Contract on privatization of Railway Car Factory Kraljevo cancelled

The Privatization Agency of Serbia cancelled the contract today (January 14th, 2010) on sale of Railway Car Factory "Kraljevo" to Ukrainian "Azov Impex" because the buyer failed to fulfill the obligations from the investment and social programme.

According to the announcement of the Ministry of Economy, which suggested that the contract should be canceled, the Agency determined that "Azov Impex" neither fulfilled the obligations towards employees nor invested 2.7m EUR in the Factory in the second and the third year after privatization.

It was also decided that the banking guarantee must be paid, as well as the fine from the privatization contract, according to which "Azov Impex" became the owner of Kraljevo-based Railway Car Factory in April 2006 by paying 200,000 EUR and promising to invest 6.5m EUR in modernization of the company.

At today's meeting with the representatives of the trade union, management and owner of Railway Car Factory "Kraljevo", the representatives of the Ministry of Economy determined that "Azov Impex" did not fulfill any of the requests of the Striking Board.

The owner was supposed to fulfill the requests of the Striking Board of the Railway Car Factory prior to December 31st, 2009, and pay 1.5 salaries to the workers, define the rate at which remaining unpaid salaries will be paid and the details of payment of regresses for year 2006.

The Ministry of Economy suggested cancellation of the sales contract because none of the workers' requests was fulfilled, and the buyer also failed to fulfill the obligations from the privatization contract.