Serbien will die Kron Juwele: Industrija Srbije (NIS) privatisieren

Serbien will die Kron Juwele: Industrija Srbije (NIS) privatisieren

Serbian government to privatise NIS


Serbia has agreed to sell off its petrol giant, but the process will take years. At the same time, an import ban and subsequent tariffs mean Serbian consumers will go on paying top dollar at the pumps.

By Georgi Mitev-Shantek for Southeast European Times in Belgrade – 14/08/06

Despite the privatisation of NIS, Serbs still will be paying high prices for low-grade petrol. [Davor Konjikusic]

After three years of political haggling, the Serbian government has agreed to the privatisation of its crown jewel -- the state oil company Naftna Industrija Srbije (NIS). The government will sell a minority package of shares, while retaining control over strategic decision-making.

The sale will unfold in several phases. In the first three-year phase, the state will sell the strategic investor 25 per cent of NIS shares. The investor must then invest $250m to earn 37.5 per cent of the shares. This way, the two main partners would arrive at an equal amount of shares. Minority shareholders, meanwhile, would hold 18.3 per cent and company employees 6.7 per cent.

Subsequently, the strategic investor would purchase shares from the state in the secondary securities market, to arrive at 49 per cent ownership.

Raiffeisen Investments and Merrill Lynch are consultants for the tender, which is scheduled to open in September, concluding in early 2007. So far, interest has been expressed by Hellenic Petroleum, Hungary's MOL, Austria's OMV, Poland's PKO, the Russian giant Lukoil and the Israeli Corporation. Should one of these companies decide to front the money for NIS, they could only hope to become majority shareholders in phase two, between 2009 and 2010.

This complicated procedure was a concession to the Socialists, whose parliamentary support is needed for Prime Minister Vojislav Kostunica's minority government to survive. Although the tender requirements call for a world oil company with a solid reputation, critics of the plan say it is unlikely that a serious investor will be interested in a minority package without decision-making power.

Meanwhile, the employees and unions see themselves on the losing end of the plan. Surplus workers will be leaving the richest Serbian company with 200 euros of severance pay per year of employment. In contrast, workers left other privatised state firms with severance payments that were many times larger.

The status of minority shareholders also remains uncertain. Raiffeisen Investments representative Rados Ilincic said they will obtain shares immediately and will be able to sell them at a guaranteed price -- even though it is not clear when shares will be placed on the stock market. By purchasing minority shares, foreigners could at some point become majority shareholders.

In theory, privatisation benefits consumers. But Serbs are unlikely to enjoy relief any time soon. A ban on importing crude oil derivatives is in place until the end of the year, and after that, a customs duty will be imposed. As a result, Serbs will have to continue filling their tanks with lower quality gasoline produced by domestic refineries.