Srbijagas puts South Stream construction behind schedule

BELGRADE - The problem with issuing government guarantees needed for the construction of the South Stream pipeline leg through Serbia has emerged because the reforms in Srbijagas, a government owned company, are behind schedule, the Ministry of Energy has said.

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 nit 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 Dacic 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, Dacic said at the Kopaonik Business Forum.

Photo Tanjug, J. Pap, Archive