Serbia is taking a loan for the modernization of the Kragujevac heating plant

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The European Bank for Reconstruction and Development has approved a loan of 18 million euros to Serbia for the district heating project in Kragujevac, it is stated in the proposal of the Law on Confirming the Loan Agreement.

The project includes the modernization of the city’s district heating system and the replacement of the existing coal-fired plant with a new natural gas-based system. This will enable the complete abolition of coal from the city district heating, it is stated in the draft law.

The project should significantly reduce or eliminate emissions of sulfur oxides and particulate matter, reduce carbon dioxide emissions and significantly improve the energy efficiency of the system.

The loan will be disbursed in two tranches – the first of 14 million euros and the second of 4 million euros.

The first part to be financed from the first tranche includes the decommissioning of old coal-fired boilers from the city’s district heating system, the installation of new natural gas-based hot water boilers, and the supervision of the works by an independent engineer. The first part of the works should be completed by the end of 2023.

The second tranche will cover the costs of rehabilitating the ash dump, which will be located at the location of the company Energetika from Kragujevac, and hiring consultants who will help in the procurement and implementation of the project and supervision over the construction works.

The second part, as well as the second tranche, are the subject of further in-depth analysis, which is expected to be completed by the end of 2021. To the extent possible, the second part is expected to be completed by the end of 2024, the project description under the Act states.

The amount of the loan to Serbia will be subject to a variable interest rate equal to the six-month EURIBOR increased by a fixed margin of 1 percent, Nova Ekonomija reports.