Kostolac power station

China plans to sign a $600m deal with Serbia, which will help the latter construct an additional unit at the Kostolac coal-fired power plant.

Kostolac general manager Dragan Jovanovic was quoted by Reuters as saying that the construction of the new 350MW unit will take five years.

Serbia will repay a $608m loan from China over 20 years. The financing agreement will allow a grace period of seven years and charge 2.5% as interest annually.

State-run utility Elektroprivreda Srbije (EPS) and the Serbian Government will provide the remaining $107m for the project.

A $1.25bn upgrade is already underway at Kostolac, which is mainly being financed by Export-Import Bank of China.

"The construction of the new 350MW unit will take five years."

The upgrade is expected to extend the life span of the coal-fired plant and boost its power production capacity. The present B1 and B2 units currently use outdated technology, which means they fail to operate to their full capacity.

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By GlobalData

Ageing coal-fired plants are the primary sources of energy generation in Serbia, providing up to two-third of its supply.

Serbia had to import large quantities of power and coal earlier in May, after flooding hit the country’s biggest power plant, Reuters reported.

Image: Power Station Kostolac A. Photo: courtesy of Mazbln / Wikipedia.