Belgrade  - The Serbian government was due Thursday to discuss a proposal by an Austrian consortium to terminate a major highway construction deal.

Salzburg-based Parr and Vienna-based Alpine last year won a 1.1 billion euros (1.61 billion dollars) contract to build a 320- kilometre highway from Serbia's border with Hungary to Pozega in the southwest of the country.

The deal-included a 25-year concession to Alipne and Porr, during which they would recoup their investment from fees levied on traffic using the road.

Though a part of the route from the Hungarian border to Belgrade lies on the pan-European corridor, the rest was unlikely to generate enough income, so the Austrian side requested additional guarantees - which Serbia refused to provide.

Starting the project was delayed and Alpine and Porr eventually asked for an extension of completion deadlines, including finalization of the project by 2012. Serbia turned that down, as well.

Local media reports said Serbia would finance the highway on its own once the contract with Alpine and Porr is canceled.

The Belgrade daily Blic said Serbia would ask Alpine and Porr to construct at least part of the new highway. An official statement in Belgrade said only the two sides would continue negotiations. (dpa)