Serbian Government Plans to Abolish Ban on Import of Oil Derivatives

30. Juni 2006, 00:00

By the end of the year, the Serbian government is supposed to allow free import of all kinds of fuel

By the end of the year, the Serbian government is supposed to allow free import of all kinds of fuel. However, such a decision will not cause massive import of oil derivatives since the government also plans to impose import duties, the Belgrade daily Glas Javnosti has reported.

Government officials have been thinking of ways to liberalise the oil market for several months now, and the described model would satisfy most actors in the oil sector.

The introduction of oil import duties suits the interests of the Serbian Oil and Gas Company (NIS) because it will buy the company enough time to modernise its oil refineries and prepare them for competition from neighbouring countries.

The proposed model will also force NIS to invest since oil import duties be enforced by 2010. Officials of the International Monetary Fund (IMF) will also be pleased because they proposed the introduction of oil import duties.

Domestic and foreign oil companies probably will not be satisfied with this solution because imported oil derivatives will be more expensive than those manufactured in NIS refineries.

Some ten days ago, the Serbian government extended the regulation on the import and processing of oil, which forbids the import all kinds of fuel except for euro-diesel, by 2010.

The government added an article to this regulation in which it states that it will consider ways to liberalise the import of oil derivatives.

Relevant ministries still have not decided what concrete model of liberalisation they would introduce, but they will most probably adopt the Polish model, according to which duties on import of oil derivatives will be decreased each year until they are completely abolished once the country enters the EU.

NIS privatisation advisor Merrill Lynch-Raiffeisen made a similar proposal for a period of two to four years. They suggested import duties in the amount of USD 20 to 40 per tonne, which could be decreased 20 to 25 per cent annually.

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