In early December, in Serbia the following negotiations between representatives of “Serbian Railways” and Russian party will be held regarding realization of the Russian state loan in the amount of $ 800 million for the modernization of Serbian Railways.

During the meeting, the final negotiations for preparation and defining of the general contractor’s agreement, which comprises all five projects which funding is planned to be from the Russian loan, as well as the special agreement for modernization of railway Belgrade – Pančevo, which will define the value and all details of this project.

After Russia has officially decided on December 23 to approve $800 million loan for Serbia for railway modernization, “Serbian Railways” expect that intergovernmental agreement between two countries should be signed in December and ratified by Serbian Parliament early 2013.

In that way, after the signing of the special contract on railway modernization Beograd-Pancevo and intergovernmental agreement ratification in the Serbian Parliament, all the conditions for the begging of construction works on this section on March 1, 2013 will be fulfilled. Modernization of the railway line Beograd-Pancevo includes reconstruction of 15km of this section, construction of 1,6km of second track and electrification of the section Pančevo bridge- Pančevo glavna. This project includes also the reconstruction of the existing track and infrastructure at the railways stations Krnjača, Ovča, Pančevo Bridge, Krnjača Bridge and Sebeš, as well as the bridge over the river Tamiš, two railway stations, two station tracks, 5 new bridges, one passing point, traction substation Pančevo, marshaling yard Krnjača.

In addition, there are ongoing negotiations on commercial aspects of procurement of new Russian DMUs and it is expected that these negotiations should be successfully finished by the early 2013. “Serbian Railways” have already bought 12 DMUs of this type from the Russian manufacturer “Metrovagonmaša”, thanks to the EUROFIMA loan, so the procurement of additional lots from the Russian loan will greatly improve the quality and the offer of the Serbian Railways in the local passenger traffic, especially on non-electrified lines. It is allocated from the Russian loan for the procurement of the new DMUs $ 100 million.

As for restoration of 6 sections on Corridor X, in the total length of 111 km, main projects and all other necessary documentations will be finished by the end of the year for all 6 sections, so the works will begin in the spring of 2013. First, the works will start at the section Golubinci – Ruma (17,9 km), and during the next year also on sections Sopot-Kosmajski Kovačevac (18,4 km), and Mala Krsna-Velika Plana (29 km). In the second phase the remaining 3 sections on Corridor X, south from Niš: Vinarce-Đorđevo (15 km), Vranjska Banja-Ristovac ( 17,7 km) and Bujanovac-Bukarevac (13,8 km), and works on these sections shall begin in 2014.

We would like to remind that, it is envisaged the realization of 5 projects from the Russian loan in the value of $800 million for modernization of Serbian Railways. In the first phase, the modernization of the line Belgrade – Pančevo will be performed, the procurement of the new DMUs and restoration of six sections on Corridor X, in the total length of 111 km. In the second phase the construction of the line Valjevo – Loznica is planned and reconstruction of 200 km of the Serbian part of the line Belgrade – Bar.

For the construction of the line Valjevo-Loznica, the main project was developed in late May this year, and there are ongoing activities on expropriation and then for the obtaining of the building permit. As for the reconstruction of the Bar line through Serbia there is ongoing process of defining the project tasks.

Loan in the amount of $ 800 million, Serbia will successively take in the period of 5 years with the annual interest of 4,1 percent. For each spent credit tranche, grace period is 4 years, and after that the repayment period is 10 years.

It is defined that Serbian party will participate with the 30 percent of workers and materials, and remaining 70 percents the Russian party, and that the participation of the Serbian party in the loan will be 15 percents.

The maximum period for completion of works is 5 years.