Serbian Government Withdraws Loan Guarantee for Gas Pipeline

The Serbian government decided to withdraw its guarantees for a 70 million Euro loan to the Srbijagas natural gas supply company, a day after the Parliament Finances Committee approved the guarantees. 

The guarantees for that and other loans to state-owned companies were on the agenda of parliament on Tuesday (24.11).   

Under the proposal, the state guarantees would have allowed Srbijagas to take loans from three banks to build a gas pipeline from Serbia’s border with Bulgaria to the border with Hungary and other neighboring countries. The loan was to have been taken from the Vojvodjanska Bank, OTP Bank, and the Post Office Savings Bank in Dinars with a hard currency clause with a repayment period of six years and a grace period of two years at an annual interest rate of 1.7 to 1.75 percent plus quarterly EURIBOR. The money would be invested through the Switzerland-registered South Stream AG shareholder society.   

Srbijagas is headed by its CEO Dusan Bajatovic, a high-ranking official of the Socialist Party of Serbia (SPS, a junior party in the ruling coalition). Bajatovic was recently thrown out of a meeting called by the new Energy Minister Zoran Mihajlovic (of the ruling Serbian Progressive Party – SNS) allegedly for failing to comply with her instructions. 

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