HIP Petrohemija to receive financial aid to restart output

14 July 2009 16:12  [Source: ICIS news]

PRAGUE (ICIS news)--HIP Petrohemija has secured at least €10m in financial support from the Serbian government that will allow it to restart production within a few weeks, Serbia's largest petrochemical producer said on Tuesday.

At least €10m ($13.9m) would be awarded to the company in the form of a grant, which would enable it to restart its 200,000 tonne/year ethylene plant and polyethylene production lines on either 1 August or 15 August, said Sasha Pavlov, an adviser to HIP Petrohemija's general director.

“The government should announce this decision on 23 July,” said Pavlov. “With this amount of money, we can buy around one month's supply of feedstock, sell the resulting polyethylene and get back on track.”

Pavlov specified that if the company were to receive €10m, it would spend €7.2m on feedstock and €2.8m on social assistance payments for laid-off workers.

At least 500 of the company’s 2,300-strong workforce are set to lose their jobs under a restructuring plan being prepared by Serbia’s privatisation agency.

The company ceased production of all products on 24 June for a period that was originally meant to be just one month, after HIP Petrohemija declared that it could no longer afford to buy feedstock.

The restructuring plan would ultimately have to find a solution to the company's debts, which total around €210m.

HIP Petrohemija owes some €81.8m to Serbian refiner NIS, which is majority-controlled by Russia's Gazprom Neft, while €31.7m is owed to Russian oil producer Lukoil.

($1 = €0.72)

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By: Will Conroy
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