Euras Technology

Tag: companies

  • U.S. denies license for NIS, fuel market faces uncertainty in Serbia

    Washington has denied Serbia’s request for a license allowing Naftna Industrija Srbije (NIS) to continue operations while negotiations over a change of ownership are ongoing. Unless the situation changes, payment transactions with NIS will be suspended starting Monday, December 8. Serbian authorities note that the Russian majority shareholder has been given sufficient time until the end of this week to settle obligations to employees and suppliers. After that, the National Bank of Serbia and other financial institutions will not risk exposure to potential secondary sanctions from the U.S. State Department.

    The primary concern for the Serbian public is how the suspension of payment transactions will affect the domestic fuel market. Nikola Rajaković, president of the Serbian Energy Association, stated that the payment suspension effectively signals the end of NIS operations. NIS would quickly be unable to function and could not meet drivers’ fuel needs until a new owner takes over. While the remaining days of payment transactions allow NIS to settle obligations to suppliers, the temporary loss of a key partner poses significant challenges for the Serbian economy.

    Energy expert Velimir Gavrilović noted that fuel stations may continue operating, but only cash payments will be accepted. He explained that NIS management is likely to keep stations open until existing stock is sold, as electronic transactions will not be possible. Practically, the company can only sell fuel for cash while supplies last. If banks cease operations with NIS, the company could face bankruptcy, as Serbian law allows for insolvency proceedings in cases of prolonged or imminent inability to pay. In such a scenario, the state would appoint a bankruptcy trustee, taking over management, while Russian ownership remains intact for creditor settlements. Whether this would satisfy the U.S. Office of Foreign Assets Control (OFAC) for license approval remains uncertain.

    NIS has stated that corporate card payments remain functional and that contractual obligations to corporate clients continue. Fuel sales at retail stations are ongoing, with payments accepted in cash, Dina cards, or via mobile banking using the “IPS Pokaži” option. The company confirmed that it is committed to maintaining stable fuel supplies and closely monitoring the situation.

    President Aleksandar Vučić assured that Serbia has fuel reserves sufficient until the end of January, although drivers may need to use other fuel stations. NIS stations account for 47% of domestic fuel sales, making a potential shutdown particularly challenging. Serbia has 204,000 tons of diesel, 18,500 tons of gasoline, and 54,500 tons of fuel oil in reserve, with annual mazut consumption at around 44,000 tons. Experts warn that reserves should not be fully depleted by the end of January to ensure some supply for later needs. Companies with fuel stations may need to import from the region to maintain market supply. When NIS stations stop operating, drivers will have to turn to other retailers, potentially causing long lines, shortages, and higher retail fuel prices.

    Gazprom Neft, the majority owner of NIS, stated that the company is adjusting operations in response to U.S. sanctions effective since October 9. NIS continues crude oil production, accumulating small reserves insufficient for full processing. Production and commercial activities are ongoing in a limited format, considering external constraints. Gazprom Neft emphasized that NIS management, with support from the Serbian government, is making every effort to minimize external impacts, ensure stable product delivery, and remain a reliable partner and responsible employer.

    Earlier, Serbian authorities requested that OFAC issue a license for NIS to operate for 45–60 days. President Vučić stated that if Moscow does not reach a sale agreement within 50 days, the Serbian government would take over management and offer Russian partners the highest possible price. Moscow confirmed ongoing negotiations with foreign partners regarding NIS ownership, while Washington authorized negotiations concerning the exit of Russian capital until February 13. The U.S. imposed sanctions on NIS on January 10 due to majority Russian ownership, with the embargo taking effect on October 9 after several delays.

  • Serbia maintains stable fuel supply amid NIS sanctions and Lukoil license extension

    In Serbia, the supply of petroleum products remains stable, though uncertainty persists due to sanctions on NIS. Trade unions are demanding explanations from NIS management regarding the company’s future operations.

    Washington has extended Lukoil’s license to operate until April 29, applicable to the company’s foreign subsidiaries. This marks the 58th day since U.S. sanctions on the majority Russian-owned Naftna Industrija Srbije (NIS) came into effect. The license, effective from December 4, allows Lukoil’s foreign branches to continue operating.

    “This means that all 112 fuel stations in Serbia will be able to operate using imported petroleum products,” said President Aleksandar Vučić in an interview with TV Pink.

    He also highlighted that Serbia will not face gas supply problems, noting that a short-term agreement with Russia is expected to be signed soon.

    Energy Minister Dubravka Đedović Handanović emphasized that the situation with NIS is monitored daily and evolves constantly. The main priority remains ensuring security of supply, which she discussed with representatives of energy companies MOL, OMV, EKO, and Knez Petrol.

    Despite almost two months without crude oil deliveries, the minister noted that citizens and businesses have not felt a disruption.

    Energy cooperation with Russia was a key topic during Vučić’s meeting with Russian Ambassador Aleksandr Bocan-Harčenko, where discussions focused on gas supply, infrastructure projects, and strategic bilateral initiatives.

    The shutdown of the Pančevo refinery has caused concern among NIS employees, prompting unions to demand clarity from management on how the company will operate under sanctions. The union confirmed to RTS that they requested detailed explanations regarding company operations and salary payments, especially considering potential bank account blocks due to secondary sanctions.

  • Support from the EU is Essential for Pljevlja’s Just Transition Initiative, According to RUP Director

    The effective execution of the Just Transition Initiative for Pljevlja, which focuses on the transformation of the Pljevlja Coal Mine (RUP), necessitates additional financial and collaborative support, as stated by RUP Executive Director Nemanja Laković.

    In a discussion with Yngve Engstroem, Head of Cooperation at the EU Delegation to Montenegro, Laković introduced 12 specific business concepts accompanied by strategic development plans. He pointed out that although the project benefits from backing by the state-owned utility EPCG and positive collaboration with various institutions, further investment strategies are critical.

    “Our aim is to secure initial capital so these enterprises can thrive based on market-driven principles,” Laković remarked, emphasizing their potential for long-term sustainability and job creation. He identified the IT sector as a vital area for growth, which requires enhanced infrastructure and a skilled workforce.

    Engstroem commended the initiative and reaffirmed the EU’s commitment to supporting green transition projects in fields such as IT, renewable energy, agribusiness, and transportation. He highlighted that over €80 million in EU funding is accessible for Montenegro’s green and just transition as part of the EU Growth Plan for the Western Balkans.

    He emphasized the necessity of connecting public investments to EU funding, workforce training, and attracting private investments — including from the Montenegrin diaspora.

    Participants concurred on the importance of fostering robust local partnerships, improving investor collaboration, and simplifying administrative processes. The execution of the EU Growth Plan will be pivotal, complementing existing initiatives aimed at supporting energy transition, human capital development, and enhancing the business climate.

  • Significant Changes in Luštica Development’s Privatization Strategy Uncovered by ASP Research

    Insights from the NGO Action for Social Justice (ASP), derived from documents accessed through freedom of information requests, indicate that the Montenegrin government originally intended to sell just 60% of the shares in the newly formed company “Luštica Development” back in 2008, a stark contrast to the 90% stake offered later in the international bidding process.

    At that time, the government, led by the Democratic Party of Socialists (DPS), established Luštica Development AD with the purpose of leasing over six million square meters of state-owned land on the Luštica Peninsula to attract foreign investment for tourism. The initial strategy included retaining 30% of the company for future sale to Montenegrin citizens, potentially through compensation mechanisms such as restitution or old savings bonds.

    However, by July 2008, the privatization committee altered its approach and opted to auction off 90% of the company’s shares in an international tender, which saw only one participant — the Egyptian Orascom Group.

    As per ASP’s findings, this decision heavily favored the foreign investor. The final agreement incorporated long-term land leases and partial ownership arrangements under a hybrid model, particularly for land associated with villas or apartments.

    Notable contractual stipulations included:

  • An upfront fixed annual lease payment of €1 million for the first decade;
  • An additional annual contribution of €1 million in company shares for the government;
  • Post the initial 10 years, lease payments set at €0.15 per square meter;
  • Land ownership transfers under villas priced at €80 per square meter, with other villa plot areas at just €4;
  • Apartment transfer fees also pegged at €80/m², while business-related land use was set at €15/m²;
  • A mere turnover rent of 2% of revenue.

ASP highlighted that the government’s initial target for lease rates was €0.75 per m², with a backup figure of €0.50, yet they ultimately accepted considerably lower rates during negotiations.

Fast forward 15 years, and Orascom now holds nearly 90% of Luštica Development, with the state retaining a minor stake, while only a minimal number of Montenegrin citizens possess shares in the initiative. ASP contends that the arrangement disproportionately favors the foreign investor, offering limited benefits to the Montenegrin state.