Serbia to Split Up Srbijagas, Reschedule Its $1.5 Billion DebtMisha Savic
Serbia will divide its natural gas monopoly Srbijagas JP in two parts, separating trade and distribution from storage and transportation, as the company’s debt became “unsustainable” and liquidity dwindled.
The government will “prevent the financial collapse” of Srbijagas and any of its new borrowing as debt reached almost 1.2 billion euros ($1.5 billion) and liquidity was just 1 percent of short-term liabilities, Energy Minister Zorana Mihajlovic told reporters in Belgrade today.
“The situation brings the country into serious danger of disruption of the gas supply” coming from Russia, Mihajlovic said, presenting a plan to overhaul the Novi Sad, Serbia-based company. “We will engage in talks with commercial banks to reschedule loans given to Srbijagas.”
Almost 100 million euros of the total are short-term loans. Srbijagas accumulated the debt between 2008 and 2012 as the government capped gas prices during the economic downturn, with public companies dominating the list of its debtors. The utility posted a $410 million net loss in 2012.
Serbia wants to curb losses of state-owned enterprises and it stopped backing their loans, trying to narrow the budget gap to 3.6 percent of gross domestic product this year from 6.7 percent in 2012 and rein in public debt. The overhaul, to be completed by the end of 2014, will unbundle Srbijagas according to European Union requirements.
Once consolidated, the transportation and storage units will operate as Transgas AD, and trade and distribution will continue as Srbijagas AD. Both will be closed joint-stock companies controlled by the state, Mihajlovic said.
Transgas may later be merged with pipeline and power grid operators, Transnafta JP and Elektromreza Srbije JP, to form the Serbian Energy Enterprise, which could transform Serbia into a Balkan energy hub as it joins the South Stream pipeline and builds a gas link to Bulgaria.