Government Losing Support for HEP Privatization?

By , 11 Jan 2017, 12:44 PM Business
Government Losing Support for HEP Privatization? Source: Government of Croatia

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While almost everybody agrees with government’s plans to buy back MOL’s share of INA, the plan that the buyback should be financed by selling 25 percent of HEP is losing support.

Prime Minister and HDZ president Andrej Plenković has recently received support of presidency of his party to return Croatian oil company INA to full state ownership, but he has not received support (certainly not unanimous) of the party to fund the transaction by selling a quarter of state-owned electrical company HEP, reports Večernj List on January 11, 2017.

Although Deputy Prime Minister and Economy Minister Martina Dalić presented to the party presidency the idea to launch IPO of HEP in order to buy INA (even though the price of both shares is still not known), HDZ presidency did not vote on the decision. So there is no political decision on the subject, and several sources claim that they are several members of the party presidency who supported the idea to return INA to majority state ownership, but were against the idea to fund the buyback by selling HEP. Two party presidency members who expressed the most negative views about the government plans are Member of European Parliament Ivana Maletić and former Entrepreneurship Minister Darko Horvat.

Although Prime Minister Plenković said after the session of the party presidency that the best way to purchase INA was to sell HEP, adding that the transaction would be completed by the end of the year, it is obvious that there is more and more resistance within HDZ to the idea that HEP should be partially privatized. Also, HDZ’s coalition partner MOST also claims that IPO of HEP is just one of possible models.

There is no doubt that serious disagreements between Plenković and MOST leader Petrov have appeared due to INA and HEP, which is evidenced by the fact that on Monday evening Plenković claimed that the sale of HEP was the most appropriate model, while Petrov just a few hours earlier said that they were still trying to find the best model. Petrov also proposed that the Constitution should be amended in order to protect strategically important state-owned companies, which Plenković firmly rejected.

Horvat said that HEP should not be sold in order to buy INA, and that INA could be bought by using retained earnings of HEP and selling state property. On the other hand, Maletić apparently believes that INA should find a strategic partner which would buy MOL’s shares, and that the money from possible partial privatization of HEP should be used for the development of the company itself.

While some members of the HDZ presidency were surprised that Plenković said he had received support for the HEP-INA model, in reality Plenković just said that he had received the support of HDZ for the return of INA, but he did not say anything about HEP, which is another proof that HEP’s privatization is in question.

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