Serbia, China agree $1.25bn plant financing

Serbia and China have agreed to financing terms for $1.25 billion (Dh4.6bn) worth of projects to upgrade two power plants, make them environmentally friendly and boost coal output, the government said yesterday.

Projects include the upgrade of two existing blocs in Kostolac of 350MW each, desulphurisation for both units and an increase of an open-pit coal mine capacity to 12 million tonnes of coal a year.

"Eighty-five per cent of the project value will be financed by the Chinese Exim Bank," the government said in a statement. "The fixed exchange rate will not exceed three per cent a year, the repayment period is 15 years with a five-year grace period."

The remaining 15 per cent of the value will be provided by the Serbian power monopoly EPS and its arm managing the power plants near the capital Belgrade.

Phased construction works at the Kostolac plant should begin in 2010 and end by 2015, Energy Minister Petar Skundric said after signing the preliminary agreement with the contractor, the China National Machinery and Equipment Import and Export Corporation.

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