A Chinese company started work this week on a new 350MW unit at Serbia’s second largest coal-fired power plant, the first new power-generating scheme in the Balkan country in nearly 30 years.
Flooded coal mines have put Serbian power supply under pressure, and the $613m project is part of a package of deals between Serbia and China that includes expanding a nearby coal mine and boosting capacity at the Kostolac coal-fired plant complex (pictured).
The Export-Import Bank of China will provide 80% of the funding for the entire project of $715m through a 20-year loan while the Serbian government will secure the rest of the funds, Reuters reports.
China Machinery and Engineering Corp is building the unit, with completion expected in 2020.
Serbia needs to upgrade its energy infrastructure to meet rising demand, especially after a flood in 2014 affected a mine supplying its biggest coal-fired plant.
The country generates two thirds of its electricity from ageing coal plants and the rest from hydro power, Reuters said.
Other western Balkan countries including Bosnia, Kosovo and Montenegro also plan to build new coal-fired plants as old plants are being phased out, but, according to Reuters, environmentalists warn that this could eventually fall foul of EU environmental standards if the countries continue moving toward toward EU membership.
China has been targeting the non-EU Balkan countries with investment and construction projects, but its method of bi-lateral deal making with governments has met with some difficulty where projects stray into EU jurisdiction, where competitive tendering is required.
One such scheme, a railway between Belgrade in Serbia and Budapest in Hungary, is facing scrutiny by the European Commission for compliance with financing and procurement rules.
Image: The Kostolac coal-fired plant complex in Serbia (Wikimedia Commons)