No new call for sale of MSK and HIP–Petrohemija – What will happen to Azotara?

According to the statement of Serbia Prime Minister Ana Brnabic, third call for the sale of Methanol & Acetic Acid Complex Kikinda (MSK) will not be published, because in that case the public company would have to be offered for only 30% of the estimated value meaning that MSK is being sold for way less than that kind of complex is actually worth.

Namely, the state government has already put MSK out to tender for finding strategic partner but there were no interested parties. During the tendering in December 2017 a Cypriot holding company bought the tender documentation but didn't submit the binding offer. The initial price for the 100% of the company's capital was EUR 38.5 million which was 100% of the estimated value. A year ago, the Ministry of Economy announced that nobody answered the call for the second tender although the initial price dropped to EUR 24.4 million, a 50% of the total estimated value.

Prime Minister Brnabic said that they would apply the same principle in the sale of Pancevo- based Petrohemija since there were buyers interested in the purchase but they haven't offered amounts the state expected.

– MSK and Petrohemija aren't a burden for the country anymore – both companies are financially stable,both cover their own expenses and operate at a profit, the Prime Minister said.

The data of the Supervisory Board of HIP-Petrohemija shoe that the company had income of RSD 39.4 billion and a gross profit of RSD 917 million in 2018. Petrohemija paid EUR 9.2 million for capital investment projects in 2018, and investments of EUR 9.1 million were contracted. Last year, Petrohemija hired 63 new workers, and the plan is for it to employ another 60 people in 2019.

With the support from the state, Petrohemija has managed to turn from an unprofitable business to making profits again in the past few years, to stop using government subventions, to successfully reorganize its business and to operate at a profit with 1,450 employees fifth year in a row. A few months back the State Secretary in the Ministry of Agriculture, Dragan Stevanovic said that Petrohemija was supposed to get a new owner – investor who would provide additional and necessary capital for investing and expanding its capacities which would contribute to better market positioning. To this end, EUR 150 million needs to be invested in the new polypropylene plant.

HIP Azotara worth around EUR 100 million

The government isn't done with Azotara from Pancevo either, Prime Minister Ana Brnabic said and added that they were looking for a strategic partner for that company as well. Azotara was one the biggest producers of mineral fertilizers and nitrogen compounds in the region but it went bankrupt near the end of 2018. Commercial Court in Pancevo issued a bankruptcy order to enforce the bankruptcy. All 975 employees received severance payments and were then left unemployed. The logical next step after the court order is for the bankruptcy administrator to announce the sale of the company. The administrator will decide whether it will offer the entire property or parts of it for sale. According to the estimates, the company is valued at around EUR 100 million while its debts are twice as much.

MSK a.d Kikinda

HIP-Petrohemija a.d. Pančevo

Azotara d.o.o. Subotica

Ministarstvo privrede Republike Srbije

Ana Brnabic

privatization

business