Serbia exclusive: South Stream political framework and actors, pro & cons

26. November 2013. / News Serbia Energy

Construction of the South Stream saved Srbijagas of tearing in several separate companies. Russians are for the legal separation, but not for ownership unbundling, says Bajatovic. Srbijagas CEO Dusan Bajatovic said that Russia would not intervene in the restructuring of the company, but that the Russian proposal vertically integrated company, the holding company – to do a legal separation, but not ownership unbundling.

According to the findings of local Serbian medias, the Russian side, was which led by Gazprom CEO Alexei Miller at a meeting with Serbian national leadership, was strongly against the proposal of the Minister of Energy Zorana Mihajlovic.

When Prime Minister Ivica Dacic asked Russians what they think about restructuring Srbijagas, they were unanimous that at this time is not a good idea, “because Srbijagas is an important partner in the construction of gas pipeline.”

As things stand, Srbijagas will not suffer changes until the job of building the South Stream’s over, but with the obligation to fully pay for gas the debt to the Russians of about 80 million dollars.

“Works on the pipeline will begin in Kovilje, and also Russian President Vladimir Putin was invited to the opening of the works. Agreement on the project will proceed as previously agreed, and there won’t be a Bulgarian scenario, or subsequent alteration of contractual obligations,” said a well-informed source to  “Blic”.

He added that the Russian side will provide a loan at an interest rate of 4.25 percent – the same conditions which have Bulgarians.

It was agreed, says a source of ‘Blic’ that the South Stream has arms that would go through Kosovo, Macedonia and Montenegro.

“Right now we do not know how this will be resolved, because the Russians do not want to sign a treaty with Kosovo, because they do not recognize that part of Serbia as an independent state,” says the source of this newspaper.

South Stream is one of the largest projects in Europe, said Miller and thanked the Serbian side to the hard work to resolve all issues related to the start of its construction.

“Regarding other ‘Gazprom’ projects, there have been some misunderstanding with the Ministry of Energy, where in some respects we noted not only the absence of cooperation, but also the absecne of any kind of dialogue with NIS, but I hope that all the difficulties that occurred will very quickly be removed and all disputes resolved,” said Miller after meeting with Serbian President Tomislav Nikolic, Prime Minister Ivica Dacic and Deputy Prime Minister Aleksandar Vucic.

Meeting with the Minister of Energy Zorana Mihajlovic did not occur yesterday. In a statement she later gave, visiting B92 in the news, said that “there is no noise on the route Belgrade – Moscow when it comes to energy agreement.”

“This government has done much more on the implementation of the agreement than the previous one. We are going to regulate certain relations, it is true, but only in part concerning exclusively and only the Serbian side”, said Mihajlovic.

Serbian President Tomislav Nikolic said that the realization of the South Stream project is of great importance for the economy of Serbia, “because it raises for one scale in the region and promotes the significant economic factor not only in the Balkans but also throughout Europe.”

Similar reviews came as well from the cabinet of Prime Minister Ivica Dacic and Deputy Prime Minister Aleksandar Vucic.

From office of Vucic they say that it is planned that the Serbian companies will carry out the works, and there was also a talk about building additional gas pipeline to Macedonia and the Republic of Srpska – said  people from the cabinet.

Legal separation, not ownership unbundling

Srbijagas CEO Dusan Bajatovic said that Russia would not intervene in the restructuring of the company, but that the Russian proposal vertically integrated company, the holding company – to do a legal separation, but not ownership unbundling.

He was a guest at the RTS, and said that the issue of Srbijagas was mentioned during yesterday’s talks with Alexei Miller.

Bajatovic repeated that Russia would not interfere, but that they supported the proposal that Srbijagas is a holding company.

“There will be no separation of ownership, in contrast to the proposal of the Ministry of Energy. There will be a legal separation and it will make business so transparent,” said Bajatovic.

He said that the conduct of social policy in the past was too expensive and therefore Srbijagas has large debts.

He was asked if the subject of Srbijagas would be a matter of coalition agreement of SNS and SPS, and he said that it should not be the subject of the coalition agreement, but the subject of evaluation by professionals.

“The government will decide how Srbijagas will look like. Realistically it should all be completed by the end of the year. Financial restructuring has to be done very quickly. It will most likely have to be a public debt, the biggest part of it,” said Bajatovic.

He said that the debt of NIS of 224 MEUR is likely to turn into long-term debt, which will be long-term pay off of Srbijagas or state.

Source; Serbia Energy

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