* Srbijagas made profit in 2015 after years of losses
* Company expects 5 pct increase in 2016 gas sales - CEO
By Aleksandar Vasovic
KOPAONIK, Serbia, March 9 (Reuters) - Srbijagas, Serbia’s state-run gas importer and retailer, is in talks with international financial institutions on how to restructure its one billion euro ($1.10 billion) debt, its chief executive said on Wednesday.
Srbijagas built up much of the debt because unprofitable state firms did not pay their gas bills and because retail gas prices were kept artificially low for years by the government to avoid a social backlash.
“This (debt) mainly came from unpaid gas deliveries, price differentials, exchange rate differentials and interest rates which all fell upon us ... most of that (debt) will have to be covered by the state,” CEO Dusan Bajatovic told Reuters during a business forum.
He said Serbian government officials and company executives have talked to the World Bank and the International Monetary Fund about how to ease Srbijagas’s debt burden. Serbia last year signed a 1.2 billion euro loan with the IMF and World Bank.
Some 475 million euros of Srbijagas’s one billion euro debt, mostly held by commercial banks, is due for repayment this year and next, according to a company presentation made at the forum.
Bajatovic said part of the debt could be rescheduled with the help of the World Bank and commercial banks, depending on the availability of favourable loans, while the company could repay some itself.
Serbia decided in 2014 to separate the transport and supply arms of Srbijagas, bringing it into line with European Union laws as the country moves towards European Union membership.
Srbijagas returned to profit in 2015 after years of losses. Bajatovic said the company had earnings before interest and taxes of 13.7 billion dinars in 2015 and made a net profit of 3 billion dinars (24.36 million euros).
He said he expected natural gas sales to grow by around 5 percent this year.
Serbia gets more than 80 percent of its gas from Russia, but is under pressure from Brussels to reduce its dependence on Russian gas after its EU membership talks began last year.
Bajatovic said the EU has secured a loan for the construction of a gas pipeline between Serbia and Bulgaria to allow the Balkan country to diversify its gas supplies, but he said the pipeline would not be commercial until a connection had been built between Greece and Bulgaria.
He said Srbijagas and Gazprom would complete the expansion this year of the Banatski Dvor storage facility to store up to one billion cubic metres of gas, double its current storage capacity of 450 million cubic metres.
1 euro = 123.1370 Serbian dinars $1 = 0.9098 euros Reporting by Aleksandar Vasovic; editing by Adrian Croft and Jane Merriman