GSP to Borrow RSD 38 Billion in Long Term After All

Source: eKapija Sunday, 07.04.2024. 12:56
Illustration (Photo: Dejan Aleksić)Illustration
In September last year, the City Assembly of Belgrade adopted the decision which envisaged the borrowing of RSD 38 billion (around EUR 325 million) by GSP Beograd in order to secure the purchase of new vehicles. In the meantime, when the just opened tender for the purchase of new trams for the needs of GSP was stopped last autumn, it seemed that the city was abandoning this idea.

However, that the huge borrowing of GSP from a commercial bank has not been abandoned is shown by the most recent phone session of the Temporary Organ of the City of Belgrade, where the agenda featured precisely the Decision by which the city confirmed its financial support to the future Agreement on a Long-Term Borrowing of GSP Beograd, and as per the Decision on a Long-Term Borrowing for the Procurement of New Passenger Transport Vehicles, which was adopted by the supervisory board of that company on September 5, 2023, and which was approved on September 13 by decision of the City Assembly of Belgrade.

– Financial support will be carried out when the conditions meet for it, that is, in the form of recapitalization in line with the relevant decision on the increase of the capital assets and/or with a regular policy of subsidizing this company by the city in line with the general and special conditions which will be envisaged by annual business programs so that the borrower could finance the obligations under the Agreement from Item 1 of this decision. The City of Belgrade hereby agrees that the financial support will be in effect for the duration of the validity of the agreement – the decision points out.

As specified, the approval of the Agreement on a Long-Term Borrowing of GSP Beograd with the selected commercial bank will be the subject of special deliberation. The explanation of the decision, among other things, reminds that the decision which was adopted by the city assembly in September gives approval for a long-term borrowing of RSD 38 billion for the purpose of investments, that is, the purchase of new passenger transport vehicles.

Since the City Assembly of Belgrade adopted the decision on a long-term borrowing of GSP back in September, the question is why the Temporary Organ of Belgrade also adopted a decision on this. We learn from well-informed sources that the reason that the Temporary Organ adopted this decision is that the commercial bank which is interested in agreeing this credit arrangement is requesting additional guarantees from the City Administration that the City of Belgrade would take on the obligation of the repayment of the loan, or the financial help to GSP through subsidies or an increase of capital assets, in case the company couldn’t repay the debt on its own. Because, it is generally known that the biggest public transport company has been operating for years with a net loss and, without additional guarantees of the city as its founder, it would not be very likely that an additional borrowing of RSD 38 billion would be accepted by a commercial bank.

D. Aleksic

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