Srbijagas blamed for South Stream construction delays

Srbijagas blamed for South Stream construction delays

"The state guarantee Srbijagas needs in order to get a EUR 75 million loan to cover the founding investment in the company South Stream Serbia was part of the 2013 budget, but it was not realized because of a restrictive debt policy," the ministry said on Tuesday.

The guarantee was not included in the 2014 budget, although the ministry had proposed it, because the Ministry of Finance did not include it in the budget bill, according to the statement.

"The guarantee would not be needed had Srbijagas conducted a financial restructuring, as the ministry proposed," the statement says.

Srbijagas would have made a EUR 120 million profit had it undergone the restructuring, so there would be no need now for a loan, the ministry noted.

The ministry "expects the problems related to South Stream funding to be resolved in a dialogue between Serbian institutions and Gazprom, so the construction of the pipeline could go at its projected pace."

Prime Minister Ivica Dačić said on Tuesday the pipeline project was behind schedule because there were problems with providing state guarantees needed for the founding investment in the joint venture.

"It has been postponed for 2-3 months now, and the tender invitation for contractors who will build the Serbian section of the pipeline is also late," Dačić said at the Kopaonik Business Forum.

Asked whether the current crisis in Ukraine has helped slow down the process even more, Dačić said that the problem is in the fact that the Serbian parliament has been dissolved ahead of the early elections, scheduled for March 16, because that postponed the passage of some relevant laws.

The two sides in the project have agreed that Russia is to finance the construction of the pipeline and Serbia to pay its share from revenues to come from charging fees for gas transit.

Dačić said that the costs of the works on the Serbian section of the pipeline are close to EUR 2 billion, and that the Serbian share is 49 percent.

“I hope that we will find a way to make everything go well. Aleksandar Vučić and I held discussions with the Russian partners and I am sure everything will be all right,” said the outgoing prime minister.