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The Government of the Republic of Serbia

In the service of citizens

Energy agreement with Russia to be ratified by July 15

Belgrade, 9 June 2008

Serbian Minister of Trade and Services Predrag Bubalo expressed expectation today that the energy agreement with Russia will be ratified in the Serbian parliament by July 15 since the constitutive session has been scheduled for June 11.

Bubalo told Avala TV that the government decided on May 9 to send the agreement to parliament for ratification without waiting for a new government to be formed.

According to Bubalo, it is of utmost importance that Serbian government representatives participated in the 12th International Economic Forum in St. Petersburg over the past three days, where the Serbian delegation convinced Russian representatives to wait until mid-July, when Serbian parliament ought to ratify the energy agreement.

He recalled that Russian Gazprom is third-ranked in the world by market capitalisation and competes for a leadership position in the world, which is very important to ratify the energy agreement with Russia. The Serbian delegation held two separate meetings with Gazprom and Gazpromneft representatives, and it was agreed that preparations for a major future agreement will be completed by July 15, said Bubalo.

This regards the privatisation of the Naftna Industrija Srbije (NIS), construction of a main gas pipeline through Serbia, and construction of an underground gas storage facility in Banatski Dvor, explained the Minister and added that more than €500 million will be provided for investment, as pledged earlier.

According to Bubalo, Gazprom experts spent the last couple of months in NIS and obtained all the information they needed regarding future proceedings and are waiting only for the agreement to be ratified.

Speaking about reviving the hydroelectric power plant Djerdap and the purchase of Russian turbines, he said that he discussed this with Deputy Prime Minister and Finance Minister of the Russian Federation Alexei Kudrin and Serbia asked Kudrin to ensure that the agreement is respected.

Bubalo recalled that the interstate agreement on writing-off debts of the former Soviet Union specifies that the price of Djerdap following renovation should be nearly $105 million, and it is acceptable to raise that price by $20 million due to higher prices of steel, which is envisaged by the agreement, but it does not include a price exceeding $170 million.