Bubalo: Privatisation of Serbian Oil Company to Take Place in Two Phases

17. Juli 2006, 00:00

The privatisation of the Serbian Oil and Gas Company (NIS) should be a combination of sale and recapitalisation,...

The privatisation of the Serbian Oil and Gas Company (NIS) should be a combination of sale and recapitalisation, announced on Friday Predrag Bubalo, Serbian minister of economy.

Bubalo added that the Serbian government will adopt the NIS privatisation strategy at its next session. The strategy was proposed by NIS privatisation advisors, Merrill Lynch and Raiffeisen Investment.

The minority package in NIS will be sold to a strategic partner alongside an obligation to conduct recapitalisation, which will then create conditions for minority shareholders to sell their shares on the market, Bubalo explained.

This phase, which is supposed to last three years, will allow the strategic partner to acquire at most 49 per cent of shares in NIS.

The Serbian government plans to sell the majority package in the second phase, which will allow the strategic partner managing control, while the state will still be able to protect its interest by a golden share or veto right.

Bubalo noted that several regional companies have expressed interest in NIS so far, including Austrian OMV, Hungarian MOL, Hellenic Petroleum, Polish PKN Orlen, Slovene Petrol and Russian Lukoil.

According to the Belgrade radio TV station B92, the Serbian government has already held preliminary talks with these companies. The government is inclined to offer 34 per cent of NIS shares at a tender, while former and present NIS workers would gain 8 per cent of shares.

Former Serbian minister of energy, Kori Udovicki, said that prior to privatisation, NIS should lose the monopoly status that it now enjoys as the only oil importer in Serbia.

“NIS earns EUR 300 million a year using its monopoly status and that will be transferred to the future buyer,” she explained. “Unless we intend to introduce competition and concessions, we better not privatise at all.”

Regionally, nine out of 10 oil companies have been privatized using the model allowing the strategic partner to initially buy the minority package, acquiring full control after three to 10 years. The state is the majority owner only in Croatia’s oil company INA, B92 has reported.

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