Smoke, noise, and disarray. It marked the beginning of the meeting in the National Assembly of the Republic of Serbia, which began on March 4, 2025. The agenda of that meeting also includes the Draft Law on the Confirmation of the Loan Agreement (Solar Thermal Power Plant Project in Novi Sad) between the Republic of Serbia and the European Bank for Reconstruction and Development[1]. The information available in the public domain is not sufficient to judge the quality of the project itself, so decisions on the spending of public funds will be made with limited information. What we can say with certainty is that the quality of the information we have in the public domain about this project is not good enough. The existing information points to the contracting and approval processes that we have already written about, and which are not transparent. Smoke, noise, and disarray are present in these processes as well.
We suggest that you invest ten minutes of your time to learn at least something about the framework into which citizens of the Republic of Serbia will pour up to 105 million euros of the debt financing, and citizens of the European Union may add more than 20 million euros.
Who enters into the loan agreement?
The Government of the Republic of Serbia has proposed to the National Assembly of the Republic of Serbia to adopt the Draft Law on the Confirmation of the Loan Agreement (Solar Thermal Power Plant Project in Novi Sad) between the Republic of Serbia and the European Bank for Reconstruction and Development.
Why this debtor-creditor relationship arises?
It is hard to tell. The Draft Law provides for some information: “WHEREAS, the Borrower intends to implement the project described in Schedule 1 (Description of the Project) which is designed to assist in financing the construction of a large-scale solar-thermal plant in Novi Sad with solar collector fields, a seasonal heat storage, heat pump and an e-Boiler (the “Project”); …
WHEREAS, the Project will be carried out by JKP “Novosadska Toplana” Novi Sad, the district heating company of Novi Sad (the “Project Entity”) and wholly owned by the City of Novi Sad (the “City”) with the assistance from the Borrower acting through the Ministry of Mining and Energy in accordance with the terms of a project agreement to be entered into between the Bank, the Borrower represented by the Ministry of Mining and Energy, and the Project Entity on the date about the date hereof (the “Project Agreement” and as defined in the Standard Terms and Conditions);”
The Schedule 1 (Description of the Project) contains 123 words and does not contain a single figure to describe the project. Through the project, the Republic of Serbia (not the City of Novi Sad, which is the owner of the company and not the company in whose business taxpayers’ money is invested) invests in three different technological solutions. The project title is given according to one of these three technological solutions. We could not find the project contract in the public domain and its content is unknown to us.
How is public money combined to finance this project, why is it so, and who decides on that?
In this description, we also learn the following: “The Project is envisaged to be co-financed with an investment grant to be provided by the EU through the WBIF.” The Loan Agreement itself states that “the Bank also wishes to make available to the Borrower an investment grant provided by the European Union (“EU”) through the Western Balkans Investment Framework (“WBIF”) in the amount of up to 20% of the total project cost pursuant to a grant agreement to be entered into between the WBIF and the Borrower (the “WBIF Investment Grant Agreement”)”. How the parties to this loan know beforehand the decisions of the EU and the WBIF, which are not parties to this agreement, is not known. Why the lender’s desire to provide the borrower with a third-party grant is of importance for this agreement is also not clear. We are wondering whether other banks, such as commercial banks, have the ability to offer to their clients free funds from these same sources. As we have previously written, there is no information in the public domain on how projects thart apply for financing from the WBIF are selected. We contacted the WBIF and the European Commission via email to learn which projects were nominated for funding through this instrument in 2024[2]. We learned that we cannot know anything about candidacy for public financing until it is approved: “Investment Rounds 10 and 10E are still ongoing and the projects that were submitted by the beneficiaries are expected to be presented to the WBIF Board for adoption indicatively in end of April. As such, we are not yet in a position to provide the information requested. We suggest you come back to us in early-mid May, in case you do not find in the meantime the information available in our WBIF website”
Do we know enough about the project to be financed with public money from the taxpayers of the Republic of Serbia and (possibly) the European Union?
The Draft Law does not contain other details about the project itself. These details may be contained in the Project Agreement, the signing of which is mentioned in the Draft Law. Through internet search we found the document that contains details about the project. The document entitled SERBIA GrCF3 W2 – NOVI SAD SOLAR-THERMAL PLANT was adopted by the Board of Directors of the European Bank for Reconstruction and Development and contains the Recommendation of the President of this bank to approve the project for financing and the accompanying report[3].
This document also provides the following information:
1. The loan will be used to finance the construction of a solar thermal collector field with a capacity of 31 MW, an electric boiler with a capacity of 60 MW and a heat pump with a capacity of 17 MW.
2. The Project is included the Green City Action Plan (”GCAP”) being developed by the City. Through the GCAP, the City identified, and is currently prioritizing, its most pressing environmental challenges with targeted investments and policy actions to address them. It is not explained how the authors of the document knew that the project would be included in the list that had not been prepared.
3. It is expected that the project will receive technical support from the WBIF for the operation of the Project Management Unit in the amount of 3,140,000 Euros. The authors of this document did not explain the grounds for such an expectation.
4. The Borrower has requested a non-refundable investment support from the WBIF in the amount of 20,900,000 Euros and that it is expected that such support will be approved. The authors of this document do not explain how they learned that the Republic of Serbia had applied for this support or the grounds for an expectation of approval. Neither the citizens of the Republic of Serbia nor the citizens of the EU can quickly find out anything about this request from the Borrower.
5. The said grant would be part of the allocation of the Republic of Serbia from the Reform and Growth Instrument. Chapter 12 of the Reform Agenda of the Republic of Serbia[4]: Investments under the Western Balkans Investment Framework (WBIF) contains an indicative list of projects by sector that will be proposed for financing from the WBIF in accordance with the relevant national and WBIF procedures. The solar thermal power plant project is not on that list. The use of solar energy in district heating systems is not recognized in the Integrated National Climate and Energy Plan of the Republic of Serbia[5], but it is mentioned in the Energy Development Strategy of the Republic of Serbia until 2040 with projections until 2050[6]. The Reform Agenda of the Republic of Serbia was adopted in a procedure in which the document was submitted for comments to a closed group in the form of a confidential document, and statements on the document were made at a closed session of the parliamentary committee for European integration in the presence of the Ambassador of the European Union to Serbia[7][8].
6. About 20% of the City of Novi Sad’s heating needs will be met from 29,000 MWh of clean solar energy that will be produced by the new heating plant. This information is repetead in several instances in the document. This percentage is many times lower, which we can verify in numerous documents of the JKP “Novosadska Toplana”.
7. The implementation of the project will reduce emissions of pollutants into the air and direct CO2 emissions by 95% without specifying the current state or the state after the implementation of the project. It is also stated that due to the use of electricity, when indirect emissions are considered, the project will contribute to an increase in CO2 emissions in total.
8. According to the 2022 Census, women make up 41.59% of the population of the City of Novi Sad. This information is incorrect.
9. JKP “Novosadska Toplana” owns 1,030 MW of production facilities, which includes the production capacities of the combined heat and power plant (“CHP Novi Sad”). This information is incorrect. The production capacities of the CHP Novi Sad are not owned by the Novi Sad Public Utility Company.
10. JKP “Novosadska Toplana” earns 97% of its operating income from providing heating services. This statement is incorrect, which can be easily verified in numerous documents of the Company.
11. PUC Novosadska Toplana has a productivity indicator of 3.5 GWh per employee. This indicator is also incorrect, which we can easily verify in numerous documents of the PUC “Novosadska Toplana”.
12. The share of renewable energy sources in heating and cooling in the Republic of Serbia in 2019 was 26.7%. It is not clear where this data comes from.
13. In the future, certain amounts of renewable electricity will appear in the power system of the Republic of Serbia, which would be lost or would represent “surplus” due to the intermittent nature of the source and the inability to achieve simultaneous consumption. It is stated that electric water heaters will use 40,000 MWh of “excessive electricity” to produce heat. It is not known on what basis this claim was made. The Integrated National Climate and Energy Plan of the Republic of Serbia states that the share of curtailed or lost renewable electricity will be negligible and is estimated at 2,500 MWh in 2040. Even if this unsubstantiated claim was true, it is not clear why the citizens of the Republic of Serbia would finance a project that benefits the JKP “Novosadska Toplana” at the expense of someone else.
14. The Integrated National Climate and Energy Plan of the Republic of Serbia sets out that the share of renewable energy sources in heating and cooling in 2030 will be 50.9% and the share of renewable energy sources in electricity production in 2030 will be 49.1%. Both figures are incorrect and are not included in the plan.
15. From the document we can learn that the expected production of thermal energy from solar collectors will be 29,000 MWh per year, that an additional 40,000 MWh will be obtained from electric water heaters and that the heat pump will produce 50,000 MWh. The solar thermal power plant project in Novi Sad would, according to plan, generate slightly less than 120,000 MWh annually, of which the solar thermal power plant itself would contribute less than a quarter[9], while the pumping of the heat pump would produce the most thermal energy. It is not clear from the document how the heat storage will be used.
[1] http://www.parlament.gov.rs/upload/archive/files/lat/pdf/predlozi_zakona/14_saziv/137-25%20-%20Lat..pdf
[2] https://wbif.eu/news-details/38th-wbif-project-financiers-group-meeting-16-december-2024
[3] https://www.ebrd.com/what-we-do/project-information/board-documents/1395324202711/GrCF3_W2_-_Novi_Sad_Solar-Thermal_Plant_Board_Report.pdf?blobnocache=true
[4] https://www.mei.gov.rs/upload/documents/nacionalna_dokumenta/reformska_agenda_rs_2024_2027.pdf
[5] https://pravno-informacioni-sistem.rs/eli/rep/sgrs/vlada/drugiakt/2024/70/1/reg
[6] https://pravno-informacioni-sistem.rs/eli/rep/sgrs/skupstina/strategija/2024/94/1
[7] https://europeanwesternbalkans.rs/kako-se-krojila-reformska-agenda-srbije/
[8]http://www.parlament.gov.rs/%D0%9F%D0%B5%D1%82%D0%B0_%D1%81%D0%B5%D0%B4%D0%BD%D0%B8%D1%86%D0%B0_%D0%9E%D0%B4%D0%B1%D0%BE%D1%80%D0%B0_%D0%B7%D0%B0_%D0%B5%D0%B2%D1%80%D0%BE%D0%BF%D1%81%D0%BA%D0%B5.49377.43.html
[9] Yet it gives a name to the project