Zorana Mihajlović Ph.D., Deputy Prime Minister And Minister Of Construction, Transport And Infrastructure

We Prepare Thoroughly For Each Move

Serbia is today a country with regulated public finances, which has enabled it to launch and finance an ambitious new cycle of infrastructure works, to work on connecting Serbia with the region and the EU, and thus also strengthening the competitiveness of our economy. That’s a job that will continue in 2018.

The vision of the Government is for Serbia to be the transit hub of the region and the first-choice country for investors who want to invest in this part of Europe, says Zoran Mihajlović Ph.D., Deputy Prime Minister and Minister of Construction, Transport and Infrastructure.

The realisation of this vision is based on continuous improvement of the business environment and investments in the development and modernisation of infrastructure, the current value of which is 16 billion euros, confirms our interlocutor.

Who are the main creditors of these huge works and, in your opinion, how effectively are those funds used?

– Infrastructure projects in Serbia are financed from all available international and domestic sources. International sources include loans from international financial institutions (EBRD, EIB, World Bank), financing from EU funds, as well as projects with bilateral financing, such as, among others, projects that Serbia implements with the People’s Republic of China, the Russian Federation, Azerbaijan and the Federal Republic of Germany for projects with KfW. Some projects are financed entirely from the national budget, as was the case with the construction of the Ljubovija-Bratunac Bridge and the Srpska kuća-Levosoje road section.

In contrast to the period four years ago, when I took over the department and found loans that were not being used and the budget burdened with the payment of millions of penalties for not withdrawing funds, today there isn’t a single project left waiting. Thanks to a complete change in the way projects are run, in the last three years almost 200 kilometres of the highway has been opened to traffic and more than 200 kilometres of railway lines have been modernised.

How much capacity does Serbia have to further borrow for the building of large infrastructure projects?

– Successful implementation of the macroeconomic and financial stabilisation programme, as well as growth achieved in GDP, placed Serbia in a position to initiate and finance an ambitious new cycle of infrastructure construction without disturbing the country’s financial stability.

An important difference compared to the previous period is the termination of the bad practise of contracting projects without taking into account the level of preparation of project documentation, expropriation and other prerequisites for the commencement of works. Having learned from the negative experiences of some former governments, our priority was to accelerate the completion of stalled projects and ensure that new projects don’t wait for the start of works.

We stick to this rule even today, when we are preparing new major projects that will start in 2018, including the launch of construction of the first sections of the “highway of peace”, from Niš to Merdare and from Niš to Pločnik, and the modernisation and reconstruction of the Niš-Dimitrovgrad railroad, with the construction of bypass lines around Niš, for which we signed a contract with the European Investment Bank at the end of January.

Given the current pace of construction on Corridor 10, how is Serbia positioned in relation to the rival European corridor that traverses Romania and Bulgaria?

– Serbia has only slowly started reducing the many decades of the backlog in infrastructure construction over the past three years. After 30 years, in 2018 we are finally completing the largest infrastructure project – road transport Corridor 10. With the completion of this traffic route, Serbia will have an unbroken stretch of highway in full profile from its north and west to its eastern and southern borders. This is a result of the intensifying of construction in the past three years, during which nearly 200 kilometres of new highways were built in Serbia, which had an immediate impact on increasing transit traffic.

In 2017, we had 17 million more vehicles on our highways than in 2014, while the public company “Roads of Serbia” had 22.6 per cent higher revenues for road tolls in 2017 than a year earlier. This clearly indicates that transit traffic is slowly returning to its shortest route, through Serbia.

Corridor 10 is the most important road for Serbia, which technically meets the highest standards of the EU, and along which we want to have even more cars, which is why we last year installed the most modern chargers for electric cars and introduced free wireless internet in rest areas.

In contrast to the period four years ago, when I took over the department and found loans that were not being used and the budget burdened with the payment of millions of penalties for not withdrawing funds, today there isn’t a single project left waiting

What are your expectations of the modernisation of railways? How much potential do they have for transporting cargo?

– Railway modernisation is one of the key conditions for Serbia to take advantage of its geographical position and become a transport hub in this part of Europe, especially when it comes to cargo transportation. Unlike the road-based Corridor 10, which some previous governments spoke about and promised a lot on, but didn’t work on sufficiently, railway modernisation wasn’t even mentioned, and let’s not even mentioning the fact that, prior to 2014, the years passed without a single kilometre of the railway being modernised.

In the past three years, railway modernisation and reform have become one of the priorities of the Government, and the first results of that are already visible. Over the course of three years, 215 kilometres of rail tracks have been reconstructed on Corridor 10 and Corridor 11.

We have begun work on the modernisation and reconstruction of the Belgrade-Budapest rail line, with which Serbia officially became part of the new 21st century Silk Road, within the framework of China’s global ‘One Belt, One Road’ initiative. In the past three years, 48 new trains were purchased that transport along our tracks, and thanks to which an increase in the number of rail passengers has been recorded for the first time after many years.

One important project in the period ahead is the construction of an intermodal terminal in Batajnica, which will have a direct link with road-rail Corridor 10 via the Belgrade bypass.

When is it realistic to expect Serbia to be able to complete its part of the Belgrade-Budapest rail line and what kind of impact do you expect from its modernisation in terms of passenger and freight transport revenue?

– The Belgrade-Budapest Railway is the first track for speeds of up to 200 km/h and is situated along the rail route of Corridor 10, which is the most important rail corridor not only for Serbia but throughout this part of Europe, as part of the basic Trans-European Transport Network (TEN-T). In the long run, it’s important for Serbia to participate in this project and be part of the new transport routes linking Asia and Europe. This rail line will connect the TEN-T and the Express Eurasian Railway, via Istanbul, and is also a continuation of the maritime and land-based new Silk Road from the Port of Piraeus towards Central Europe. The fact that Serbia is one of the key transit points on this route creates the opportunity not only to increase the volume of goods transportation but also to build new logistics and industrial zones and attract investment in the area along the main transport arteries.

Zorana MihajlovicWorks were launched on the section from Stara Pazova to Novi Sad in September last year, while works on the Belgrade-Stara Pazova section started at the end of November 2017. According to the envisaged dynamics, we expect works on this rail line to be completed by the end of 2021.

The journey time from Belgrade to Budapest is currently around eight hours, but upon the completion of the construction that travels time will be reduced to around three hours. By increasing the speed and shortening the route between Belgrade and Budapest, rail carriers will be able to plan new commercial offers for passengers that include final destinations in Vienna, Bratislava and Prague. When it comes to transporting goods, with the improving of the technical parameters of the rail line we expect a drastic increase in the volume of goods transport, not only through the individual use of rail transport but also in combination with other modes of transport through the development of combined transport. Likewise, when it comes to containerised rail transport, new increased flows of goods are expected from the direction of China to the Greek Port of Piraeus, via Macedonia to Serbia and onwards to central and eastern parts of Europe.

Railway modernisation is one of the key conditions for Serbia to take advantage of its geographical position and become a transport hub in this part of Europe, especially when it comes to cargo transportation

Are you still considering the “Cargo 10” project, which doesn’t require major investment and has generated great interest among almost all countries in the region, including Germany, Austria, Greece, Turkey etc.?

– An important prerequisite for economic growth is good connectivity at the regional level, which provides high-quality transport services. In addition to improving transport services through the improvement of infrastructure, we are also working on so-called soft measures that don’t require large financial resources, and that together have a significant positive impact on the quality of transport services, attracting new transport flows. A specific example is the recent establishment of the direct “Sava Express” train between the two regional transport hubs of Belgrade and Ljubljana, which will carry significant freight flows from Turkish and Greek ports, which transit through Serbia and via Austria to be transported further to Western Europe.

Another important activity being carried out with the aim of improving transport is the creation of a new rail freight corridor, called ‘Alpine-Western Balkans’ and running through five countries: Austria, Slovenia, Croatia, Serbia and Bulgaria, all the way to the Bulgarian-Turkish border. This corridor represents the natural flow of goods from Turkey to Western Europe, and its goal is to speed up the flow of goods and attract new flows from the rival Corridor IV.

The countries lying along the route of this corridor, over the course of October and November 2017, signed a Letter of Intent addressed to the European Commission as an application to establish a corridor in accordance with EU regulations. The European Commission is currently preparing a decision to establish a corridor, and its adoption is expected soon. Following the adoption of the European Commission’s decision, it is planned for the corridor to be fully functional within two years. Through the establishment of this corridor, stronger and more efficient cooperation is expected between infrastructure managers and railway operators, so it can be said that this corridor is the successor of the “Cargo 10” initiative.

What kinds of experiences in the development of eGovernment can be derived from the introduction and application of electronic building permits?

– Four years ago, investors waited an average of nearly a year for a building permit, and often four, five or six years, and many didn’t believe it was possible to introduce e-permits in Serbia, let alone for them to take on a life of their own. Permits are today issued in an average of five days, and we have 23,000 construction sites throughout Serbia, compared to around 500 in 2014.

Considering that Serbia is today ranked 10th in the world in the issuing of building permits according to the World Bank and that NALED declared this reform “the reform of the decade”, e-permits represent an example for all other reforms being implemented in Serbia. With a view to the model for the introduction of permits, the Ministry commenced reform of the land registry-cadastre, with which the number of procedures when registering real estate property will be reduced from six to one, and which is also crucial to Serbia’s further progress on the World Bank’s Doing Business Index.

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