Favourable price of Russian gas in exchange for Russia building railroads in Serbia?

“We got an unbelievably good price for gas”, Serbian President Aleksandar Vucic declared triumphantly a few days ago after his meeting with Russian President Vladimir Putin in the Russian resort of Sochi.

The price for gas to Serbia in the next six months will not change, i.e. it stands at $270 per 1,000 cubic metres, which is slightly lower than the $300 that Gazprom intends to charge the rest of Europe.

In the last two or three days, the Serbian public has been debating whether this could be called the President’s great success or it is the result of close relations between the two countries or a political concession on the Russian side. Perhaps the truth is much less romantic and more pragmatic, and the explanation lies in the statement given by the deputy mayor of Belgrade, Goran Vesić, who said that Putin and Vučić have agreed that Russian companies will build Belgrade’s urban and suburban railroads.

However, the agreement on Russian companies building railroads in Serbia is older than the gas agreement and the indication of this can be found in the Budget Law adopted last week, which envisages a possibility of Serbia taking out a loan from the Russian Federation in the amount of 2,05 billion euros. A smaller segment of this loan, i.e. 750 million euros, refers to the second phase of the railway modernisation, while the larger part of 1.3 billion euros refers to the loan for the development of the Belgrade railway, namely the Beogradski Dijametri project.

Experts say that there is little chance that the state will borrow the said amount next year, as it has not appeared in official documents so far, and only when the projects and feasibility studies are completed will it be possible to use the money, although it seems that the project contractor has already been chosen. Economist Sasa Djogovic also believes that the price of gas has been determined in proportion to the Russian interests here:

“Nobody gives something for nothing. Everyone is looking for a favour, political or economic. We can speculate whether in this case, the favour relates to the modernisation of the Belgrade railway or something else. One thing is certain, there was no official competition launched for the Beogradski Dijametri project and no public call for submission of bids to determine the right price for the works and to choose the contractors. When doing business in this way, prices can be negotiated in secret and groups or individuals can profit. On the other hand, this could mean that the state will be even more indebted than it would have had to if there really had been a proper tender,’ Djogovic notes.

(Danas, 30.11.2021)

https://www.danas.rs/vesti/ekonomija/rusi-nama-gas-mi-njima-zeleznicu/

This post is also available in: Italiano

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