Each year, Serbia invests approximately two billion euros in its road and railway infrastructure. This raises important questions: Who constructs these roads? What methods are used? And how does the cost of a kilometer of highway in Serbia compare to that in the rest of Europe?
On St. Nicholas Day 2019, the construction of the “Autoput Miloš Veliki” was celebrated with a performance by Zli Pevač Lazović. President Aleksandar Vučić, then-Chinese Ambassador Cheng Bo, and Prime Minister Ana Brnabić were among the notable figures in attendance. The event highlighted the significance of this major infrastructure project.
Milojko Arsić, a professor at the Faculty of Economics, remarked on the nostalgic undertones of the event, drawing comparisons to the era of Tito and socialism. Meanwhile, Goran Vesić, Serbia’s Minister of Construction, Transport and Infrastructure, emphasized the importance of progress and leaving a lasting legacy through infrastructure development.
In 2019, Serbia saw a dramatic increase in infrastructure investments. Previously, investments ranged between 1% and 1.5% of GDP. Today, this figure has doubled to around 3% of GDP, translating to approximately two billion euros annually. As a result, Serbia now boasts 1.1 kilometers of highways per 100 square kilometers, approaching the EU average of 1.25 kilometers.
Key infrastructure projects
The Moravian Corridor: This 110-kilometer route stretches from Pojate to Preljina. Traffic engineer Zoran Đorđević highlights its significance, noting its connection between two historic corridors and its potential to enhance regional development in central Serbia. Minister Vesić points out that the corridor will serve key cities and attract investments.
The “Smile of Vojvodina”: Spanning 175 kilometers, this route will connect Bački Breg near Hungary to Srpska Crnja near Romania, passing through major towns like Sombor and Kikinda. Đorđević argues that this corridor is vital for improving connections within Vojvodina and with neighboring countries. Vesić adds that it will also provide a faster route for Romanians traveling to Western Europe.
Who builds Serbia’s roads?
Foreign contractors dominate large infrastructure projects in Serbia. The Moravian Corridor is being constructed by the American-Turkish consortium Bechtel-Enka, while the “Smile of Vojvodina” is managed by the Chinese company China Construction Eight Engineering Division. Domestic firms often face challenges in securing contracts for such large projects due to the need for significant bank guarantees and experience.
In some cases, projects are executed based on interstate agreements, which can favor foreign companies. For instance, the “Smile of Vojvodina” was awarded directly to a Chinese firm due to a bilateral agreement. Similarly, the Moravian Corridor project was awarded to Bechtel-Enka following a memorandum of cooperation signed in 2018.
Critics argue that domestic companies are at a disadvantage due to high financial requirements and lack of references. Some believe that the tendering process can be skewed, benefiting certain contractors.
Costs and controversies
The cost of highway construction in Serbia has been a topic of debate. Initial estimates for the Moravian Corridor were around 800 million euros, but the project has since seen its budget increase to 1.6 billion euros. This discrepancy has raised concerns about transparency and cost management.
Minister Vesić attributes some of the cost increase to additional requirements, such as flood prevention measures, not included in the original estimate. He argues that comparisons with past estimates are problematic due to varying conditions and timelines.
The Fiscal Council has criticized the current investment model, citing excessive cost overruns and a lack of transparency. They recommend a return to a more regulated system with clear project justifications and adherence to public procurement laws.
The future of infrastructure investment
The Serbian government plans to invest five billion euros in traffic infrastructure by 2027, as part of the “Serbia 2027. Leap into the Future” initiative. This ambitious plan aims to boost economic growth and connectivity. However, the IMF has called for greater transparency and detailed reporting on project costs.
Minister Vesić highlights the economic benefits of these investments, including job creation and increased property values. Despite criticisms and concerns, the government remains committed to enhancing Serbia’s infrastructure, with projects like “Vožd Karađorđe” promising to further improve national connectivity.
As Serbia continues to develop its road and railway networks, it faces the challenge of balancing cost, efficiency, and transparency. The outcomes of these investments will shape the country’s economic future and regional integration.
