Serbia and China Agree $344 Million Overhaul of Kostolac Plant

Serbia and China National Machinery and Equipment Import and Export Corp. will sign a $344 million contract tomorrow for the first phase of a planned overhaul of Serbia’s coal-fired 640-megawatt Kostolac B power plant.

The Chinese state-owned contracting company, known as Sinomach, will overhaul two power-generating units at Kostolac B and install desulphurization equipment, Serbia’s Energy Ministry said, announcing the signing ceremony.

The deadline to complete the works is 30 months. A second phase will include expansion of the nearby Kostolac and Drmno coal mines to 12 million metric tons annually.

The deal is part of a broader bilateral agreement reached in Beijing last year, under which China will support several infrastructure projects in Serbia with a $1.25 billion, 15-year loan, including the Kostolac B upgrade and a new bridge in Belgrade across the Danube river.

It was agreed that the works will be led by Chinese contractors, with some participation of Serbian companies. The credit line will be provided by the Export-Import Bank of China, or Exim Bank, at a 3 percent interest rate.

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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