Agreement on the settlement of the debtor-creditor relations between Russia and Serbia

“In the current of the past ten days, during the official visits of the Serbian government delegations to Sweden, Japan, China and Russia, billion dollars debt claims have been settled”, declared Mr. Bozidar Djelic – Minister of Finance and Economy, upon his return to Belgrade, at the same time emphasizing the reaching of the agreement on the settlement of the clearing debt of the former USSR towards the former SFRY republics, as well as the settlement of the Serbian Petrol Industry (NIS) towards the Russian company “Gazprom”.

Besides, the major achievement of this series of visits is the writing-off of the NIS 70 million dollars debt towards the Chinese corporation “Sinochem”.

Minister Djleic emphasized the fact that the remaining part of the mentioned NIS debt should not represent a fiscal burden for the Serbian citizens, since the regulation of this debt is an exclusive matter of NIS. He also added that the agreement that was reached in the matter of the NIS-Sinochem debt settlement, offers the opportunity for the regulation of the remaining Serbian debts towards China, amounting approximately 200 million dollars.

Mr. Djelic reminded that the negotiations with the Russian party on the regulation of the mutual debtor-creditor relations lasted for almost three years, and have been intensified since last March, when the Russian Federation initialed the multilateral agreement on the amount and the repartition of the clearing debt of the former USSR towards the former SFRY republics, which is amounting a total of 1,29 billion clearing-dollars, 38% of which (491 million clearing-dollars) should go to Serbia-Montenegro.

After having established the initial framework, negotiations that have been led, concerned the exchange rate that would provide for the transition from the calculations in clearing-dollars onto real, US dollars. Minister Djelic said that the initial exchange rate of 0.5 US dollars for one clearing-dollar, suggested by the Russian party, has been increased to the rate of 0.625 US dollars for one clearing-dollar, adding that this concession by the Russian party represents an amount of 163 million dollars against the total of the debt, i.e. 62 million dollars for the portion going to Serbia-Montenegro.

According to his terms, by reaching an agreement on the exchange rate, the amount of 491 million clearing-dollars have been brought to 306,7 million US dollars, 18 million going to Montenegro, and 288,7 million dollars going to Serbia.

Mr. Djelic said that our delegation accepted the best solution – out of three possible ways for this debt settlement, meaning that the amount of 288,7 million dollars shall be used for the purpose of two essential national projects in Serbia: the revitalization of the “Djerdap” power plant, in the amount of 100.6 million US dollars, and the covering of the NIS debt towards the world biggest gas production corporation – the Russian “Gazprom”, in the amount of 248 million US dollars, to the 31st July of the current year.

„The Djerdap power plant has not been properly revitalized and renovated since 1972. Thanks to this agreement, in the current of the following year, the biggest capital investment in our country for the past 30 years shall be initiated, the realization of which should last for the next six years”, emphasized the Finance Minister, adding that the result should be the extension of the technical validity of the power plant for another 40 years, but mainly in the assurance of a stable source of electric power to the benefit of Serbian citizens.

Mr. Djelic also added that this represented an opportunity for a six-years business projects stability for domestic companies, since the Russian corporation “Energomash export” – that has won the international tender for the Djerdap power plant revitalization, shall engage in this project a number of domestic companies, such as „Termoelektra“, „Sever“ from Subotica, MIN, „Gosa“, „Lola sistem“, „Prva petoletka“, the IMS Institute, „Antikor“, Lola institute, the Institute Nikola Tesla and others, whose activity should have positive repercussions for the entire country economic situation.

The Finance Minister said that 203 million dollars have been provided for the remaining part of our claim, and that these resources shall be used for the covering of the NIS debt towards the Russian “Gazprom”, explaining that this should cover four fifths of the major debt NIS contracted in the period going from 1994 to 2000, while the last fifth – amounting 46.4 million dollars, should be covered through exportations of Serbian products and services to the Russian market, as well as to third parties marketplaces. He also added that, considering the context, the Russian giant “Gazprom” announced the possibility of engaging construction companies from Serbia and Montenegro on its construction project sites in Turkey.

Owing to this arrangement, the NIS gas providing line shall also be revitalized, while NIS shall enter the restructuring process, opening the possibility for a long-term agreement for “Gazprom” gas supplies to Serbia. In such way, a more stable gas supply system shall be assured, but it would also guarantee the obtaining of lower prices for the citizens.

Mr. Djelic added that the initial framework for the mutual debtor-creditor relations’ regulations should be additionally modified and initialed by the Governments of Serbia, Montenegro and Russia, before the official signing of the Agreement in Moscow before the end of the year, and its ratification by the respective Serbia-Montenegro and Russian Parliaments.

“These have been very difficult negotiations. None of the parties involved reached the maximum, but a satisfying solution was found for both Russia and Serbia”, declared Mr. Djelic, emphasizing that the principle of direct negotiations with no mediation, between the Russian and Serbian parties had been fully respected.