EU extends $647 million grant for Serbia's fast railway line

BELGRADE (Reuters) - The European Union on Tuesday extended a 610 million euro ($647.15 million) grant to Serbia for the construction of a fast railway line that will connect southern Serbia with central Europe.

The grant was symbolically signed in a train in presence of EU Enlargement Commissioner Oliver Varhelyi, who said the deal showed the European Union was delivering on its promise to invest in the economies of the Western Balkans region.

The 208-kilometre line should connect the Serbian capital Belgrade with the southern town of Nis. The overall cost of the project is estimated at 2.7 billion euros.

President Aleksandar Vucic said the EU grant was the largest ever given to Serbia, which has received a total of 420 million euros in EU grants so far.

"The EU is now giving us 610 million euros as a gift," said Vucic, adding that the new railway line will enable travellers from Nis to get to Budapest in less than five hours.

Vucic said Serbia would provide 525 million euros for the project and would take out loans of 1.1 billion euros and 550 million euros with the EIB and European Bank for Reconstruction and Development respectively.

Varhelyi arrived for the signing ceremony in Belgrade a day after Vucic returned from Brussels where he attended talks on a Western-backed deal aimed at normalising relations between Serbia and its former province of Kosovo.

Vucic and Kosovo Prime Minister Albin Kurti reportedly agreed on the deal but said more talks were needed for its implementation.

($1 = 0.9426 euros)

(Reporting by Aleksandar Vasovic, writing by Daria Sito-Sucic; Editing by Christina Fincher)