Serbia: Srbijagas & state budget under financial liabilities from cancelled South Stream

28. March 2016. / News Serbia Energy

Due to the construction of the South Stream, Serbia has established with Gasprom the company South Stream Serbia for the construction of the South Stream gas pipeline. This company is registered as a typical offshore company in the Swiss town of Cug, which is considered an offshore zone.

According to the research of the portal Insajder.net, almost two months after the construction of the South Stream gas pipeline had been suspended, 17.8 million euros was paid to the account of the subsidiary company the majority owner of which is the Russian Gasprom, and which is seated in Serbia.

The director of Serbiagas, Dušan Bajatović, says for Insajder.net that this is the payment for previously undertaken liabilities.

Two months after the construction of the South Stream gas pipeline had been officially suspended, 17.8 million euros was paid to the account of the subsidiary company the majority owner of which is the Russian Gasprom, and which is seated in Serbia. This company had been established for the purpose of constructing the Serbian section of the gas pipeline.

According to the director of this company, Dušan Bajatović, in the last five years, Serbia invested around 30 million euros in the Swiss company through the public enterprise Serbiagas.

After the cancellation of the project, instead of closing the company in Switzerland, as well as in Serbia, and returning the money to the budget, it has been announced that these two companies will continue operating so as to construct the Turkish Stream, a new project, which, according to our research, is far from implementation.

Serbia Only One to Have Agreed that the Parent Company Be Abroad

Due to the construction of the South Stream, Serbia has established with Gasprom the company South Stream Serbia for the construction of the South Stream gas pipeline. This company is registered as a typical offshore company in the Swiss town of Cug, which is considered an offshore zone.

As it has been published in the Insider series called Energy (dis)agreement, no other country on the gas pipeline route did this, but they established parent companies in their own countries. The Swiss company South Stream Serbia, 51 percent of which is owned by the Russian Gasprom, afterwards established a subsidiary company in Serbia, the task of which was to conduct the project of South Stream construction in Serbia.

According to the analysis of financial reports performed by the journalists of Insajder.net, it can be seen that the parent company from Switzerland paid 17.8 million euros to the account of the subsidiary company seated in Serbia, and this two months after the construction of the South Stream had been officially abandoned.

The question arises as to what activities could have cost as much as 17.8 million euros, when the Serbian public only saw the “beginning of construction” i.e. the welding of the first seam of the gas pipeline in the village Šajkaš in Vojvodina in 2013, after which the media has reported that this “construction site” was forgotten already tomorrow when the politicians left.

It is also unknown what companies were engaged in the works with respect to the South Stream project, in whose hands the majority of money ended up ultimately.

Dušan Bajatović said for Insajder.net that the payment to the account of the company in Serbia, almost two months after the cancellation of the entire South Stream project, referred to the payment of previously undertaken liabilities.

NIS Completely Undervalued during Sale Due to Construction of South Stream

The section through Serbia was to be around 400 kilometers long. According to official announcements, it was supposed to cost around 1.7 billion euros in total, of which Serbia was to invest around 830. Government representatives announced that the annual income from transit fees would amount to as much as 200 to 500 million euros for Serbia once the South Stream was constructed.

The contract on the construction of the South Stream was a part of the large Energy Agreement on phase cooperation between Serbia and Russia. Government representatives called it the job of the century which would bring more than two thousand new jobs for Serbia, job for dozens of construction companies, economic boom and the entrance of Serbia into the lucrative business with natural gas transportation.

At the same time, this job also serves them as an excuse for various accusations that could be heard in the public that the national oil company NIS had been completely undervalued during the sale to the Russians.

In the same way, due to the South Stream project, in addition to NIS, the exclusive right to use all reserves of oil and gas in the country has also been given over to Gasprom, and the majority ownership of the only domestic natural gas storage in Banatski dvor has been given up, the price and security of supply of this energy product being dependent on this storage, transmits Serbia-energy.eu

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