Projects in Serbia

Project Summary Documents

Project Summary Documents (PSDs) are disclosed for each project prior to Board consideration. They contain project descriptions, financial details, client information, environmental issues, tender guidelines, and contact details. PSDs for private sector projects are disclosed at least 30 days prior to Board consideration and for state sector projects, at least 60 days.

Project Summary Documents

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb) 

Case studies

Serbian law reform boosts small business

“Back in Tito’s day, when Serbia was part of socialist Yugoslavia, credit was considered half-way a gift. Debtors were protected above all and nobody had sympathy with lenders,” says Professor Miodrag Orlić, a Supreme Court judge in Yugoslav times.

Striking the balance between debtors’ and creditors’ rights is a delicate act. With technical support from the EBRD, Professor Orlić and other Serbian economic and legal reformers have transformed the system of securing loans through assets pledged as collateral. The new “registered pledge” law protects both trusting bankers from welching clients and down-on-their-luck borrowers from rapacious creditors.

“It’s made a huge difference. We can authorise loans much more quickly than before, with more certainty that the debt is secured by adequate collateral,” says Vladan Radikić, a lawyer with Serbia’s ProCredit Bank.

To ensure that the new law was tailor-made to Serbia’s needs, the EBRD’s legal experts studied the country’s existing legislation and suggested ways of adapting and improving it while still respecting Serbia’s legal traditions. The Bank’s efforts were funded by the United Kingdom and by the multi-donor Balkan Region Special Fund, which is supported by Canada, Denmark and Taipei China.

The new law incorporates features that were unthinkable before. Enforcement can, if agreed by the parties, take place outside the judicial process, making it quicker and cheaper. Lenders can accept a wider variety of assets as security, and pledges are recorded in an online database. When borrowers default, lenders can seize the assets straightaway to avoid losing them.

The legislation has been backed up by a new pledge register established in 2005, where lenders can fi le the pledges made to them and verify that the collateral has not been pledged to someone else as well. The reform has already made a big difference to the ability of banks to lend to small businesses, the engines of economic development and job creation.

ProCredit Bank endorses the new system: “Before, we had to go before a judge so the borrower could pledge the collateral; this whole process took two weeks. The new register is online and we can see all the information we need about a pledged asset on our computers instantly. It’s all very quick. We can lend with confidence the same day that the pledge is registered online.”

Supporting health care

Hemofarm Group, the leading pharmaceutical producer in Serbia and Montenegro, has built its business on the production of generic drugs. These are cheaper to buy than licensed brands and make health care affordable for many people in this region.

The €18 million six-year loan from the EBRD approved in 2002 has enabled Hemofarm to buy new equipment to modernise the plants and to achieve the highest industry standards. This was the first EBRD loan to a private industrial entity in Serbia and Montenegro. The first phase of the investment plan was completed in May 2003 and the second is expected to be completed in the first half of 2005. After acquiring another local pharmaceutical producer in 2003, the Group has reached a market share of 45 per cent. The Group produces approximately 300 medicines, which cover most of the therapeutic groups. About one third of the 2004 sales (€174 million) are generated from exports. The Group has a well-established presence in the markets of Bosnia and Herzegovina, FYR Macedonia, Romania, the Middle East and Russia, its main export market.

The second EBRD eight-year loan to Hemofarm of €22 million approved in 2004 is supporting the construction of a greenfield facility for the production and packaging of solid forms in Obninsk, Russia. The facility will be one of the first in Russia to comply with the EUs Good Manufacturing Practices (GMP). Hemofarm has a well-established sales office in Russia, which promotes and sells Hemofarm’s products to the main wholesalers. Over the next years, the company will gradually introduce several new branded (higher value / higher margins) products on the Russian market, supported by significant investments in product management and reorganisation of the sales and marketing functions. The new brands will enable the company to reposition itself with a distinctive product portfolio from their competitors. The EBRD syndicated €5 million of its commitment to Alpha Bank (Greece) in November 2004, which indicates the interest from commercial financiers to work with Hemofarm

Hemofarm is one of the most highly regarded companies in the country. Its extensive operations in and around Vrsac near the Romanian border employ 2,000 people in sales, operations and research. The company has a strong management team with experienced, relatively young managers. The company has a sound balance sheet and a strong revenue generation with focus on improving the liquidity situation. The company complies with local environmental and health and safety regulations.

Marbo

Marbo Product is the largest producer of potato chips and other snack foods in south-eastern Europe. The privately owned maker of popular local snack food brands like Chipsy, Clipsy and Max, Marbo Product, which has plants in Serbia and Montenegro and in Bosnia and Herzegovina, has received an EBRD €10 million loan to diversify its range of products, improve efficiency and increase production to export its products to neighbouring countries. The Bank’s six-year loan, offering a longer maturity than currently available in Serbia, will also help improve the company’s standards of corporate governance in line with international practices.

Belgrade municipal infrastructure reconstruction programme

The EBRD is helping to improve the lives of the people of Belgrade through a €60 million loan to upgrade the water system, improve public transport and modernise district heating. One-third of the financing has been extended to the Belgrade Water Company to improve the quality of water supply following years of under-investment. A shortage of funds for maintaining the water mains and treatment plants has resulted in low water pressures and water shortages during the summer months. The EBRD loan is financing construction of a water treatment plant that will bring an additional 2,400 litres per second on line.

The Belgrade Heating Company is using €20 million of the financing to improve the distribution system and to install meters, which will encourage customers to control their consumption. The third part of the financing is being used to improve tram lines and to buy 150 new buses for the public transport system, which is used by 80 per cent of the city's population. The bus system is currently unable to cope with demand, and delays are common. The appointment of new management forms the core of an initiative to restructure private sector participation in transport services. Air quality in the city will be improved as the new buses will meet EU standards for emissions. The loan was provided without a sovereign guarantee, allowing the government to commit its resources to other needy projects.