China Eximbank provides $301 million preferential buyer’s credit for Obrenovac-Ljig Section of the Highway E-763 Construction Project (Linked to Record ID#67010)

China Eximbank provides $301 million preferential buyer’s credit for Obrenovac-Ljig Section of the Highway E-763 Construction Project 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 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 August 26, 2013, 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 (2013) 36 (280)] worth $301,000,000 for the Obrenovac-Ljig Section of Highway E763 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 0.25% commitment fee. and a 0.25% management fee.

The Government of the Republic of Serbia’s Ministry of Finance and Economy subsequently signed an on-lending agreement with Serbia’s Ministry for Construction and Urbanism for the Obrenovac-Ljig Section of the Highway E-763 Construction Project.

The proceeds from this on-lending agreement were used to finance 85% of the $333,747,540 cost of a commercial contract [number 351-03-326/2012] between Serbia’s Ministry for Construction and Urbanism, Koridori Srbije d.o.o.

Beograd (a project company and wholly owned subsidiary of the Government of the Republic of Serbia), and China Shandong International Economic and Technical Cooperation Group Ltd. of Shandong Hi-speed Group Co Ltd., which was signed on May 13, 2013.

The borrower made principal repayments worth approximately $20,067,000 in 2020, $20,067,000 in 2021, and $20,066,000 in 2022.

The loan’s (principal) amount outstanding was $267,681,000 as of December 31, 2018, $290,967,000 as of December 31, 2019, $270,900,000 as of December 31, 2020, $250,833,000 as of December 31, 2021, and $230,767,000 as of September 31, 2022.

This project involved the construction of a new highway (A2 or E-763) segment from Obrenovac to Ljig that measures 62.7 km in length.

It had three components: the construction of a 26.23 km road segment from Obrenovac to Ub; the construction of a 12.5 km road segment from Ub to Lajkovac; the construction of a 23.98 km road segment from Lajkovac to Ljig. The 62.7 km highway is 28.4 meters wide and it was designed for speeds of 130 km per hour.

The project also involved the construction of 42 bridges and overpasses, and the installation of 200 km of guardrails for safety purposes.

Upon completion, Highway E763 -- measuring 300 km in length and connecting Belgrade, capital of Serbia, to Bijelo Polje, the border city of Montenegro -- was expected to serve as an important channel that links Serbia to Montenegro’s access to the sea, promoting economic connectivity and development across the Balkan region, and significantly reducing travel time between Belgrade, its neighboring countries, and the sea.

The completion of Highway E763 was also expected to provide convenient transportation that would benefit many cities along the route, including Obrenovac and Ub, thereby reducing transportation costs and stimulating the local economy.

China Shandong International Economic and Technical Cooperation Group Ltd. was the EPC contractor responsible for implementation. Its work was supervised by Koridori Srbije d.o.o. Beograd. Construction began on June 30, 2014 and was reported to progress smoothly. The highway was opened to traffic on August 18, 2019.

During the initial construction phase, a once-in-a-century flood took place (in early 2014).

To address the flooding issue, the project team incorporated into the highway drainage design an integrated lightweight high-density polyethylene (HDPE) water collecting well and drainage pipe, as well as prefabricated rainwater treatment equipment.

These measures are conducive to the drainage of subgrade and pavement in a flooded area and ensure the stability of subgrade.

In addition, concrete channels were constructed in rainwater collecting areas on pavement and embankment slopes so that surface runoff (rainwater sewage) could flow into rivers, streams, channels, and other water receiving areas along the highway channel system after receiving graded treatment from circulation filters and settling facilities.

The collected water can used for agricultural irrigation, drought resistance, and flood prevention. It can also help prevent the highway from damaging the surrounding water environment.

During project's construction and operation periods, photovoltaic technologies supplied both heat and electricity, accounting for 76.49% of the project’s total energy consumed.