Serbia’s first public-private partnership for heat energy supply

First public-private partnership (PPP) contract in Serbia for the supply of heat energy for public buildings has been signed in Pirot. The contract signed by the city of Pirot and GGE ESCO company also envisages replacement of heating oil boilers in four local schools with the ones using biomass .

The value of the deal is RSD 80 millions (EUR 648,000). The reconstruction should be completed and all the systems  operational for the coming heating season. The cost for heating for a dairy high school “Dr Obren Pejic” and three elementary schools was RSD 32 millions (EUR 259,000) annually, but switching to biomass and improving the efficiency of the systems will reduce the cost to RSD 20 millions (EUR 162,000)

Under the terms of the contract, GGE ESCO is obliged to deliver heat energy to a public partner for the period of 15 years. That company will perform the complete overhaul of the existing heating systems, install new, eco-friendly and efficient biomass boilers which will replace old and inefficient ones using heating oil. Each school will be equipped with two boilers in order to secure steady supply of heating in case of a breakdown.

GGE ESCO will be responsible for the maintenance and repair of the heating systems. It is estimated that this modernization will reduce CO2 emission by 420,000 tons annually.

PPP is a win-win both for public and private partner

The mayor of Pirot Vladan Vasić considers this deal a beneficial one for the City because it is the private partner the one who is obligated to provide RSD 80 millions to modernize the system: “It is the public partner’s obligation, apart from regularly servicing the payments for heating bills, to provide conditions for this investment to be realized in order to have better heating in schools in future, with prices that are currently lower than prices we would be paying to Toplana heating utility”.

Vasić points out that this will be the first energy-efficiency project. He is expecting that, by the end of this year, another PPP agreement will be reached – for the street lighting. In his interview for Balkan Green Energy News, the Mayor of Pirot said that this city is on a good way to reach all EU’s eco-standards soon.

On behalf of GGE ESCO doo company from Belgrade, the contract was signed by Ankica Barbulov, Managing Director. She said that using biomass in new boilers will bring significant savings: “The kilowatt-hour of delivered heat energy will be up to 30% cheaper, depending on the maturity of existing equipment in these schools. I think that introducing PPP in energy sector is very important for Serbia, because there have been no investments in energy infrastructure for decades. Public sector should seize the opportunity to engage private capital in order to improve the quality of service and use renewable energy sources”.

Barbulov said that wooden biomass from the wider area of Pirot will be used for heating. For that job, people will be hired for producing and delivering wood chips, subcontractors from Pirot as well.