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news 12 Sep 12

Serbs Hatch Power Deals With Russia, Germany

President Tomislav Nikolic has gone to Moscow and the Deputy Prime Minister, Aleksandar Vucic, to Berlin on energy related business.

Bojana Barlovac
BIRN
Belgrade

Serbian leaders are busy travelling in different directions across Europe to secure fresh investment in the country's fuel and energy sector.

President Tomislav Nikolic met his Russian counterpart, Vladimir Putin, in the Russian Black Sea resort of Sochi on Tuesday to discuss energy deals.

Russia has offered a loan to help Serbia fill its budget holes and ensure that pensions and salaries continue to be paid on time.

Serbia's current budget deficit is 7.1 per cent and the public debt is almost 55 per cent of GDP, higher than the IMF has recommended.

The two heads of the states also discussed the imminent signing of a strategic agreement on the South Stream gas pipeline. Construction of the segent running through Serbia should begin this year.

Putin highlighted the possibilities of further intensified relations, adding that Russian companies were ready to act as partners in the modernization of Serbia's energy sector.

"We tie prospects in the area of energy not only to Russian fuel delivery but also to the realization of strategic, truly pan-European projects, such as the South Stream [pipeline]," he commented.

Aleksandar Vucic, Deputy Prime Minister and Defence Minister, meanwhile has travelled to Berlin to sign a memorandum of understanding and strategic partnership between the German energy producer RWE and Serbia's state-run electric power company EPS.

Under the terms of the deal, through a joint venture with EPS, the Germans are expected to invest up to 2.2 billion euro in Serbia's energy sector.

Of this sum, 1.2 billion euro will be used to add a third unit to Serbia’s lignite-fired "Nikola Tesla B" power plant. About a billion euro will go on hydropower plants on the River Morava and the River Drina.

Vucic also met with Philipp Roesler, Germany's Economy and Technology Minister and  Deputy Chancellor, and Dirk Niebel, Minister for Economic Cooperation and Development.

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