Ministry of Finance of the Republic of Serbia is trying to develop a way to pull Serbia out of the contract with Russia,on loan for the financing of “Serbian Railways”, in amount of 800 million dollars, writes “Blic”.
The loan was agreed upon,back in 2008, during the mandate of Boris Tadic, with the Russian President – Vladimir Putin. It became active, when Aleksandar Vucicbecame the Prime Minister. Works have already initiated on some projects, and it was purchased 27 Russian diesel trains and locomotives. Until now,USD 300 millionis withdrawn, but there are still 500 million remained.
Terminationscenario should take place in the form required by the Serbian side, to extend the loan implementation deadline after the final deadline – December 2017, which Russian side is unlikely to accept. ‘Blic’ source from the Ministry of Finance, said that the documents already prepared for delivery to the Russian side.
‘Blic’ source from a technical government of RS says that Minister Vujovic believes that the Russian loan is not favorable for Serbia. As a reminder, the annual interest of Russian loan is 4.1 percent, with a grace period of four years and a repayment period of 10 years. Vujovic is convinced that the money could be found on the other side with better conditions, and is ready, says our source, to even go with the Russians on arbitration.
The other ‘Blic’ source from the Ministry of Finance says that the entire team of the Minister Vujovicis on their feet, in order to develop a form of termination, and to pay for the damage as little amount as possible. Our intervieweepoints out, that the Ministry of Finance was familiar with every detail of loan, as they participated in its creation, as well as in the annexes, whichis unusual turn of events.
“There are indications of some tendencies of world and European financial institutions, to limit the income of Russian money in Serbian infrastructure investments. In the Ministry, there arespeculations that, after the contract termination with the Russians,a new contract, with the EBRD or the World Bank,will be concluded. The question is,how arbitration results will influence Serbia – the “Blic” source said.
Milan Kovacevic, foreign investment consultant, says for “Blic” that does not know the reasons for the possible termination of the loan agreement with Russia on the “Serbian Railways”, but that Russia could ask for compensation. Kovacevic is also pointing out some controversial elements of the contract.
“The bottom line is that when contract was signed,it was not seen how this package will end up. The purchased trains were similar to those which “Gosa” manufactures, not modern. Then I supposed, our own should be purchased, rather than Russian “- Kovacevicsays.
Reply of the Ministry of Finance: We want to extend the deadline
The Ministry of Finance did not want to answer directly whether there is contract termination with the Russians on the pier, the paper said.
“As it is known, the original deadline for the availability of loan funds is December,31, 2017. That period is not sufficient to complete the design and construction works of the envisaged projects. Negotiations are in progress,necessary to ensure extension of the deadline for the implementation of this loan”, says the response by the Ministry of Finance.
USD 300 millionis used.
Agreement on Russian loan amounting toUSD 800 million was signed in January, 2013.
The loan is intended for the modernization and electrification of the Belgrade – Pancevo railway, reconstruction of six sections on Corridor 10, total length of 111 kilometers, procurement of new diesel trains, construction of Valjevo – Loznica railway, andreconstruction of the Serbian part of the Belgrade – Bar railway.So far,about USD 300 millionis withdrawn. The annual interest rate is 4.1 percent, with a grace period of four years and a repayment period of 10 years.
