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Serbia to Sell Srbijagas-Controlled Plants, Keeps Gas Company

Nov. 9 (Bloomberg) -- Srbijagas JP, Serbia’s natural gas monopoly, will sell its fertilizer, poultry and chemical companies to prepare for market liberalization while the government keeps the utility state-owned.

The sales will include fertilizer maker HIP Azotara DOO, poultry producer Agroziv AD and the Metanolsko Sircetni Kompleks AD chemical company, which Srbijagas acquired by swapping their debt to the gas company into equity, Energy Minister Zorana Mihajlovic told reporters in Belgrade today.

“We’ll carry out a deep reform, after a detailed analysis, to restructure the company and divest non-core activities that burden the core activity,” she said. The process may take a year and a half, she said.

The parliament approved guarantees for Srbijagas’s borrowing of 190 million euros ($241 million) this week to help it cover some of last year’s debts, while Finance Minister Mladjan Dinkic pledged to end state-backed liquidity loans.

Srbijagas owed more than 60 billion dinars ($678 million) to banks at the end of 2011, while also claiming at least 650 million euros from consumers for gas delivered. It sold a glass factory in July, acquired through debt conversion.

“Srbijagas has serious financial problems, but still it doesn’t mean it will be privatized,” Mihajlovic said.

Srbijagas’s management has repeatedly said that its gas business is losing money because government-regulated retail prices are lower than the rates the company pays for imports from Russia, Serbia’s main source of gas.

Mihajlovic spoke after signing a preliminary agreement with more than 30 local companies that seek to become gas distributers and retailers ahead of an expected opening of the market next year.

-Editor:

To contact the reporter on this story: Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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