Serbia will put its NIS oil monopoly up for sale this year, Economy Minister Mladjan Dinkic said on Wednesday. Naftna Industrija Srbije (NIS) and JAT are the only monopolies the ruling coalition has agreed to sell, he said, and the government expected to complete their sale in 2008. The government will first draft a law on NIS, defining its privatisation. The law will be adopted in September or October and then will launch a tender for NIS in October. Government plans to sell a 25 percent stake in NIS in the first stage, followed by a capital increase, as advised by Merrill Lynch. The capital increase should give the buyer an additional 12.5 percent stake.
Our view: A list of potential bidders for NIS includes Russia's Gazprom Neft and Lukoil, MOL, OMV, Hellenic Petroleum, Rompetrol and PKN Orlen. Stretched financial position will limit the possibilities of PKN Orlen and Rompetrol. OMV has already expressed its cautious stance on downstream acquisitions as the company’s expectations for refining margins are rather dull. MOL and Hellenic will likely be very active in bidding however, as we previously stated, we believe that Russian companies have the highest chance in winning the tender mostly due to the existing political tights between two countries.