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15 Dec 10

Macedonia in Talks with China on Major Energy Project

Economy ministry confirms that government is holding talks with Chinese investors on constructing giant energy project in the Vardar valley.

Sinisa Jakov Marusic
Skopje

The project envisages the construction of 12 hydro-electric power plants, generating a total of 325 Megawatts, along Macedonia’s biggest river.

“We are negotiating with the Chinese State Energy Company and the Chinese Development Bank on a feasibility study for the construction and financing of the project," an official from the ministry told Balkan Insight.

The economy ministry will make its final decision on whether to accept the offer in “three months or more”, the same official said.

“This is one of the biggest infrastructure projects in Macedonia, so we need quality data and analysis on which to base our decisions," the official added, explaining that Macedonia needs to find a way to make the whole project financially profitable.

In 2008, the government issued a tender to collect offers for the Vardar valley project but the tender was annulled last summer after not one company applied.

The announced revival of the two-decade-old project has the potential to cause controversy. Before starting construction of some of the plants, energy experts say the authorities will have to move large sections of existing highways and railway lines, some of which form part of Euro Corridor 10, which links the country to Serbia in the north and Greece in the south.

Some estimates say that moving this infrastructure alone could cost as much as a billion euro. The current annual budget of Macedonia is some 2.5 billion euro.

Macedonia's main source of power is several thermoelectric and hydroelectric plants. However, their output is not enough to meet demand in the country, which has to import power every year.

The Macedonian Academy of Arts and Science has estimated that by 2025, Macedonia may have to import as much as 90 per cent of its electricity needs if it fails to build more power plants.

As an alternative to the Vardar Valley scheme, Macedonia was recently invited to participate in the building of a nuclear power plant at Belene, in Bulgaria, but Skopje is still undecided on the idea.

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