Serbia to seek fair price for Naftne Industrije Srbije

Serbian President Boris Tadic has said Serbian oil monopoly Naftne Industrije Srbije (NIS) must not be sold at a price below its worth.

"We cannot sell NIS for nothing, or surrender it to any partner for political reasons," Tadic said in an interview with daily Dnevnik. "That is why we shall be negotiating with a potential partner. These negotiations will not be simple but will offer a great opportunity."

He said negotiations with Russia's Gazprom will be difficult, adding Serbia will carefully weigh the Russian group's offer. "If we bring the negotiations to a successful end, Gazprom could become the strategic partner of NIS," Tadic said. "If not, we shall have to search for a partner elsewhere."

Gazprom signed a letter of intent with Serbia in December 2006 to build a 400-kilometer gas pipeline across the country from its border with Bulgaria to the frontier with Croatia. In exchange, Gazprom is keen to secure majority stakes in NIS and electricity monopoly Elektroprivreda Srbije (EPS), which is also up for privatisation. Serbia expects income from the pipeline project in the form of transit fees, in addition to money earned from construction and maintenance of the pipeline.

At a special session on Dec. 29, the Serbian government adopted a platform for negotiations on Gazprom's offer. Tadic said he would support an arrangement with Gazprom in return for stable gas deliveries to Serbia over the next 30 years and if the interests of the NIS employees and public finances are respected.

But minister for the economy Mladjan Dinkic said the sale of NIS should be separate from the gas pipeline agreement. "Instead of excluding NIS from this arrangement and announcing a qualification tender that ends with an auction, at which they would get a price five to eight times higher than what is being offered, the government has rejected the proposal of the ministry for the economy and has opted for making a direct deal," Dinkic told the Politika daily.

Dinkic claimed Gazprom's offer requires Serbia to sell 51 pct of NIS' capital for 400 million euro, which is half of the company's book value. Austria's OMV AG is also reportedly interested in taking part in the privatisation of NIS together with Hellenic Petroleum.

Russian businesses have acquired several Serbian companies, among them tourist agency Putnik and major industrial engineering company Termoelektro.