The representatives of the Electric Power Company of Serbia (EPS), Steam Power Plant and Strip Mines Kostolac and China National Machinery and Equipment Import and Export Corporation CMEC signed 1.2 billion USD worth of pre-contract today (February 3, 2010) on rehabilitation and expansion of steam power plant Kostolac.
- The contract on the loan for that project should be signed within next few months, while the contracts on works should be signed in phases - said Serbian Minister of Energy, Petar Škundrić, at the press conference in the Government of Serbia.
He added that the works would start in 2010 and that they should be finished prior to end of 2015.
Cooperation between China and Serbia in rehabilitation of steam power plant Kostolac, as Škundrić reminded, is a part of the interstate agreement, which was signed in August 2009 in Beijing, during the visit of the highest government delegation of Serbia.
The package project on rehabilitation and expansion of capacities of Kostolac's steam power plant anticipates revitalization of two existing blocks, B1 and B2, of 350 MW each, "desulfurization" of these two blocks, and enlargement of the capacities of strip mine Drmno to 12m tons per year with the construction of new block B3.
Škundrić said that 85% of the funds for the project, about 1.06 billion USD, would be provided from the loan of Chinese Exim Bank. Annual fixed interest rate on that loan will amount to 3%, the repayment period will be 15 years, with the grace period of five years.
Remaining 15% of required funds will be provided by EPS and Steam power plant Kostolac.
As Škundrić pointed out, that will be the biggest investment in the energy sector of Serbia, which will enable enlargement of production capacities of steam power plant Kostolac by minimum 450 MW.
The main contractor is company CMEC, and the plan is that domestic companies carry out minimum 40% of all projected works.
The Ambassador of China to Serbia, Wei Jinghua, said that the realization of the project for rehabilitation of steam power plant Kostolac would be the turning point in the relations between China and Serbia and that there was big potential for cooperation between the two countries in energy sector.
CEO of Steam power plant and strip mines Kostolac, Dragomir Marković, pointed out that the new production capacities of steam power plant would repay the loan for that investment.
CMEC from Beijing is the biggest Chinese company in field of production of power supply equipment and engineering, and it currently has contracts for works abroad worth 9.5 billion USD.
China is the world's second country in the power of energy capacity, which amounts to 850,000 MW.