Two letters of credit (L/Cs) have helped close the financing of the sale of state-owned assets in Serbia's downstream oil industry.

The L/Cs helped part of the Russian state company Zarubezhneft, buy an oil refinery, a lubricant-manufacturing facility and a retail network in Republika Srpska, one of the two regions forming Bosnia-Herzegovina

The deal

The Russian company agreed in 2007 to pay Euro 42 million for an 80 per centstake in the Bosanski Brod refinery and Euro 67 million for a 75.6 per centinterest in a lubricant factory in the Modrica Lubricants Refinery.

Zarubezhneft also said it would pay Euro 10 million for an 80 percent stake in the Banja Luka Petrol Company, a retail network.

Obligations met

According to an official statement the agreement on the sale of the shares of the state capital held by the Pension Insurance Fund and the Fund for the Restitution of the Serb Republic bound the buyer to pay to the seller the amount of Euro 72.55 million to cover obligations.

Officials say that a first L/C for Euro 36.275 million was released on 20 June 2008. A second L/C for Euro36.275 million was released on 8 August 2008.

This, as far as Serbian officials are concerned, means that the Russian buyer has fulfilled all the purchase obligations.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.