Bank of China Limited (Hungarian Branch) provides EUR 203.4 million loan for Municipal (Sewage) Infrastructure Project

📋 Staff Comments

1. The Bank of China Limited (Hungarian Branch) loan agreement can be accessed in its entirety via https://www.dropbox.com/s/52bpwuxq16c9sz1/Bank%20of%20China%20loan%20agreement%20for%20Works%20on%20Construction%20of%20the%20Municipal%20%28Sewage%29%20Infrastructure.pdf?dl=0.
2. The Serbian project title is prve faze Projekta sakupljanja i prečišćavanja otpadnih voda centralnog kanalizacionog sistema grada Beograda.
3. For loan and debt rescheduling records with variable interest rates, AidData calculates the all-in interest rate at T0 based on the reference rate (such as LIBOR or EURIBOR) on the loan start date, plus any known margin. Please see the methodology for additional details.
4. Under the loan agreement, each party acknowledged and agreed that Sinosure should be subrogated to the rights of the Agent and the Lenders to the extent of any payment made by or on behalf of Sinosure under the Sinosure export credit insurance policy. The Sinosure export credit insurance policy insures certain political and commercial risks in respect of the EUR 203,400,928 loan and provides coverage of at least ninety-five per cent of all of the principal and interest of the loan.
5. In Serbia, CRBC acts through a local subsidiary known as China Road and Bridge Corporation Serbia Ogranak Beograd-Savski Venac.
6. The project is part of a wider Serbian-Chinese venture called Clean Serbia that was launched in 2021 by the Serbian government in 65 cities and municipalities and is worth $3.6 billion. The aim of the initiative is to modernize, repair, and in some cases build brand-new water-management systems across the country in order to provide better drinking water, combat pollution, and expand access to modern sewage networks, which government statistics show more than one-third of Serbian households do not have access to.
7. The EUR 203,400,928 Bank of China loan for the municipal (sewage) infrastructure in Belgrad should not be confused with the EUR 203,775,000 syndicated loan from Unicredit Bank, BNP Paribas Fortis SA/NV, and BNP Paribas SA for a similar wastewater project in Belgrade (that is backed by a Sinosure credit insurance policy). The latter loan agreement can be accessed in its entirety via http://www.parlament.gov.rs/upload/archive/files/cir/pdf/predlozi_zakona/2022/011-84_22.pdf.
8. The Chinese project title is 塞尔维亚污水处理项目.
9. An open and competitive bidding process is a European regulation which the Serbian government ignored and instead chose to base the decision for a contractor on the 2009 intergovernmental Agreement on Economic and Technical Cooperation in the Field of Infrastructure between Serbia and China. Serbia is only a candidate for EU membership and therefore is not bound by European regulations; however, these actions are viewed by watchdog groups like Transparency Serbia as corruption and disrespect for both European regulations and Serbia's own Public Procurement Law. AidData considers a lack of open and competitive bidding process as a Governance challenge.

📚 Sources & References

• Bank of China loan agreement for Works on Construction of the Municipal (Sewage) Infrastructure
• China's CRBC to build 26 wastewater treatment plants in Serbia
• China’s CBRC to build communal infrastructure in Serbia
• Izgradnja kanalizacije u Srbiji bez tendera predata firmi iz Kine
• Law on Confirmation of the Credit Arrangement Agreement in the amount of EUR 203,400,928 between the Republic of Serbia, represented by the Government of the Republic of Serbia, acting through the Ministry of Finance, as the Borrower, arranged by BANK OF CHINA SERBIA AD BELGRADE
• National Bank of Serbia 2022 Annual Report on Activities and Results
• Počela realizacija projekta 'Čista Srbija' u Kragujevcu
• Public Finance Bulletin, 2022
• Public Finance Bulletin, 2023
• Public Finance Bulletin, 2024
• Realization of First Phase of Clean Serbia Project – 26 Waste Water Treatment Facilities and Around 700 km of New Sewer Systems in 14 Towns and Municipalities
• Red Flags: Chinese Project In Serbia Raises Familiar Concerns About Beijing's Balkan Investments, СЛУЖБЕНИ ГЛАСНИК РС МЕЂУНАРОДНИ УГОВОРИ
• 中交集团塞尔维亚污水处理项目开工
• 塞尔维亚总理视察中国路桥污水处理项目
• 驻塞尔维亚大使陈波出席克拉古耶瓦茨污水处理项目开工仪式
• 驻塞尔维亚大使陈波出席克拉古耶瓦茨污水处理项目开工仪式 Loan applications and disbursements are still being received and processed as the projects continue to evolve. Ongoing monitoring and evaluation are in place to ensure project continuity.