Representatives of the Serbian Ministry of Finance and Economy and NIS Visited HIP “Petrohemija”

December 18, 2012

The delegation headed by the Minister of Finance and Economy of Serbia, Mr. Mladjan Dinkic, visited HIP “Petrohemija” earlier today. Accompanied by the Chief Executive Officer of HIP “Petrohemija”, Mr. Milan Teofilovic, and the Chief Executive Officer of NIS, Mr. Kirill Kravchenko, the guests visited the high-density polyethylene production unit (HDPE) whose reconstruction and capacity increase constituted the first phase of the company restoration, carried out with the logistic and consultancy support of NIS and the Government of the Republic of Serbia. Total investment funds for this phase of HDPE unit modernization amounted to 6.1 million Euro, out of which 2.5 million Euro was used for execution of works, and the remaining 3.6 million Euro was invested into the purchase of cutting-edge technology equipment. The funds for execution of works related to unit modernization were secured from the cash flow of HIP “Petrohemija”, with a full support of Government and NIS representatives, who provided logistic and consultancy support to the company for this project. After this investment, the production capacity of the unit increased from 70 to 90 thousand tons of HDPE per year. It has been estimated that this investment will significantly improve the financial result of the company and, as such, it represents a crucial step towards its rehabilitation. It may be inferred that the start-up of the HDPE unit at an increased capacity resulted in the increase of the ethylene factory capacity, as well as in the production renewal at “Panonijaplast” factory, which stopped back in 2009. During their visit, the delegation discussed parameters pertaining to the second phase of investment cycle, which is scheduled to commence in January 2013. With the planned investment volume around 60 million Euro and the implementation deadline of 2 years, HIP “Petrohemija” should achieve positive business results after this phase. Notwithstanding the complex situation in the company, HIP “Petrohemija” Management has invested considerable effort in order to re-establish the production potential of the company. In only a few months, we have managed to implement the first part of investment program and, hence, set up strong foundations for a successful future of the company. Our strategic partner NIS deserve greatest credit for providing a beneficial and an efficient support”, declared Milan Teofilovic, the Chief Executive Officer of HIP “Petrohemija”. “Our strategic partnership with HIP Petrohemija, with which we signed the agreement in 2011, has a win-win character. Let me remind you that Petrohemija is connected with Pancevo Refinery not only due to the virgin naphtha, but also due to elements of infrastructure, therefore our joint activity is quite natural. Petrohemija is one of the most significant NIS’ clients, this precisely being the reason for our interest in fast rehabilitation of the company and start of its operation at full capacity”- declared Kirill Kravchenko, the Chief Executive Officer of NIS.