The government of Japan approved a RSD 26 billion and 250 million loan to the Electric Power Industry of Serbia (EPS) for the construction of desulphurization facilities at the Nikola Tesla A thermal power plant (TENT) in the city of Obrenovac, central Serbia.

The Loan Agreement was signed in Obrenovac Thursday by CEO of the Electric Power Industry of Serbia (EPS) Dragomir Markovic and Head of the Japan International Cooperation Agency (JICA) Representative Office for the Balkans Satoru Kurosawa.

During the ceremony, Serbian Deputy Prime Minister Bozidar Djelic and Japanese Ambassador to Serbia Toshio Tsunozaki signed and exchanged memos on economic cooperation between the governments of the two countries. The loan is the biggest investment in the field of environmental protection in Serbia.

The Japanese loan falls in a favorable category, since the interest rate is only 0.6 percent per year, with a maturity of 15 years, including a five-year grace period. The loan is part of Japan's Official Development Assistance (ODA) program, aimed at providing monetary help, infrastructure, emergency assistance, and public facilities to underdeveloped nations.

This is the first such loan that the government of Japan will grant Serbia, and will be implemented through JICA. The total project cost is EUR 300 million, and the remaining 15 percent not covered by the Japanese loan will be provided by EPS. The construction of the desulphurization facility should begin by the end of 2012, and should take between 2.5 and three years in all to complete.

The desulphurization projects are among the most significant projects that EPS should implement in harmonizing its business standards to those of the EU. By 2017, EPS should invest about EUR half a billion into the desulphurization projects for the Nikola Tesla A and B and the Kostolac B plants and a total of EUR 1.2 billion in all environmental projects in the country.

About 30 percent of the legislative framework that should be harmonized with the EU legislation is related to the field of environmental protection, of which 70 percent of such obligations fall on EPS.