State guaranteeing EUR 123.7 million loan for construction of oil pipeline to Hungary

The Government of Serbia has adopted the Draft Law on granting a guarantee of the Republic of Serbia to Banka Postanska stedionica for a loan of RSD 14.53 billion to be used by Transnafta for the construction of the Serbia-Hungary oil pipeline.

The loan is intended to finance the construction of the oil pipeline from the Hungarian border to Novi Sad, a project that the government has declared significant for the Republic of Serbia. The state guarantee is a condition for the withdrawal of the approved loan funds.

According to the draft law, the state will irrevocably, unconditionally and on first call guarantee the regular and timely settlement of Transnafta’s obligations to Banka Postanska stedionica on the basis of a long-term loan.

The loan of RSD 14,528,082,271.39 was contracted with an interest margin of 2.5% plus three-month BELIBOR, while the period of availability of the funds is 42 months from the entry into force of the law on granting the guarantee.

The loan can be withdrawn in one or more tranches, and the repayment period is up to 138 months from the date of loan disbursement. After the grace period, the loan will be repaid in 32 equal quarterly installments. The loan realization fee is 0.3% of the loan amount and is paid in a single installment in advance.

The Serbian Budget Law for 2026 provides for an amount of up to 17.58 billion dinars for the provision of a state guarantee.

The Serbia-Hungary oil pipeline should enable diversification of the routes of supply of crude oil to Serbia. As stated in the explanatory memorandum to the bill, Serbia is currently supplied with imported crude oil from only one direction, via Croatia and the Janaf system.

The new oil pipeline is planned to connect the Hungarian system with Novi Sad. Crude oil would be delivered from Hungary to the Transnafta terminal in Novi Sad, from where it would be transported via the existing oil pipeline to the Pancevo Oil Refinery.

On Serbian territory, the construction of a route approximately 113 kilometers long is planned, and the pipeline will pass through the territories of the municipalities of Kanjiza, Senta, Ada, Becej, Zabalj and Novi Sad. On the Hungarian side, a section of approximately 190 kilometers is planned, from Szazhalombatta to the border with Serbia.

A maximum capacity of 5.5 million tons of crude oil per year is envisaged.

The Government of Serbia declared the construction of the Hungary-Novi Sad border oil pipeline a project of importance for the Republic of Serbia in December 2023.

I. Z.

Vlada Republike Srbije

Banka Poštanska štedionica a.d. Beograd

Transnafta ad Pančevo

Government of Serbia

Banka Poštanska štedionica

Transnafta

Draft Law on granting a guarantee of the Republic of Serbia for a loan for the construction of the Serbia Hungary oil pipeline

Serbia Hungary oil pipeline

Janaf