(MENAFN- Qatar News Agency) Serbia and China signed on Friday a $716 million- (529.5 million euros) deal to build a new coal-fired power plant unit and expand coal mining, officials here said.
The deal signed with China Machinery Engineering Corporation (CMEC) foresees the construction of a new unit at Serbia's largest power plant, Kostolac, to be finished by 2019, Energy Minister Zorana Mihajlovic said adding the construction is expected to start in early 2014.
Also, the project includes expansion of a lignite mine near the plant, which expected to increase its output from 9 to 12 million tons of coal per year. Funding of the project will be secured a loan from China's Exim Bank to the Serbian government that will cover 85% of the necessary finances, in accordance with framework accord between Belgrade and Beijing agreed in 2010. The 15-year loan has a five-year grace period, with a fixed 3.0% interest rate.
It should be approved by the Serbian parliament in December, during a debate over the 2014 draft budget, Mihajlovic said. Serbia needs to upgrade its energy infrastructure, damaged and mismanaged during the Balkan wars of the 1990s, to meet growing demand and reduce its reliance on importing energy. Transport Minister Aleksandar Antic said Serbia has managed to secure $1 billion from China's credit fund set up for mostly infrastructure products in Central and Eastern Europe.
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