Serbia and Russian investment: From energy to debt in rubles

7. June 2013. / News Serbia Energy

Purchase of Oil Industry of Serbia, Beopetrol, Bank of Moscow, and entrance in the banking market of Sberbank, are some of the key russian investment in Serbia in the last 13 years, which amounts nearly a billion and a half dollars, not including the construction of the South Stream gas pipeline or a loan for the reconstruction of serbian railways, whose retreat is waiting for a few years. Does the Russian Federation, besides the economic interests use its investments to achieve the goals from their political agenda?

Their close relationships, which have been conserved also during the international isolation of Serbia and the wars in former Yugoslavia, Serbia and Russia, have continued to grow even after the October change, no matter what the official politics of Serbia basically turns the Euro-integration and opens to western countries.

Despite that the political opinions of two states do not fully coincide any more, economic ties have been confirmed with several agreements, such as free trade and energy cooperation. Serbia and Russia, however, have not yet signed a strategic partnership agreement, announced several times.

Based on the energy agreement, Gasprom became owner of the largest manufacturers of fuel Oil Industry of Serbia for 450 paid and about 550 invested million dollars, while to the state was given the opportunity to become part of a major Russian gas project – South Stream. The value of building his arm that will pass through Serbia is estimated at 1.7 billion euros. Besides, Russia has been invested the amounts of the tens millions of dollars in mining, tourism, banking and insurance companies.

At the moment, when the agreement between Serbia and Russia was signed five years ago, the local energy sector was on its last legs and, according to deputy Minister of Energy, Petar Stanojevic, the dramatic end of that story was prevented with the investment of russian Gasprom:

“Serbia could not complete its gas storage for 20 years. Modernization of NIS was questionable. There even were not a lot of potential customers or investors, in short fate of the company was uncertain. South Stream was not even discussed. Investment in NIS justified expectations is the highest percentage. We have a new facility and a new refinery. As for the expectations of the South Stream, Serbia is finally coming to one of Europe’s most important, because through South Stream will flow 10-15 percent of total Europe’s gas needs, “said Stanojevic.

But despite the agreement with Russia and other forms of cooperation, according to the confession of our interlocutor, Serbia is among the countries that pay the most expensive Russian gas. Does that settle also the political influence that Russia has and eventually seek to strengthen in Serbia?

“Political interest is directly related to oil, gas and arms, so that it cannot be excluded from this story. Its weight is a question that many factors affected. How to say that, most of the factories are no longer working. If somebody gives an opportunity to reduce cost and become acceptable, we can only be happy if we can achieve a lower price that will provide work to our economy. We cannot avoid it. “

Petroleum Industry of Serbia

Allegations of uncertain status of workers and the breach of the social program cast shadows on the story of russian privatizations in Serbia. Specific objections that were discussed in the Serbian public are related to NIS, which ignored many obligations from the agreement between Serbia and Russia, according to the president of the Independent trade union of Naftagas, Save Blagojevic.

While management of NIS denies any irregularities, Blagojevic in the meantime, on behalf of hundreds of workers, addressed to the authorities for help, but also to the president Tomislav Nikolic:

“They went to the extent that the employees have been moving away from the job, they have been moving to new fictitious jobs in specific sectors which were called as the administrative and technical assistance to the company operations, in fact, these employees had nothing to do. I got the response from the President that the issue was not in his jurisdiction, but he promised to instruct relevant ministries to resolve and inform us about it. From the others I still have not received any response. “

Turning to the loans

Another stain is undoubtedly a revitalization which followed the end of the monopoly on fuel imports in Serbia. In fact, since in 2011. came governmental regulation about that , dual fuel excises were introduced, which were more expensive for imported and cheaper for fuel which was produced in Serbia – which was interpreted as a privilege of the Oil Industry of Serbia.

After objections of competition and domestic public and warnings from Brussels that it violated the Interim Trade Agreement EU and Serbia, dual excise taxes were abolished. From that point it can no longer speak of NIS’s monopoly position in Serbia, explains journalist Jelica Putniković:

 “NIS certainly is not a monopolist, because Serbia has thirty licensed importers of fuels for wholesale, and in Hungary only five. If Hungary does not allow just anyone to register, then the question is whether Serbia needs so many importers, which is less than Hungary and whose economy is less developed and with worse standard.”

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