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New Serb government eyes big energy projects, sell-offs

Serbia is hoping to attract some €3 billion ($4 billion) of investment into the energy sector over the next four years, and eventually become an energy hub in the Balkans, its new prime minister said last week.

Presenting the program of his coalition government, Prime Minister Vojislav Kostunica singled out big energy projects as a top priority. "The main foreign investment is expected to come in the energy sector," Kostunica said. "The government plans to ensure at least €3 billion ($4.08 billion) over the next three years, especially in the gas and oil sectors. The government will build a 400-kilometer gas pipeline, worth around €1 billion," he added. He also pledged to press ahead with the privatization of oil monopoly NIS, saying the government will "complete the staged privatization, ensuring NIS's value rises several times." The sell-off, slated for 2006, was postponed as Serbia went into early elections in January, and over three months of coalition talks. A government was agreed 10 days ago under European Union pressure, and sworn in late on Tuesday.

A proposal by advisers Merrill Lynch and Raiffeisen sees a phased sale, with 25% of the firm sold initially and more parcels offered later on fulfillment of certain conditions. The price tag for the 25% stake was to be $300 million, based on NIS's $1.2 billion nominal total value. Firms that have so far expressed interest include Hungary's MOL, Austria's OMV, Poland's PKN Orlen, Greece's Hellenic Petroleum, Russia's Lukoil and Gazprom Neft and Romania's Rompetrol. The new government will have among its main tasks the restructuring of big, socialist-era utilities, most of which are still in state hands, such as power company EPS. (