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Serb oil/gas co reform to begin with debt payback
  
BECEJ, Yugoslavia, June 23 (Reuters) - Serbia said on Saturday it would 
privatise its oil and gas monopoly NIS over the next three to four years and 
that settling a debt to Russian Gazprom would be the first stage of the 
reform. 

"The first stage of privatisation of Naftna Industrija Srbije (NIS) will 
start this year with a settlement of a $322 million debt to Gazprom," Serbian 
deputy energy minister Vladimir Kostic told a seminar on NIS's future. 

The announcement came only a week after Russian President Vladimir Putin, 
accompanied by an economic and military delegation, visited Belgrade and 
agreed to promote ties with Yugoslavia with a gradual phase-out of 
traditional barter trade. 

Kostic did not elaborate on the debt settlement scheme. One of the options 
mooted in Belgrade is a debt-for-equity swap. 

Kostic said the company's privatisation would take three to four years and 
NIS itself would first have to be reformed. 

"The intention is to transform NIS into a group of functional companies and 
then privatise them," Kostic said. 

NIS holds a monopoly in exploiting domestic oil and gas fields and in 
wholesale trade of crude oil, derivatives and natural gas. 

The company operates two refineries in Serbia, both of which suffered massive 
damage during NATO's three-month bombing of Yugoslavia in 1999. 

The direct damage to NIS plants and infrastructure is estimated at $950 
million, NIS's deputy general manager Rajko Tomanovic told the seminar in the 
town of Becej in the northern Serbian province of Vojvodina. 

"The Pancevo crude oil refinery suffered the greatest damage of $370 
million," Tomanovic said. 

In the 1980s, NIS was producing around 1.4 million tonnes of crude oil a 
year. After a decade of sanctions, mismanagement and NATO air strikes, the 
annual production has fallen to 800,000 tonnes, Tomanovic said. 

07:59 06-23-01


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