Government adopts bill on confirming loan agreement for subway of EUR 178.38 million

At its latest session, the Government of Serbia adopted the Bill on the confirming of the agreement on the credit arrangement of EUR 178.38 million between Serbia and Deutsche Bank Aktiengeselschaft Filiale Hong Kong for the construction of the Belgrade Subway.

The agreement on the credit arrangement was signed on September 20 this year. The Law on the Budget of Serbia for 2024 approves borrowing from foreign investment corporations, funds and banks for the project of the construction of the Belgrade Subway, phase I, in the amount up to EUR 1.5 billion, which pertains to the Agreement on the Credit Arrangement in the amount of EUR 178.38 million.

– Within the construction of Phase I, Line I of the subway, in the Makis space, between the Sava Main Route and the classification yard Makis, the construction and the equipping of the depot location is planned. The entire subway system will be controlled from the Makis depot and that will be the place for the maintenance of all the subway trains – it is pointed out in the explanation of the bill on the credit arrangement.

As specified in this bill, the period of the availability of the credit is five years, and the beneficiary is the PUC Belgrade Metro and Train. The loan repayment period, as pointed out, is 13 years, including a grace period of 5.5 years, and the interest rate is variable and based on a 6M EURIBOR, increased by a fixed margin of 1.65% a year.

The fee on unwithdrawn funds is 0.65% and is paid semi-annually during the period of availability for the unwithdrawn loan amount.

When it comes to the reasons for the adoption of the bill, they remind that the construction of the Belgrade Subway is a project of great importance, especially since the capital of Serbia is one of the rare capital cities in Europe without a subway system.

– The development of the subway system in Belgrade is based on a combined approach, which entails a subway system which is supposed to solve the existing traffic problems and secure a better realization of the mobility of the populace, while at the same time being the generator of the development of certain city routes and areas, which, according to the urban plans, are yet to be developed and urbanized. The subway system is supposed to play a dominant role in the coming period and become the backbone of the functioning of the passenger public transport system within the continually developed area of Belgrade – notes the explanation of the bill.

Among other things, the reasons for the importance of the construction of the subway cite that it should secure the basic transport functions (to connect places of residence with workplaces and schools, to secure accessibility to important points in the city’s territory, such as urban centers, business zones, facilities of extraordinary recreational and tourism attraction etc.), and to enable the ease and security of communication for the citizens, to enable for investors a more efficient functioning of facilities, zones or complexes that they want to invest in, and for tourists and recreational users a more comfortable and easier availability of certain destinations. It should be reminded that it is precisely the first subway line that a part of the public and experts has been criticizing for years now because it will not connect the most important points in the city, where a large number of people moves on a daily level, and because it will bypass locations such as the Clinical Center or Prokop.

When it comes to the bill, it also reminds that, in November 2014, the memorandum of understanding on the construction of the subway system in Belgrade was signed between the Government of Serbia, the Government of France and the City of Belgrade and that, in April 2019, in Beijing, the memorandum of understanding was also signed between the Government of Serbia, the City of Belgrade and the Chinese company Power Construction Corporation of China Limited, whose aim is cooperation toward the realization of this project.

The commercial agreement on the design and construction of the Makis depot, the document reminds, was signed on September 22, 2023, between the City of Belgrade, the PUC Belgrade Metro and Train, the Ministry of Construction, Transport and Infrastructure of Serbia, as the representative of the Republic of Serbia, and the Chinese company Power Construction Corporation of China Limited, in the amount of EUR 209.86 million, which is the price of the commercial agreement for the goods and services suitable for payment in line with the Sinosure policy.

D. A.

Deutsche Bank AG - Repräsentanz Belgrad

Ministarstvo građevinarstva, saobraćaja i infrastrukture Republike Srbije

JKP Beogradski metro i voz Beograd

Deutsche Bank AG

Power Construction Corporation of China Limited

Ministry of Construction Transport and Infrastructure of Serbia

PUC Belgrade Metro and Train

credit arrangement for Belgrade Subway

Makiš subway depot