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The Government of the Republic of Serbia

In the service of citizens

EBRD loan deal granting €150m to Srbijagas signed

Belgrade, 18 February 2010

Representatives of the Serbian government and Srbijagas today signed two agreements with the European Bank for Reconstruction and Development (EBRD) worth €150 million for the construction of new gas storage, maintenance of gas transmission network and refinancing of existing loans of Srbijagas.

Hildegard Gacek, left, and Dusan Bajatovic

The agreements were signed by Serbian Minister of Finance Diana Dragutinovic, EBRD Director for Serbia Hildegard Gacek and Director of Srbijagas Dusan Bajatovic.

The Minister explained that repayment of the loan will start in three years, with interest rate of 1.92%, and will finish by 2022.

She pointed out that this is a strategic loan in a move to achieve Serbia’s energy independence and stability.

Gacek said that the government and Srbijagas are conducting a reform in the energy sector to approach Serbia closer to European standards and legislation in this area.

She recalled that the EBRD financed €180 million worth of projects in 2008, while in 2009 it invested €423 million, adding that since the beginning of its engagement in Serbia, the bank has financed a total of 94 projects with €1.8 billion.

Hildegard Gacek and Diana Dragutinovic

Srbijagas Director Dusan Bajatovic explained that €70 million, out of the total €150 million, will be invested in the construction of the new storage facility in Banatski Itebej, whose capacity will be one billion cubic metres of gas, while €50 million will be used to procure gas and refinance existing loans.

Another €20 million will be spent on the construction of the gas pipeline towards Republika Srpska and Romania, while the remaining €10 million will be used to finance a number of feasibility studies.

He said Serbia has the capacity to complete the new gas storage facility within two construction seasons, as well as to restructure Srbijagas. That way the company will remain 100% state-owned, though parts of the company dealing with transportation, distribution and storage will function separately.

We will not sell these sections, but simply recapitalise them and boost their competitiveness, Bajatovic concluded.

Minister of Energy and Mining Petar Skundric stressed that Serbia’s goal is not only to ensure energy stability, but also to turn its energy sector into a regional leader in this field, adding that the gas sector has already come close to achieving that goal.