UAE Investments: Al Ravafed at Loss, Unfinished Irrigation Systems, State Land Lease Price - Secret
The agricultural company Al Ravafed Serbia, a majority-owned company of the same name from the United Arab Emirates, operated in the previous year with a loss of more than two million euros. Data from the financial statement for 2018 show that this company did not fulfill its contractual obligations related to investing in irrigation systems, but it does not show whether and to what extent Al Ravafed fulfilled its obligation to pay compensation to the state of Serbia for the use of military agricultural land in Karadjordjevo.
Although it is a public property, that is, parcels owned by the state managed by the Ministry of Defense, the ministry said in an insider's response that the 2018 Arab investor paid for using 3,500 hectares of agricultural land in Karadjordjev is a trade secret.
Interestingly, the Ministry had the same response during the first two years of Al Ravafed's operations in Serbia. According to an Insider survey, during that period, contrary to contractual obligations, Al Ravafed initially paid nothing for state land in Karadjordjev.
The company, which entered the Serbian market in 2014, retroactively made payments for the use of these parcels only in 2017. The ministry, which now invokes contractually guaranteed confidentiality of information, then provided information to the Insider reporters on the amount of compensation paid.
These data showed that for the first three years during which this land was cultivated by Al Ravafed, the state's rental income was up to six times less than the revenue generated on the same parcels by the state prior to the arrival of the Arab investor.
To land without auction, with opposition from professional services
Recall, based on an interstate agreement with the United Arab Emirates, the Government of Serbia in 2014 signed an agreement with the Arab company Al Ravafed. The company Al Ravafed Serbia was founded, with an Arab partner of 80 percent and the state of Serbia 20 percent of ownership. The investor was sold or leased out more than 10,000 hectares of the most productive state agricultural land in Backa, without a tender, without auction.
One Arab firm took over another
Following the poor business results achieved by Al Ravafed Serbia in the previous year, in early 2019, there was a change of ownership because the former majority owner, the UAE Al Ravafed company was taken over by Elite Agro LLC, also registered in Abu Dhabi.
Elite Agro is already present on the Serbian market through the company Yugo Elite Agro, which owns Zobnatica from Backa Topola. The Yugo Elite, through Zobnatica, cultivates 1,600 acres of land.
Al Ravafed, among other things, has obtained about the use of about 3,500 hectares of land in Karadjordjevo, for which, under the contract, it is obliged to pay to the Ministry of Defense 20 percent of the annual profits made on those parcels.
According to an Insider survey, this arrangement was made despite opposition from the Ministry of Defense's expert services, who warned that it was inadmissible that land use compensation would depend on investors' profits. At the end of 2013, the Ministry of Defense's Material Resources Sector gave the opinion that it was necessary to establish a fixed remuneration, because if Al Ravafed did not make the planned profit and "our income would be zero".
Irrigation systems invested 2.5 times less than contracted
Despite officials' announcement that the country's business arrangement with the UAE's Al Ravafed would lead to a flourishing Serbian agrarian, hiring local farmers and many times higher yields, it turned out that Al Ravafed Serbia was operating at a loss, owed to suppliers, late in fulfilling contractual obligations.
According to the latest financial statement, the company has operated in the course of 2018 with a loss of approximately two million euros and debts of more than 50 million euros.
Although under the contract, Al Ravafed was required to complete an investment in irrigation systems by 2017, that investment is not yet complete, as can also be seen from the notes of the financial report for the past year.
While the contract stipulates that an Arab investor must invest around € 19 million in irrigation systems, financial statement data show that Al Ravafed has spent two and a half times less than the agreed amount so far, or only € 7.5 million.