Bloomberg News

Alstom Accepted as Likely Contractor for Belgrade’s First Subway

October 06, 2011

Oct. 6 (Bloomberg) -- Belgrade’s city assembly approved an agreement for Alstom SA’s transport unit to take part in developing a subway in the Serbian capital.

The assembly authorized the municipal government to sign a Memorandum of Understanding with Alstom Transport for 15 kilometers (9.3 miles) of tracks, including seven kilometers underground, based on a feasibility study by Egis Rail.

Alstom is “ready to provide all the technical support” during the feasibility period and expects to eventually win the contract, Miodrag Jelisavcic, Alstom’s representative in Serbia, said in a phone interview.

The project is part of a “strategic partnership” signed in April between French President Nicholas Sarkozy and Boris Tadic, the president of the former Yugoslav republic that wants to win European Union candidacy status as early as this year. Among financing options for the subway plan, France would help secure the financing and Alstom may choose a subcontractor for digging tunnels, building platforms and train stops.

Serbian Deputy Premier Bozidar Djelic estimated Alstom Transport’s part of the contract would be worth 1 billion euros ($1.34 billion) following his trip to France. Today’s document doesn’t specify the value.

Another co-financing plan have Serbian find funds for the construction part of the project and Alstom provide trains and rail equipment. A third option is a public-private partnership, in which Alstom would become a concessionaire for the future subway.

France pledged support of 3 million euros for the feasibility study and the designs.

‘Sufficient’ Finance Capacity

The study and the design for the first subway line are set to be completed by the end of 2012, followed by a financing agreement. Serbia then has two years to negotiate a binding contract with Alstom, without seeking another company for the job. The first line may open as early as 2017.

The city has “sufficient capacity” to support the subway development “because our level of debt is not big and we can service loans that we take,” Mayor Dragan Djilas said today at an assembly session at city hall.

Serbia’s parliament has yet to ratify the Strategic Partnership Agreement, which France has done.

--Editors: Douglas Lytle, James M. Gomez

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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