The Serbian Parliament is set to consider four draft laws that will authorize state guarantees for loans taken out by the public company Srbijagas from domestic commercial banks. These guarantees, totaling 201 million euros, are aimed at supporting the company’s ongoing investments in gas infrastructure.
The loans, signed on November 15, will be backed by the Serbian government, which will assume responsibility for repaying the loans should Srbijagas fail to meet its obligations.
The first loan: Poštanska Štedionica
The first draft law concerns a loan from Poštanska Štedionica, Serbia’s Postal Savings Bank. This loan, with a maximum value of 51 million euros (in dinar equivalents), carries an interest rate consisting of the three-month Euribor plus a 2.2% banking margin. The law stipulates that Serbia will guarantee the repayment of this loan if Srbijagas defaults.
This funding will be used for capital investments aimed at developing the gas distribution network, including expanding the transportation and storage capacity of gas pipelines in Serbia.
Two loans for gas pipeline construction
The second bill outlines guarantees for two loans taken by Srbijagas. The company will borrow 45 million euros from Bank Intesa and 15 million euros from Poštanska Štedionica for the construction of the Leskovac-Vranje gas pipeline. These funds will help expand the gas network, with a more favorable interest margin of 1.2% plus the three-month Euribor.
A second set of loans, also for gas infrastructure, includes a 45 million euro loan from OTP bank and 15 million euros from Poštanska Štedionica for the construction of transmission stations in Horgoš, Banatski Dvor and Loznica. This loan carries an interest rate of 1.45% plus Euribor.
A final loan for distribution pipelines
The fourth loan, totaling 30 million euros, will be provided by Bank Intesa to finance the Belgrade-Valjevo-Loznica gas pipeline. The interest rate is set at 1.22% plus the three-month Euribor.
The justification for borrowing
The Serbian government explains that these loans are essential to completing critical gas infrastructure projects, such as the Leskovac-Vranje pipeline and the Belgrade-Valjevo-Loznica pipeline. These projects are seen as integral to the country’s energy stability and economic growth.
While the state guarantees increase the public debt, the government considers these investments necessary for long-term energy security and economic development. Additionally, despite the increased financial risks, the loans are viewed as a justified investment.
Economic Impact and Loan Terms
The proposed laws also highlight the varying costs associated with the loans. Poštanska Štedionica’s loan is the most expensive, while loans from Bank Intesa are more favorable.
Once approved, these laws will enable Srbijagas to complete critical gas infrastructure projects while the Serbian government shoulders the financial risk in case of default. This marks another step in Serbia’s ongoing efforts to modernize and expand its energy infrastructure.
