Transport development crucial for new investment, economic growth and employment - Decarbonization and development of road and rail network in EBRD's focus

Transport is a catalyst for economic and inclusive growth, key to trade development and attracting foreign investment, and offers opportunities for emerging markets to integrate into the global economy. At the same time, transport sector in the regions where the European Bank for Reconstruction and Development (EBRD) operates requires large investments and must become greener and more resilient to the effects of climate change in order for economic development to be sustainable - this is one of the EBRD's priorities in the transport sector.

- The participation of international financial institutions, such as the EBRD, in infrastructure projects reduces risks and encourages best practice in terms of project design and implementation, including social and environmental standards. Our goal is to mobilize private co-financing whenever possible, through well-structured and transparently conducted tenders for concessions and public-private partnerships. Whether we fund public or private partners, the ultimate goal is well-implemented infrastructure projects implemented under the best possible conditions for the countries in which we operate.

We discussed the EBRD projects in the transport sector in Serbia and further plans for the development of domestic transport in another text, on the occasion of marking the 30th anniversary of the EBRD and 20 years of the its Belgrade office.

Regional connectivity

The needs for investment in the transport sector in Serbia, as in the rest of the region, are great, and special attention is paid to improving regional connectivity and connecting the region with the rest of Europe.

- Building better transport links between the countries of the Western Balkans and the entire region with the European Union, reducing transport costs and time, facilitated trade, these are among the main drivers of economic growth and employment, - explains Mirjana Vujicic, chief banker at the EBRD office in Belgrade.

Since the launch of the WBIF initiative in 2009, Serbia has received over EUR 200 million in grants for infrastructure projects and EUR 770 million directly from the EU IPA II package - a total of almost EUR 1 billion in grants from the EU and bilateral donors within the WBIF.

After financing the Nis-Dimitrovgrad section on Corridor 10, one of the newer projects supported by the EBRD is the construction of the highway between Nis to Merdare, the section to Plocnik. The total value of the construction of the section of 37.4 km from Nis to Plocnik is EUR 225 million. The EBRD participates with a loan of EUR 85 million, the European Investment Bank with a loan of EUR 100 million and the European Union donates 40.6 million grants. The so-called "Peace Road", once it is constructed, will connect Nis and Durres in Albania, and the total length of the Nis - Merdare road that Serbia will build is 77 kilometers.

- The first tender for works is currently underway, and the beginning of works is expected in the second half of 2021 - Mirjana Vujicic explains.

The EBRD has been equally active in railway traffic since the establishment of the Belgrade office. Among other things, the reconstruction of the railway from Rakovica to Resnik was financed, as well as the purchase of new trains for passenger transport on regional lines.

Also, another important upcoming project for railway traffic in Serbia is the reconstruction of the Belgrade-Nis railway, for which initial negotiations are currently underway.

In addition to investments, the EBRD is cooperating with Srbija Voz on the modernization of corporate governance.

- The reforms needed to achieve good governance often touch on sensitive topics, not only in Serbia but in all countries where the EBRD invests, it is a complex process and requires a lot of time. Improving corporate governance and commercialization of state-owned companies accelerates the functioning of the market economy, but should also lead to benefits for the company itself through improved quality of services of public importance and less companies relying on state budget - says Pavle Djuric who leads the technical support to Srbija Voz.

The EBRD has financed the purchase of new passenger trains on regional lines

The Western Balkans Rail Summit will be held in September in Belgrade and is organized by the EBRD, EIB and the Transport Community. The summit, which will be attended by EU Enlargement Commissioner Olivér Várhelyi, will gather representatives of the authorities of the countries in the region, with the goal of jointly planning and agreeing on the improvement of the railway network and connections for the EU. This year also marks the European Year of Railways.

Decarbonization of transport

The decarbonisation of the transport sector is one of the main pillars of the Green Agenda for the Western Balkans, supported by the leaders of the Western Balkan countries in November 2020 at a summit organized in Sofia.

Serbia is actively participating in the EBRD Green Cities Program, with Belgrade and Novi Sad joining the program. The action plan for Belgrade has been completed and is awaiting adoption at the city assembly, and the action plan is being drafted for Novi Sad. The increasing use of alternative propulsion vehicles and e-mobility are clearly highlighted in these action plans.

After the initial renewal of the Novi Sad vehicle fleet with the purchase of 29 buses running on compressed natural gas (CNG), the second phase of the project is now in the works and includes the procurement of 10 electric buses and supporting infrastructure, expected to be announced by the end of this year. Procurement of such modern vehicles reduces emissions.

Air transport

The EBRD supports private sector participation in transport and infrastructure investments, and one of the most common forms is through public-private partnerships. One of the first major concession projects in Serbia is Belgrade's Nikola Tesla Airport, for which the concession agreement was signed with the French company Vinci in 2018. The EBRD is contributing with a loan of EUR 72 million for this project, with the project's total investment being around EUR 1 billion.

The airport modernization project includes the renovation of the passenger terminal building, capacity expansion and overall improvement of services and facilities. Although the modernization program will increase the airport's capacity, it will also make business more environmentally friendly.