LNG Terminal Law Draft Hit with Criticism

By 24 May 2018

ZAGREB, May 24, 2018 - Opposition parties in the Croatian parliament led by the Social Democratic Party (SDP) on Thursday lashed out against the Liquefied Natural Gas Terminal Bill which should pave the way for the construction of an LNG terminal on the northern Adriatic island of Krk, describing it as "a rape of the constitution and democracy", a waste of taxpayers' money and "a second stage of the sale of Croatia."

Presenting the bill to parliament, the State Secretary at the Ministry of Environmental Protection Ivo Milatić said that the bill aimed to define the infrastructure of the LNG terminal, which he said was of strategic interest to Croatia, as well as to maintain the security of natural gas supply and regulate the award of concessions for the use of the maritime domain. He added that concession fees for the use of the maritime domain would be paid to local government.

The annual concession fee for the first 25 years would be 1.5 million kuna (200,000 euro) and the central government would waive a third of revenues from concession fees, as a result of which two-thirds, or one million kuna, would be paid to Omišalj Municipality and one third, or 500,000 kuna, to Primorje-Gorski Kotar County.

"Who are you working for? Why would I have to pay for more expensive gas so that your government could curry favour with the United States and buy their friendship? You pay it out of your own pocket," Branimir Bunjac of the opposition Živi Zid party said.

SDP leader Davor Bernardić said that his party was with the citizens of Omišalj Municipality and the entire Primorje-Gorski Kotar County and that it supported the construction of an on-shore LNG terminal because if was development based and environmentally acceptable and would create jobs.

Darko Horvat of the ruling Croatian Democratic Union (HDZ) noted that the LNG terminal project had been included among the strategic projects by the SDP government headed by Zoran Milanović.

Stjepan Curaj of the Croatian People's Party (HNS), a junior partner in the ruling coalition, said he was confident that the bill would put Croatia on Europe's energy map.

SDP MP Željko Jovanović called the bill "a rape of democracy, the constitution and law", while his party colleague Arsen Bauk announced a number of amendments to obstruct the passage of the bill, which is being discussed under fast-track procedure.

The SDP's Alen Prelec asked how many phases the project had and why the government insisted that a floating terminal was cheaper than an on-shore one if a study from 2016 showed the opposite. "An on-shore terminal is twice as expensive as a floating one, and there will be two phases: first there will be a floating terminal and then an on-shore one," Milatić replied.

Romana Jerković (SDP) asked in whose interest this was. "Is it in our strategic interest to invest in floating terminal infrastructure with taxpayers' money while someone else, namely foreigners, will make a profit? Should it not be in our strategic interest to invest in our own gas fields?" she asked. "This seems to be the second phase of the sale of Croatia," she added.

Milatić said that the terminal would be built by the LNG Croatia company, which is owned by the energy companies Plinacro and HEP. "As far as I know, these are Croatian public companies and we are not selling off anything here. This kind of project has to be put up for concession because it concerns the maritime domain and there is an established procedure for that," he responded.

Živi Zid MP Ivan Pernar warned that LNG terminal lease rates were record low throughout Europe, only 23 percent, and that the state would have to pay the difference in the cost of terminal maintenance, which he claimed would have an impact on gas prices for buyers. "Another problem is that Croatia will have to invest at least 275 million euro in the terminal. Instead of investing in a terminal which we do not need and which is unprofitable, we should invest this money in renewable energy sources," Pernar said.

Milatić rejected the predictions that the terminal would be insufficiently leased. "We estimate that it will operate at full capacity and that there will be no such problems. As for the investment, total investment is currently estimated at 250 million euro, of which 102 million has been secured from the EU. This means that we should ensure 150 million euro for this investment," he explained.

The opposition also criticised the ruling coalition for ignoring the local government of Omišalj, but the state secretary dismissed their criticisms saying that the local government was fully included in this process.

Meanwhile, local government leaders from Omišalj and Krk, along with SDP MP Željko Jovanović and Istrian Democratic Party (IDS) MP Tulio Demetlika, reiterated their opposition to the LNG Terminal Bill, saying the construction of a floating LNG terminal on Krk island would not benefit the local community and Croatia but other countries, especially Hungary.

Speaking at a press conference in the parliament building, Mirela Ahmetović from Omišalj said that if the bill was passed, her municipality would ask the Constitutional Court to assess whether it was in line with the constitution. "We will take all the necessary measures to halt this harmful project," she said.

Activists from the environmental group Green Action staged a protest outside the parliament building, saying that the bill was in the fast-track procedure to bypass the will of the local and regional community, shorten the procedure for the award of concessions and reduce the time for parliamentary and public debate on the issue. They said that this was unacceptable.

They called on the lawmakers to take into account the opinion of the local population and vote against the bill, claiming that it would no doubt have a significant impact on the environment. They said that the bill was not in public interest and that it was environmentally unacceptable and unprofitable.