Novelties in Awarding the State-owned Agricultural Land for Non-agricultural Purposes

The new ordinance replaces the previous one, that regulated awarding of state-owned agricultural land for non-agricultural purposes - it introduces some novelties and modifies some of the existing solutions.

The main novelty relates to the purposes for which the state-owned agricultural land may be awarded, pursuant to the ordinance – one ground for awarding the state-owned agricultural land is eliminated, one new ground is introduced.

Pursuant to the new ordinance, it is not possible anymore to award the state-owned agricultural land for the purposes of activities connected to construction of facilities of interest for the Republic of Serbia (e.g. for parking lots for construction machinery) or, for the purposes of activities connected to construction of facilities of energy or utility infrastructure, telecommunications and/or protection against natural disasters. 

However, it is now possible to award the state-owned agricultural land for the purposes of conducting geological exploration works, i.e. for the purposes of exploitation of oil and/or natural gas.

This new ground for awarding of state-owned agricultural land is also subject to many exceptions regarding the procedure for awarding of the land – e.g. there is no limitation of class of agricultural land that may be awarded (while otherwise only lower classes – sixth, seventh and eighth class of arable agricultural land may be awarded), nor is there mandatory public bidding procedure for awarding the land for this purpose.

Other novelties of the new ordinance relate to the procedure and technical aspects of awarding the state-owned agricultural land for non-agricultural purposes.

Some of these novelties ease the procedure under which the interested parties may apply for awarding the land – the documentation submitted in the process of application is less demanding than before – some of the mandatory documents are now obtained by the competent local authorities, instead of being submitted by the interested parties (such as information on location, minutes of the agricultural inspector on the state of the land, and similar), while some are submitted in later phases – i.e. only by the party that is selected as the user of the subject land.

Namely, the project of recultivation, remediation, i.e. rehabilitation of the land, that was previously submitted by all interested parties when applying for bidding procedure, is now submitted by the party awarded with the right to use the land, upon execution of the contract on use of the land with the Ministry of Agriculture, i.e. within one year from the contract execution. The same applies for the certificate of balance reserves of minerals for exploitation of the land. However, until these documents are submitted – the land cannot be used for the (non-agricultural) purpose for which it is granted, and only preparatory works may be conducted by the user of the land.

Another technical novelty regards the manner of securing the costs of recultivations, remediation and/or rehabilitation of the agricultural land used for non-agricultural purposes, pursuant to the ordinance. While both previous and the new ordinance prescribe that these costs are borne by the user of the land, the manner of securing the funds for this purpose is modified – previously the user deposited 30% of the amount needed for recultivation/remediation/rehabilitation, which is determined by the project of recultivation/remediation/rehabilitation, prior to the execution of the contract on use of the land, signed  with the Ministry of Agriculture, while the remaining 70% were deposited at latest five years before the contract expiry. If the user would fail to deposit the remaining 70% of the funds needed for recultivation/remediation/rehabilitation, the contract would be terminated. If the user would fail to conduct recultivation/remediation/rehabilitation pursuant to the project and within deadlines set down thereof, the Ministry of Agriculture was authorized to keep the deposited amount.

Now, pursuant to the new ordinance, the instrument for securing the funds for recultivation/remediation/rehabilitation is not specified. However, regardless of the particular security instrument, the security instrument covering the entire amount needed for recultivation/remediation/rehabilitation (determined by the project) needs to be submitted within one year from the execution of contract on use of the land with the Ministry of Agriculture, and until it is submitted, the land cannot be used for the (non-agricultural) purpose for which it is granted. If the user conducts recultivation/remediation/rehabilitation of the land in accordance with the project of recultivation/remediation/rehabilitation and within the deadlines set down thereof, the security instrument is returned.

By Marija Vukcevic, Senior Associate, JPM Jankovic Popovic Mitic