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November 20, 1995
. Vreme News Digest Agency No 216
Russian Gas

The Six Magnificent Ones

by Dimitrije Boarov

As soon as the UN Sanctions Committee ten days ago approved FR of Yugoslavia the monthly import of 186 million cubic meters of gas from Russia at the suggestion of Serbian President Slobodan Milosevic (as "down-payment" for his signature on the Peace Accord), the domestic firms became aflutter about who would get the deal of exporting the wheat to pay for the imported gas.

As the gas importer is already known, the commotion has been caused by the wheat export. Serbian Prime Minister Mirko Marjanovic, who two years ago was merely the Director of the import-export firm Progres, managed with the help of the Serbian Government (Prime Minister Zelenovic and his successor Sainovic) to take the gas imports away from Naftna Industrija Serbije (NIS, a state firm) and give them to a private firm he himself set up - Progresgas-trejding.

It may be just a coincidence that this firm has finally arisen from anonymity and the "grey zone" of confidential deals at the moment the "humanitarian import of gas" was approved; its public appearance was made through the promotion of the "Top 200 Yu-firms" published annually by the Belgrade economic weekly "Ekonomska Politika" for almost 30 years now. Progresgas-trejding was the first private firm which made the top ten last year. It took 9th place after merely two years of existence with its revenue totalling 274,343,000 Dinars (quite a sum according to local criteria). Its success is even greater if one bears in mind that the net income of 14,903,000 was achieved by only six employees, while the other nine Top Ten firms, either socially-owned or mixed and employing 36,901 people together recorded a net income of merely 4,574,000 Dinars (five of them recorded neither profits nor losses). Do Prime Minister Marjanovic and the Serbian Government need any more arguments to prove the greater profitability of private firms over socially-owned and state companies?

How did the six magnificent in Progresgas-trejding succeed in earning their firm a net income three times greater than that of the other nine top firms in Yugoslavia put together? It is less likely that the reason for their ascent to the top should be attributed to Toplica Nedeljkovic, who was Mr. Sainovic's deputy when the latter was the Energy Minister. For, Nedeljkovic failed to appear an any list of Manager of the Year, he did not take part in any charity drives, he never sent a telegram of support to President Milosevic, he never issued a statement to the press in two years, he did not oppose the devaluation of the Dinar, etc.

It seems that the secret of the firm's success should be sought among its nimble owners and executives. The problem is that the public does not know who these lucky men are, all it knows is that Mirko Marjanovic, the current Serbian Prime Minister, was active in the setting up of the firm. That firm is his baby.

It is unknown whether Prime Minister Marjanovic has helped the firm he made and how much. All that is known is that, as soon as it was made public that the gas importation was approved, NIS immediately announced that the gas would have to be paid for immediately and that the current gas arrears stood at over 300 million Dinars (NIS, allegedly, owes 400 million Dinars). As NIS is no longer a gas importer, it is possible that the arrears in question are what NIS owes Progresgas-trejding (or at least a large part of it, as part of the gas is produced locally). If there is a grain of truth in this presumption, then it is no wonder that the Serbian Government announced after its November 13 session that the gas should be paid for. The fate of NIS and the solvency of Progresgas-trejding are in question.

The business grapevine says that the Progresgas-trejding magnificent six were close to getting the wheat deal in addition to the gas import. The wheat is in the hands of the Republican Commodity Reserves Board (the preliminary inter-state agreement says that Yugoslavia is to export to Russia three million tons of wheat over the next three years), which had bought it from the farmers for next to nothing, at the price of 0.28 Dinars or 28 pfennigs per kilo (Prime Minister Marjanovic at the time said that was the world price). The Serbian Government had in August and September paid the farmers between 100 and 130 German Marks per ton of wheat "in real terms". One ton now costs 200 DM on the world wheat market.

The Republican Board recently began receiving "open" bids for the wheat export deal. This means that the rivalling firms offered their export price without a tender, and the one boasting the most influence in the Board was able to trim its price according to the "open" bids that had already arrived and get the deal because its offer was the best. It seems, however, that some have begun to grumble, that someone might have mutinied because the Board is looking for a partner in consultation with Progresgas-trejding, the gas importer and rival wheat exporter, so that the whole process was taken back to square one. The daily Politika on Tuesday published an official "Tender the Export of the Wheat Harvested in 1994 and 1995" underscoring that the bids should be sent within eight days in sealed envelopes and that they would be opened at noon, on November 23 in the Board's premises.

When the ad is read, it is clear that advantage will be given to firms offering the export of at least 400,000 tons with advance payment, the parity of FOB ports on the Danube, the necessary export papers, and ensuring the wheat export within eight months. Should the proviso "export papers" be underlined - it sounds almost ridiculous. True, to someone from outer space it might seem logical that the state of Serbia is pledging to give advantage to the firm which has the approval of the FRY for the export of wheat from Vojvodina. However, as most of us here are not aliens, the proviso resembles a proviso of "fitness", which will help the state easily defend itself from the firms it does not want to grant export papers to.

True, if the private firm Progresgas-trejding gets the deal of the year, no-one will be able to criticize the Serbian Government for favoring only the social and state sectors and Prime Minister Marjanovic will have to be congratulated on being lucky when he set up this private firm of the six magnificent.

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