 2022, AidData could not identify any evidence that construction had commenced. Some sources seems to suggest that the COVID-19 pandemic has led to implementation delays. There is, however, evidence that some preliminary (pre-construction) activities have taken place, such as land expropriation.

Additional details

1. The Chinese project title is 塞尔维亚奥布雷诺瓦茨至贝尔格莱德新区供热管道建设项目 or 塞尔维亚奥布雷诺瓦兹至贝尔格莱德新区供热管道建设项目. The Serbian project title is Пројекат изградње топловода Обреновац - Нови Београд. 2. AidData estimated the all-in interest rate (2.37%) by adding a 2.7% margin to the average 6-month EURIBOR rate in January 2020 (-0.330%). 3. The China Eximbank BCL (loan) agreement [ID#1420313022020210056] can be accessed in its entirety via https://www.dropbox.com/s/gjrlmg2c8e8f55w/China%20Eximbank%20loan%20agreement%20for%20Construction%20of%20District%20Heating%20Pipeline%20Project%20Obrenovac-Novi%20Beograd.pdf?dl=0

Number of official sources

19

Number of total sources

35