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Belgrade waste-to-energy project reaches financial close despite COVID-19

The Belgrade waste-to-energy (WtE) project in Vinča, Serbia has reached financial close. The European Bank for Reconstruction and Development (EBRD) is contributing a EUR128.25 million syndicated loan, including a loan of EUR72.25 million for its own account, a loan of EUR35 million provided by Erste Group Bank AG under the A/B loan structure, and EUR21 million in concessional finance from the Green Energy Special Fund, which is funded by TaiwanICDF.

The 103 MW Belgrade waste-to-energy (WtE) combined heat and power (CHP) project currently under construction in Vinča, Serbia has reached financial close (photo courtesy EBRD).

The Belgrade waste-to-energy (WtE) project in Vinča, which will provide the 1.7 million inhabitants of the Serbian capital with a modern waste management system, has reached financial close. As all the conditions of the financing agreement have now been fulfilled, lenders are starting loan disbursements to support the timely implementation of the project.

The new facility will replace Europe’s largest unmanaged landfill, located just 15 kilometres from the centre of Belgrade, and holding more than 10 million tonnes of waste after more than four decades of operation. The site will be fully remediated with a new sanitary landfill, a 103 MW waste-to-energy plant and a modern facility to process construction and demolition (C&D) waste.

This landmark EUR370 million project is one of the largest public-private partnerships (PPPs) in Serbia to date and brings private funding and expertise to a public sector project. A total of EUR290 million in debt is provided by a pool of lenders.

Construction underway

Construction of the new facilities started in October 2019 and continued throughout the recent public health measures in Serbia. The private investors – SUEZ (France), ITOCHU Corporation (Japan), and the European fund Marguerite – made sure that project implementation continued despite the challenges posed by the COVID-19-related restrictions, and all preconditions for financial close have been met successfully.

Serbia has responded quickly and decisively to the pandemic and we are heartened that the country is now re-emerging with the same determination and will to succeed. Continuing the work at the Vinča landfill demonstrates the joint priority of the public and private partners and their lenders such as the EBRD to create a clean and healthy environment. The EBRD stands united with other financiers to bring the Vinča project to its successful completion and start of operations as planned. The EBRD is also pleased to support the project implementation by extending technical assistance to the city of Belgrade for the establishment of a PPP monitoring unit and its capacity-building, said Zsuzsanna Hargitai, EBRD Regional Director, Western Balkans and Head of Serbia.

The new landfill will be EU-compliant, with modern waste-management and treatment technology. Replacing the existing landfill will also address a major environmental and health risk, including the pollution of the nearby river Danube.

The 103 MW waste-fired combined heat and power (CHP) facility will contribute to reducing greenhouse gas (GHG) emissions and the dependence of Belgrade on fossil fuels. It will have a capacity for a volume of approximately 340 000 tonnes per year of household waste, while the construction and demolition waste facility will treat 200 000 tonnes per year.

This is equivalent to around 66 percent of the total municipal waste generated in Belgrade, and generate renewable heat and electricity equivalent to power consumption for approximately 30 000 households in Serbia.

The new sanitary landfill, with a capacity of 170 000 tonnes per year, will be finalised by the end of 2020, while project completion and full commercial operations are expected in 2022.

This is a milestone project which will change people’s lives in Serbia. It will address pressing environmental challenges as well as introducing a new dimension in generating energy. It demonstrates the EBRD’s commitment to vital infrastructure development, which today is more pressing than ever, said Susan Goeransson, EBRD Director, Infrastructure, Europe.

Wider investment package

The EBRD financing is part of a wider package including the International Finance Corporation (IFC) and the Austrian development bank Oesterreichische Entwicklungsbank (OeEB), with loans of up to EUR72.25 million and EUR35 million, respectively.

The total investment is mobilised by Beo Čista Energija Ltd., a special-purpose vehicle formed by SUEZ, ITOCHU, and Marguerite. Beo Čista Energija entered a 25-year PPP with the city of Belgrade in 2017 for the first large-scale environmental infrastructure PPP investment in the Western Balkans region.

The EBRD is a leading institutional investor in Serbia and has invested more than EUR5.9 billion across 264 projects in the country to date. The EBRD is focusing on supporting private-sector development, improvement of public utility services, and the overall transition towards a green economy.

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