China has approved an €800m ($1.1bn) loan to help Serbia expand a coal-fired power plant, a Serbian utility official has announced.

Serbia, which has not given terms of the loan terms, said it plans to use the money to boost capacity at the 1,010MW plant at Kostolac, about 100km from Belgrade, reports Reuters.

The plant is Serbia’s second-largest coal-fired power plant and generates about 14% of its total electricity.

“We are going to begin reconstruction of two 350MW blocks in Kostolac coal-fired power plant this year,” chief executive of Serbia’s state-run utility EPS, Aca Markovic, told Reuters.

Serbia produces 70% of its power from coal-fired plants and the rest from hydropower. It urgently needs to upgrade its ageing energy infrastructure, which was damaged and then fell into disrepair during the Balkan wars of the 1990s, according to Reuters.