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Public-private partnerships in Serbia: Recent developments and challenges

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Belgrade has recently signed a substantial contract with private firms Strela Ub and Strela Obrenovac for transportation services on 34 city lines, valued at 54.1 billion dinars (around 460 million euros). This deal exemplifies the growing trend of public-private partnerships (PPPs) and concessions in Serbia, a sector that has seen over 150 contracts worth more than eight billion euros over the past 12 years. Despite this, the field has faced various challenges, including disputes, contract terminations, and incomplete initiatives.

The Program for the Development of Public Procurement (2024-2028) outlines the importance of public-private partnerships and concessions for Serbia’s EU accession, specifically under Chapter 5, which addresses cooperation between the state and private sector. This chapter, opened in December 2016, requires Serbia to fully align its regulations with EU standards before it can be closed.

The Commission for Public-Private Partnership, a key body in this framework, has reviewed and given positive opinions on 276 project proposals since 2012. These projects, totaling over eight billion euros, primarily involve upgrading public lighting and public transportation services.

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Recent notable public-private partnerships include a new call for proposals to enhance public urban and suburban transportation in Aranđelovac and a significant partnership for 84 city bus lines in Belgrade. Additionally, the municipality of Loznica is seeking private partners for public transport, with the project valued at 697 million dinars.

One of the most well-known public-private partnerships is the BusPlus system in Belgrade. Initially contracted to the Turkish company ApexSolutions (now KentKart) in 2010, the agreement was renewed in 2021 but terminated by the city in 2023, leading to ongoing arbitration proceedings initiated by KentKart.

In the realm of concessions, Belgrade signed a 300 million euro deal in 2017 with French Suez Group SAS and Japanese Itochu for the Vinča landfill rehabilitation and energy production facility. Additionally, in 2018, the French VINCI Airports secured a concession for the Nikola Tesla Airport’s infrastructure, committing to a one-time fee of 501 million euros and annual fees of 228 million euros over 25 years, along with significant investment obligations.

The Horgoš-Požega highway concession, valued at 1.5 billion euros and awarded to the Spanish-Austrian consortium Alpina-Por in 2007, was terminated in 2008 after a government review.

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Looking ahead, Serbia plans to amend the Law on Public-Private Partnerships and Concessions as part of the current Public Procurement Development Program and Action Plan. The Assembly is expected to complete this process by the end of the year, including developing guidelines, tender documents, and training for all stakeholders involved in these partnerships and concessions.

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