DINKIC: Serbian government and NIS to invest EUR 60 million in Petrohemija

The Serbian government and the Petroleum Industry of Serbia (NIS) plan to invest together EUR 60 million in the local petrochemicals producer HIP Petrohemija to ensure that the company will emerge from its restructuring by mid-2014 as a profitable business, Finance Minister Mladjan Dinkic said on Tuesday.

HIP Petrohemija is currently controlled by the Serbian government, which has the stake of 54.89%. Other major shareholders are Srbijagas with 13.38%, the Development Fund of the Republic of Serbia with 13.36% and NIS with 12.72%, according to the figures published on HIP Petrohemija's website.

The investment cycle - comprising EUR 20 million worth of state funds and EUR 40 million to be contributed by NIS, will kick off in January and should last for two years, Dinkic said in a statement issued after he toured Petrohemija's upgraded high-density polyethylene (HDPE) production unit alongside NIS CEO Kiril Kravchenko and Srbijagas CEO Dusan Bajatovic.

Dinkic added that Pancevo-based HIP Petrohemija, one of Serbia's biggest exporters, had long suffered from underinvestment, stressing that that needed to change in order to ensure a turnaround for the business.

The funds for the 6.1 million euro upgrade of the HDPE unit were secured from the company's cash flow with the approval of the state and that of NIS, which provided logistical and advisory assistance for the project.

The upgrade has raised the HDPE unit's annual output capacity to 90,000 tonnes from 70,000 tonnes, SeeNews reported.

Petrohemija CEO Milan Teofilovic stated that the factory would be operating at full capacity in 2013 because the planned investments can be implemented without halting production.

During 2012, Pancevo-based Petrohemija was closed for almost eight months due to financial problems and the modernization of HDPE production unit.