Parent’s old debt weighs down Serbia’s main petroleum refinery

BELGRADE (Reuters) – Serbia’s main refinery reported yesterday a $12.2 million loss through September 2005 and outlined plans for 167 million euros ($200.1 million) of investment to upgrade facilities and add environmental controls. Rafinerija Nafte Pancevo (RNP) said it went into the red after its parent, Serbian oil monopoly NIS, transferred to RNP’s books a $94 million debt Serbia owed to China for oil delivered in the 1990s. «Our business result for the first nine months was positive. But our financial result was not, because the old Chinese debt was transferred to us,» RNP’s financial manager Mirjana Zec told a news conference. Serbia piled up a $262 million debt to China’s Sinochem during the rule of Slobodan Milosevic. The Chinese firm wrote off $70 million in 2004, with the remainder due to be repaid by 2011. RNP and a smaller refinery in Novi Sad are Serbia’s only two crude oil refining facilities with a combined capacity of 160,000 barrels a day. Both are part of NIS – Naftna Industrija Srbije – which the government must privatize as part of a loan deal with the IMF. Working at full capacity did not yet mean delivering top quality products. «Only 30 percent of our products meet European standards. We still have a problem of a high sulfur content in our products which we cannot cut down,» said RNP General Manager Kosta Ilic. Ilic said RNP had a list of upgrade projects, costing an estimated total of 360 million euros over a three-year period.