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Belgrade Metro project advances with contract annexes approval

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The temporary administration of the City of Belgrade has given its consent for the signing of two contract annexes concerning the construction of the Belgrade Metro. One of the annexes accelerates the work on the Makiš depot, as the loan funding for this section is still pending, while the other extends the deadline for delivering technical documentation for the eighth time, including the conceptual design of the first phase of Metro Line 1, which is being developed by the French company Egis Rail.

Under the first annex, the company “Power China” will bear the costs of exploratory work and design at the Makiš depot. This is because the loan agreement with Société Générale Bank has not yet come into effect, delaying the financing for these works. The delays are due to consultants hired by SG Bank who have not completed the environmental and social impact assessment for this project.

During one of its recent sessions, the temporary administration approved a resolution proposal allowing the City of Belgrade, particularly the Secretariat for Public Transport, to sign this annex.

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The Contract Agreement for the Makiš Depot’s design and construction was signed in September 2023 by the Republic of Serbia (represented by the Ministry of Construction, Transport, and Infrastructure), the City of Belgrade (Secretariat for Public Transport), the Belgrade Metro and Train Public Utility Company, and Power Construction Corporation of China (Power China).

One of the preconditions for this agreement is confirmation from the client (City of Belgrade and Belgrade Metro and Train Public Utility Company) to the contractor (Power China) that the financier (Republic of Serbia) has notified both parties of the financial arrangement’s entry into force.

However, this arrangement remains pending. The lender is Société Générale S.A.

To finalize the financial arrangement, the prospective lender has requested the appointment of an independent environmental and social consultant, Ramboll UK Limited, to conduct an Environmental and Social Due Diligence (ESDD) analysis of Metro Line 1, Phase 1, and the Makiš depot.

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“Activities to implement the analysis began in August 2023, aiming to meet additional requirements defined through ESAP,” the proposal for the annex states.

Considering the project’s importance, the parties agreed to expedite the Makiš depot project by signing an annex for exploratory work and design, allowing Power China to cover costs until the financial arrangement is in place.

If the Contract Agreement isn’t executed within nine months, Serbia or the City of Belgrade and Belgrade Metro and Train Public Utility Company will pay their obligations through a separate payment agreement from the Serbian budget.

Société Générale’s Central Bank headquarters didn’t respond to Nova Ekonomija’s inquiries regarding the loan agreement.

Additionally, an annex was approved for the contract with “Egis Rail,” extending the deadline for technical documentation delivery to June 30, 2024. This includes the conceptual design for Metro Line 1’s third phase and feasibility studies for its first phase, with an environmental impact study.

The completion deadline for the contract, originally set for May 3, 2022, will now be extended due to ongoing reviews and alignment with safety regulations.

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