October 20, 2011 / 6:01 PM / in 6 years

Serbia, China sign deal for coal plant, mine

SARAJEVO (Reuters) - Serbia’s power utility Elektroprivreda Srbije (EPS) said on Thursday it has signed a preliminary deal with a Chinese consortium to jointly build a 744 megawatt coal-fired unit at an estimated cost of more than 2 billion euros ($2.7 billion).

Under the deal, the consortium that includes China Environmental Energy Holdings Co. Ltd and Shenzhen Energy Group Co. Ltd, and EPS will form a joint venture for the future project, EPS said in a statement.

It said the project includes the construction of the coal-fired unit in the southwestern town of Obrenovac, part of its Nikola Tesla power complex, and upgrade of the Radeljevo coal mine that will feed the plant.

EPS said it also agreed with Chinese partners to define future cooperation on a number of renewable energy projects, in particular biomass, but provided no further detail.

The deal is the latest in a series of energy projects agreed over the past two years with China, which was considered the Balkan nation’s closest ally, along with Russia, when Serbia faced international isolation in the 1990s.

Serbia produces 70 percent of its power in coal-fired plants and the rest from hydro power. in 2010, EPS produced 36 GWh of electricity, or 1 percent above the target, with hydro output hitting a record level.

It urgently needs to upgrade its energy infrastructure, damaged and mismanaged during the Balkan wars of 1990s, to meet growing demand and reduce future reliance on imports. ($1 = 0.725 Euros)

Reporting By Maja Zuvela

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