Minister says Serbia to delay privatization

BELGRADE (Reuters) – Serbia will postpone all major privatizations, including the sale of a stake in the NIS oil monopoly, and leave it to a new government to handle such deals next year, Finance Minister Mladjan Dinkic said yesterday. Serbia is widely expected to hold an early general election in December to solve the crisis caused when Dinkic’s G17 party left the minority coalition of Prime Minister Vojislav Kostunica on October 1 over stalled talks with the European Union. «The government will stop issuing tenders in the next two or three months,» Dinkic told an investor forum. «There will be no tender for NIS. New tenders must wait for the new government, otherwise they would be subject to pre-election political manipulation.» Serbia called for expressions of interest in NIS 10 days ago. The 25 percent stake was due to be sold this month. «We expect the tender for NIS to be called in the first quarter of 2007,» Dinkic told reporters on the sidelines of the forum. «Everyone in the European Union, the World Bank and the International Monetary Fund supports this decision.» He said this decision would make sure that the companies involved get serious strategic investors after the ballot. The government expects to get at least $300 million for the 25 percent stake, based on NIS’s $1.2 billion nominal total value. The buyer would get another 12.5 percent stake through a $250 million capital increase and would have to reinvest a further $250 million from NIS profits. Once the first stage of privatization is over, the state and the buyer would each hold a 37.5 percent stake. The buyer would get management control and Serbia would keep a right to veto decisions such as a sale of NIS to third parties. Three years later NIS would launch an initial public offering (IPO), putting on sale 15 percent of its total capital. Following the IPO, the initial buyer would have the chance to boost its holding to 49 percent, depending on the company’s three-year performance. At the end of 2005, Naftna Industrija Srbije had assets of 1.9 billion euros ($2.38 billion) and liabilities of 867.6 million euros. By the end of July, privatization advisers Merrill Lynch and Raiffeisen Investment had held meetings with companies including Hellenic Petroleum, OMV, MOL, PKN Orlen and Lukoil.

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