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The Government of the Republic of Serbia

In the service of citizens

NIS privatisation in three phases

Belgrade, 25 July 2006

Serbian Minister of Energy and Mining Radmoir Naumov said today that the privatisation of the Serbian Oil Industry (NIS) should contribute to the creation of a competitive market and attract foreign investment into Serbia.

Radomir Naumov

Speaking at a press conference, Naumov recalled that at its previous session the Serbian government adopted the option presented by the privatisation advisor for NIS the Consortium Merrill Lynch-Raiffeisen Investment, as the optimal one, according to which a strategic partner will become owner of 49% of the total capital of NIS through recapitalisation.

Representative of the Consortium Merrill Lynch-Raiffeisen Investment Rados Ilincic said that NIS will be privatised in three phases, the strategic partner will become owner of 49% of the company’s capital and take over management control, and capital investment in the initial phase of privatisation which should reach a minimum of $250 million.

Ilincic said that in the first phase of privatisation, which should conclude in three years, 37.5% of the shares of the company will be sold to the strategic partner, the Serbian government will retain the same number of shares, and the remaining 25% will be given to employees and the privatisation register.

He added that NIS employees will receive €200 per service year and will become shareholders immediately.

According to Ilincic, in the second phase of privatisation, the strategic investor will become owner of 49% of the capital, the Serbian government will have 21%, 15% will go to the privatisation register, and the same number of shares will be available for sale at the stock-exchange.

Ilincic said that the sale tender for NIS should be announced in September this year, and the procedure will end at the beginning of 2007. He stressed that consortiums may compete, but not financial investors such as investment funds whose main business interests are not compatible with the activities of NIS.