PUBLIC PRIVATE PARTNERSHIP: MUNICIPALITY OF NOVA VAROŠ
The Municipality of Nova Varoš is located in the South West Serbia, in the border area of three countries – Serbia, Montenegro
and Bosnia and Herzegovina, next to main road M21. It has 16,758 citizens and covers the area of 581.47 km2. With 22,400 ha
of forests, Nova Varoš is one of75 top municipalities in Serbia regarding forest land, which makes great potential for the development of wood processing industry and investments in renewable energy sources (primarily biomass). In order to better utilize this
resource, the Municipality plans to construct a cogeneration facility in cooperation with a private partner, to produce heating and
(green) electricity. The plan is to produce ca. 6 million kWh during the first year, and later on increase the amount to 20 million kWh.
Cogeneration biomass facility will produce thermal energy intended for heating in
Nova Varoš and touristic zone Zlatar, and the electricity to be sold to Electric Power Industry of Serbia (EPS). The priority will be production of thermal energy (77%), while
the electricity will account for 23%. The thermal energy capacity is 10 MW, and 2 MW
for electricity. The project involves construction of thermal power lines of nominal pressure of 25 bar with the required number of indirect substations, production of sanitary
hot water, distribution to consumers, improving the energy efficiency, expanding the
use of district heating and attracting new users. Possible form of project realization is
PPP with the elements of concession, where the utility services would be performed by
a special-purpose entity. The agreement is concluded for a period from 5 to 50 years.
The Municipality designed a study on potentials and opportunities for commercial
use of wood biomass for production of energy and economic development of
municipalities Nova Varoš, Priboj and Prijepolje.
Project ID: Cogeneration Facility
Renewable energy sources
PPP with elements of concession
Municipality of Nova Varoš, local public enterprise „Energija“
EUR 10.5 million (EUR 18.5 million, depending on the
Municipality: EUR 1.5 million
Municipality (donations, subsidies, loans): EUR 2 million
Private partners: EUR 7 million
Gross income 143
Projected ﬁnancial results
The Municipality shall provide land equipped with appropriate infrastructure –
including the foundations and supporting structure, with all accompanying legal,
property and technical documentation. The private partner shall develop the technical projects and invest in completing the required facilities, purchase of technological
equipment and shall be in charge of the company production and management.
Supply market: around 7,000 tons of wood chips, the basic input for the work of
this facility, shall be provided by the local sawmills (ca. 86%), Public Enterprise
“Srbijašume – Serbia forests” (12%) and local households (2%). It is estimated that
coniferous wood mass, only, annually creates around 12,800 tons of wood chips.
Placement market: the heating energy will be marketed to the existing and future
district heating users in the Municipality, and the electricity shall be sold to EPS.
PPP in Serbia supported by
Municipality of Nova Varoš,
32 Karađorđeva street, + 381 33 62 140, +381 33 62 142 (fax)