PM reveals contract with Etihad

PM reveals contract with Etihad

Vučić said that only the “business plan” part of the contract cannot be disclosed, being a trade secret, and added that he hoped nobody would mind.

“This is an internal document that contains information about what we want to achieve on the market,” Vučić told a press conference at the Palace of Serbia.

As he said, Etihad is under obligation to invest "up to EUR 100 million, up to EUR 40 million in added capitalization, EUR 60 million is a loan of the founder that we have not used because we expect to have a profitable company by the end of the year."

Serbia will at the same time have to invest EUR 42 million in cash over the next three years, and take over all Jat Airways debts, 80 percent of which are toward the state.

He said he was thankful to the UAE partners for making it possible for him to present the contract with Etihad, adding that that contracts such as those would be available to the public on the website of the Serbian government.

Vučić said that the Serbian government had signed the agreement because since 2003, the national carrier had been generating yearly losses of EUR 35 million, although they had been even bigger, and also because only four of its seven Boeings 737-300 were still flying today.

“All governments knew what kind of problem it was. We were well aware about the risks we were taking in transporting passengers,” the prime minister said.

Jat Airways was used for years to employ members of political parties and the airline would have been shut down had the government not taken steps and found a strategic partner, he stated.

"It would have caused economic and social damage and hurt Serbia's reputation, because a national airline is a mirror for the country it belongs to," he noted.

The legal services related to the contract did not have a huge cost, he stated, pointing out that those "important and difficult services cost a total of EUR 270 thousand."

Air Serbia is becoming a leader in the region and we expect the airline to be even more successful in 2016, not only in the Balkans, but also in Hungary and Greece, he said.

Etihad was chosen for a partner because that airline was declared the best in the world last year and because it has been among the top three airlines in the world for years now, along with Turkish Airlines and Lufthansa, he explained.

Thanks to the contract with Etihad, 10 aircraft will be purchased at EUR 14 million lower than normal price, which saves a total of EUR 140 million, he remarked.

Vučić also said that on Thursday, "the United Arab Emirates (UAE) paid USD 1 billion in budget aid to Serbia."

"Expensive"

Aleksandar Vučić said that his government will not seek to terminate the contract with Italian carmaker Fiat on the joint investment in Zastava Kragujevac, or the contract by which Russia's Gazprom Neft became the majority owner of Petroleum Industry of Serbia (NIS), both signed by a previous government.

"The contract with Fiat is good but very expensive for Serbia," said Vučić, stressing that it is important for the citizens to be aware of this.

"I think that (former Serbian president) Boris Tadić has done a good thing to bring Fiat to Serbia," Vučić told a press conference at the Serbian government Thursday evening. Even such a contract is better that having the state pay for the company's losses, he said, adding that he has no intention of terminating the contract.

"My job is to protect the interests of Serbia, and not some other country," he said, noting that “the state acts responsibly and does not want to drive the investors away.”

"I have no intention of damaging our relations with Russia either, but I want to ensure better conditions for us,” the prime minister said.

Commenting on the agreement on the privatization of NIS, Vučić said that he is not satisfied with the profit based on Serbian oil and gas, pointing specifically to the 3 percent mining rent, which stands at 32 percent in Russia.

Also, the investment in retail network is not clear enough, he said, noting that out of the EUR 400 million net profit reported by the company Serbia receives only EUR 29 million in dividends.

"We are not content with that and it is an issue to be resolved with Mr. Putin and Mr. Medvedev. If they agree, we will seek to amend the contract in that respect,” the prime minister said, adding that it is the only thing Serbia can do as it indirectly agreed that the contract is not to be altered.