ECONOMY

Serbs extend life of NIS monopoly

BELGRADE – Serbia has extended the ban on oil product imports to end-2010, granting its NIS oil monopoly four more years free of competition, according to a decree published in the Official Gazette yesterday. That implies the privatization of NIS will come by end-2010 too, also delaying by four years the promised sale, analysts said. The decree also ordered the ministers of energy, finance and trade to draft by the end of 2006 a set of rules for a gradual imports liberalization, which would not affect excise duties which are an important revenue flow for the national budget. Petrol in Serbia retails at roughly 1 euro per liter, a third of which is excise duty collected by the state. Serbia consumes some 3 million tons of oil products a year. The government first banned free imports of refined oil products in early 2001 to clamp down on petrol peddling, but has kept it as an excuse to protect NIS from any competition until the monopoly boosted its value before it turns private. Because of the ban, fuel retailers in Serbia rely on NIS refineries in Pancevo and Novi Sad for any petrol or diesel fuel they sell. Refining fees are estimated to have earned NIS more than $700 million since 2001. Analysts have urged the government to immediately lift the ban and replace it with customs duty, which could also protect NIS until it upgrades while also allowing some competition to develop. Serbia has hired Merrill Lynch and Raiffeisen Investment to draft a plan preparing NIS for a sell-off. Belgrade had initially agreed with the International Monetary Fund to put on sale control in its two refineries by end-2006. But the draft, seen by some analysts, suggests NIS will be privatized by 2010, in two stages, with the state at first formally remaining the majority owner, but not the manager. The strategic investor, which is to be picked by end-2006, should in the second stage become majority owner via capital increase.