Gazprom completes purchase of majority stake in Serbian oil firm

Business Materials 2 February 2009 20:13 (UTC +04:00)

Russian energy giant Gazprom completed the purchase of a majority stake in the Serbian oil monopoly NIS Monday by wiring 400 million euros (512 million dollars) to Belgrade, dpa reported.

Serbia and Gazprom agreed the sale of 51 per cent of the NIS capital a year ago, but the deal was delayed by early elections in Serbia, as well as a strife within the new ruling coalition.

Economy Minister Mladjan Dinkic had criticized the deal as unfavourable for Serbia, but his objections faded as the financial crisis began taking its toll in Serbia.

The deal contract was finalized on December 24. Apart from the 400 million euros for the capital, Gazprom committed itself to invest an additional 547 million euros into the company infrastructure.

The criticism of the deal abated in Serbia particularly as the Serbian currency - the dinar - dramatically fell at the end of 2008 amid falling investments and increasingly expensive credits.

In spite of regular interventions by the central bank, which spent 1.1 billion euros in the final quarter to prop the dinar up, the currency plummeted from around 75 to around 90 for the euro.

The trend continued and the dinar fell to 95 for the euro though the bank continued using the thinning reserves, which dropped to less than 8 billion euros - half of what they were two years ago - before the cash injection from the NIS sale.