Zagreb Gas Distribution System to Go Bankrupt Due to Russian President Putin?

By 5 June 2018

A decision made by Vladimir Putin in 2009 could now lead to the bankruptcy of the local gas distribution system in Croatia’s capital.

Remember gas reductions in January 2009? Due to the tensions between Ukraine and Russia and allegations about gas theft, then Russian Prime Minister Vladimir Putin made a decision about cessation of distribution of gas through Ukraine. In Croatia, this brought a temporary interruption of gas supply for large, industrial consumers, reports on June 5, 2018.

Tomorrow, after eight years, the Commercial Court in Zagreb should finally issue a verdict in a lawsuit in which the Munja battery factory seeks 42.5 million kuna in compensation from the Zagreb local gas company because it stopped the distribution of gas and allegedly caused damage to the plant.

The case is interesting because the city gas company claims, based on expert testimony and documents, that the damage was faked and that it did not happen at all because of the interruption in the gas supply. However, even if the outage was a factor, the gas company says that it should not be held responsible because it just implemented the government's instructions and did inform Munja in advance.

Although more than 400 large consumers were blocked from receiving the gas at the time, Munja is the only one who has decided to file a lawsuit. It is owned by Ivan Miloloža, a prominent member of the Croatian Employers' Association, who initially also sued the state for issuing the instructions in the first place, but later dropped the case.

“They demand 42.5 million kuna, which would rise to about 100 million kuna with interest. The possible loss could push us towards the bankruptcy,” say the sources from the gas company.

In its request for compensation, Munja says that, after the gas supply was cut off, it found that water had gotten frozen in pipes, as well as acid in the batteries, while the lead in boilers solidified, which damaged pipes, boilers, batteries, production machines and various equipment, even chimneys and fences.

The Croatia Osiguranje insurance company paid about 10 million kuna in damages to Munja, so now it has launched a separate lawsuit also demanding compensation from the gas company.

While Munja says that the damage has been established and refers to expert witnesses, the lawyers for the gas company claim precisely the opposite: that a direct connection between the gas cut-off and the damage cannot be established. This has allegedly also been proven by experts from the Faculty of Mechanical Engineering and Naval Architecture. In their submission to the court, the lawyers directly say that it is all a lie and that the alleged repairs of the machines had been carried out by the companies associated with Miloloža, which destroyed all the evidence which could lead to the establishment of the cause.

“They have submitted invoices that are not related to the gas problem but include fictitious services and expenditures that are part of regular maintenance of the machines. All the circumstances raise suspicion that the alleged damages either did not occur or did not arise as a result of the suspension in gas supply,” say the gas company’s lawyers.

Whatever the verdict, it is certain that the losing party will file an appeal.

Translated from (reported by Ivan Pandžić).