The Chinese company China Machinery Engineering Corporation (CMEC) is threatening Serbia with a lawsuit in international arbitration worth USD 795 million due to years of delays in the construction of the Kostolac B3 thermal power plant. The Chinese believe that the four-year delay was not their fault, and that EPS is responsible. In case of a loss, Serbia intends to file a counterclaim for damage caused by the need to import electricity. If the case goes to arbitration, the project could cost Serbia $1.5 billion, including the $715 million already paid.
The Chinese side claims that the increase in costs is due to inflation, the coronavirus and the war in Ukraine, as well as changes in the scope of work by EPS. The main disagreement concerns the revision of prices that were stipulated in the 2013 contract, when the project was supposed to be completed in 2019.
Despite the completion of construction and commissioning of the facility in December 2024, negotiations on compensation have not been completed, as the Chinese company is demanding a revision of the contract price. The Chinese argue that inflation and changes in the design documents have led to additional costs, and also take into account problems with obtaining permits and the effects of the pandemic and war in Ukraine.
Serbia tried to negotiate, but the Chinese did not agree to a compromise and continued to seek compensation through arbitration. In the event of arbitration, China is expected to file a claim for an amount exceeding the original project amount.
Source: https://t.me/relocationrs/516
