NIS invests EUR 237 million in Pancevo-based Petrohemija to make it profitable until 2014

(Pancevo-based Petrohemija)

A total of EUR 237 million will be invested in Petrohemija in Pancevo in order to make that company profitable until 2014, Minister of Economy and Regional Development Nebojsa Ciric and CEO of the Petroleum Industry of Serbia (NIS) Kirill Kravchenko announced Wednesday.

- An agreement on the strategic cooperation between NIS and Petrohemija, which was signed on November 21st, envisages a EUR 62 million investment in the production capacity boost at two plants within Petrohemija in the first phase - Ciric said at a press conference.

He reminded that the agreement defined three pillars of Petrohemija's development - financial restructuring, implementation of the investment program, and a change in the management system. The aim of financial restructuring is to reduce the company's debts by over EUR 150 million through a change in the structure of equity capital.

Ciric said that debts would be either written off or converted to capital, so that the Petroleum Industry of Serbia, as one of the largest creditors, will also hold the biggest stake in Petrohemija, amounting to about 34%.

As Ciric announced, Petrohemija will also take out a loan, for which a guarantee should be provided by the Republic of Serbia, to finance the first phase of the investment of EUR 62 million, which will be implemented in 2012 and 2013.

- The polyethylene production capacity will be increased in that phase, and Petrohemija is expected to start operating profitably as early as in 2014 - Ciric explained.

- During the second phase of the investment, which will be implemented in 2014 and 2015, money will be spent on the improvement of energy efficiency and the reconstruction of Etilen factory - Minister Ciric added.

He also voiced his expectation that the number of employees at that Pancevo-based plant would not be cut.

As it was announced at the press conference, Petrohemija will also change its management system, meaning that NIS and Srbijagas will have more representatives in the company's management, and some acknowledged experts from the international labor market will be hired as well.

Srbijagas will appoint Mila Mladenovic to the Managing Board, whereas Nicholas Petri and Ivan Solcek, an independent expert, will be appointed to the Board by NIS.

Kravchenko assessed that it was possible to achieve success at Petrohemija similar to the one achieved at NIS. He also voiced the expectation that Petrohemija would operate profitably and boost its exports once the investment was implemented.