Friday, 8 November 2019

Could a Croatian Shipyard Build Jadrolinija's New Fleet?

Jadrolinija's fleet renewal action plan has been being mentioned for some time now, but nobody has really spoken about it in any particularly specific terms.

As Poslovni Dnevnik/Marija Brnic writes on the 8th of November, 2019, regardless of the fact that Jadrolinija is doing well and is liquid, successfully servicing Croatian tourism and "carrying" the season on its proverbial shoulders, Minister of Maritime Affairs, Transport and Infrastructure, Oleg Butkovic, has stated that this national shipping company has a worryingly old fleet and estimates that "the acquisition of a new fleet should have gone better'' than it did.

He emphasised this in an interview with Croatian Radio over recent days. He is at the same time critical of the current way of ''filling'' the fleet, as it primarily involves procuring used ships on the world market. He placed emphasis on the fact that these vessels should be new, and on top of that, they could be made right here, in a Croatian shipyard.

The minister said that the company has an action plan for the procurement of new ships, and announced the contracting of the first ships early next year. As stated, Jadrolinija's fleet renewal action plan has been being mentioned for some time, but no one has yet spoken about it in any real specific terms. This remains the case.

At the request from Poslovni Dnevnik to the company headquarters in Rijeka, they confirm that a procurement plan for the next three years has indeed been prepared, and that the strategic goal is to renew the fleet. What the actual value of the planned investment is, and what the dynamics of the planned implementation are, were not revealed by Jadrolinija. They say the plan is to buy used ships, but also to start building new ones.

''Besides the construction itself, it all involves the preparation of different types of documentation and projects. Some of the investment value ​​will depend on multiple aspects, most notably the current supply in the used boat market when it comes to buying, as well as the state of the shipbuilding market when it comes to building new vessels for the Jadrolinija fleet,'' a short clarification from Jadrolinija stated.

The most recent acquisitions of more than a year ago were two new builds contracted for around 70 million kuna plus VAT per ship, and two used ships, each coming with price tags of 63 million kuna plus VAT. About twenty days ago, through a negotiated procedure which went without public announcement, the company procured a passenger ship worth 63 million kuna plus VAT from a Greek seller.

The implementation of this procedure is also interesting due to the fact that in the spring, when the construction of new ships for Jadrolinija was mentioned as one of the ''saving solutions'' for the ailing shipyards in Pula and Rijeka (Uljanik and 3 Maj), the obligation to conduct public procurement turned out to be an obstacle.

Economy Minister Darko Horvat, as it was said at the time, had submitted a request to the European Commission to try to negotiate a way to exclude these procedures, but until yesterday there was no feedback on the results of these possible negotiations.

In the meantime, the situation is such that Uljanik, as a now bankrupt company, would not be able to apply for this job. It is unlikely, interlocutors say, that even 3 Maj (without major support from the government and the approval of the Commission) would be able to compete for these works. Brodosplit and Dalmont from Kraljevica and possibly Tehnomont from Pula, could compete with local shipbuilders for the kind of ships Jadrolinija needs.

However, more detailed information on the sizes and strength of the ships they intend to build, which would certainly like to be heard by local shipbuilders, isn't something Jadrolinija is willing to publicly provide as yet.

''The company's strategy is to ensure that Jadrolinija has faster, younger, bigger and more comfortable ships on the most important lines than it has today, but also to ensure that the vessels are accessible to every island in the most comfortable and efficient way. In addition to fast ships, our goal is to rebuild the fleet in the ferry segment for local ''short lines'', but also to replace the oldest ships in the fleet,'' they say from Jadrolinija, which successfully transports more than 12 million passengers and 3 million vehicles per year.

Jadrolinija will finance the new passenger ships, which are also a prerequisite for the future ability to duly fulfill the concession contracts, partly from its own funds and partly from loans it has taken out. However, the cost of modernisation still remains unknown.

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Sunday, 19 May 2019

Brodosplit Delivers Polar Cruiser, Dutch Conclude Contract for New Vessel

As Novac/Drazen Grubisic writes on the 18th of May, 2019, Split's Brodosplit shipyard will build another new ship for its end buyer, Oceanwide Expeditions. The vessel will be designed specifically for polar areas with a delivery obligation set at October 2021. This information was recently confirmed to the Cruise Industry News portal in a short conversation with Wijnand van Gessel, the owner of the aforementioned Dutch company.

"We've had a good experience with the shipyard in Split, working with them as a partner," stressed Van Gessel for Slobodna Dalmacija.

The new ship will be Hondius's sister, which will be taken over next week by the company, and it will have the name Janssonius, named after a famous Dutch cartographer from the seventeeth century, Johannes Janssonius.

"Hondius is of a very good quality and was built at a decent price. The shipyard stuck to its delivery times, which is the most important thing in this industry," Van Gessel stated, announcing that Hondius will leave Split next week and go to the Netherlands until the cruise begins in June.

Hondius has a maximum capacity of 196 guests, or 174 in a double room, which is considered by the Dutch to be an optimal number. Among the special features are larger cabins, some with balconies, and a large observation lounge with large windows.

In Brodosplit, the vessel was known as Newbuild (Novogradnja) 484 and was presented as a symbol of Brodosplit's restructuring and a step up in both organisational and technological aspects. It was built with new software, tools and technology, especially so in regard to part of the equipment, as almost 80-85 percent of the ship had already been equipped during its construction, resulting in better quality, shorter deadlines and lower construction costs.

The ship was built according to a new financing model, for its own fleet and for long-term lease.

This new polar cruise ship is the first ship in the world to be built in the LR PC6 class, which will meet the latest Lloyd Registry requirements for Polar Class 6 vessels. It is 107.6 metres long, 17.6 metres wide and its main engine boasts a total output of 4260 kW. It will be able to accommodate nearly 200 passengers accommodated in 85 cabins, which will be taken care of by 70 crew members.

The ship's guests will soon be offered a high hotel standard, as well as various cabin categories, from two-room to four-bedroom, as well as spacious suites, where they will be provided with multiple secured systems to provide a safe and comfortable stay.

The design and all technical solutions are all the work of Brodosplit's talented designers.

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Click here for the original article by Drazen Grubisic for Novac/Jutarnji

Thursday, 2 May 2019

Chinese Interested in Croatian Shipyards, With One Condition...

The Chinese interest in Croatian projects is continually growing, or so it seems, and there is now room to dare when it comes to the potential Chinese rescue of Uljanik and 3 Maj at the eleventh hour.

As Marija Brnic/Poslovni Dnevnik writes on the 2nd of May, 2019, the Chinese CSIC representatives currently visiting Croatia to see the state of Croatia's ailing Uljanik (Pula) and 3 Maj (Rijeka) shipyards have expressed clear interested in new projects with Croatia's shipyards, but only if the Croatian state covers the cost of what has already failed, there have also been mentions of the diversification of production, but they don't want guarantees.

If there is an agreement between the Croatian Government and the Chinese CSIC about reviving Uljanik and 3 Maj, it will be done so with regard to a combination of the models which were discussed with the previous two strategic partners, Darko Končar and Tomislav Debeljak.

According to the explanation given by Minister of Economy Darko Horvat after the final talks and the three-day visit of CSIC's representatives, the Chinese are indeed interested in starting with new projects, while the state should cover the cost of old, failed projects, meaning it will need to take place on a clean slate. It's also more than likely that the sites of today's Croatian shipyards will see other projects developed there, that is to say, the diversification of activities will occur.

"If they don't see the possibility of continuity of shipbuilding at this time, we want other industries to take place here, and not just those exclusively involved in shipbuilding," Minister Horvat stated. Therefore, unlike Danko Končar's initial idea, Chinese diversification would not be a real-estate business, but would involve some sort of other, new production aside from shipbuilding. And the clean starting position the Chinese have indicated that they want, which is similar to what Tomislav Debeljak sought but is unlike his idea, almost certainly means declaring the bankruptcy of the two shipyards.

"We don't expect them to finance failed attempts to build ships that haven't been completed. The starting position means new projects,'' stated Horvat in reference to the wishes of the Chinese.

The continuation of construction in Pula and Rijeka in partnership with CSIC would in any case have a completely different financing philosophy. The Chinese say, after the talks, that they are completely astonished at the reliance of state guarantees for shipbuilding. To repeat what Finance Minister Zdravko Marić stated recently, it's much too early to talk about exactly what changes might occur in this context following their entry into Uljanik and 3 Maj. Over the next few weeks, CSIC's senior people will analyse the collected information and determine whether or not, and indeed in what form they're interested in entering into the structures of Croatia's enfeebled shipyards.

At this moment in time, Darko Horvat has merely announced that any form of Chinese entry would involve a new way of financing, with different sources, a different way of drafting project documentation, and would involve no state guarantees. After the final talks at Zagreb Airport, Horvat didn't provide any more specific information, nor the deadlines within which he expected to receive feedback from the Chinese, but he did appear to try to leave the impression that he was optimistic about the whole situation. The Chinese representatives themselves, however, didn't give any media statements.

Make sure to follow our dedicated business page for more information on Chinese-Croatian business relations, Chinese projects and investments in Croatia, doing business, working and investing in Croatia and much more.


Click here for the original article by Marija Brnic for Poslovni Dnevnik

Tuesday, 30 April 2019

Is Chinese Rescue of Croatia's Burdened Shipyards Inevitable?

If the China Shipbuilding Industry Corporation (CSIC) gives up, it will be difficult to find another candidate for the ailing Croatian shipyards Uljanik (Pula) and 3 Maj (Rijeka) which is in the shipbuilding industry and is also a strong and respected player. Could a Chinese investment be on the cards?

As Poslovni Dnevnik/Suzana Varosanec writes on the 29th of April, 2019, after yesterday's meeting with Prime Minister Andrey Plenkovic and his government ministers, Hu Wenming, Chairman of the Board of China's largest shipbuilding company China Shipbuilding Industry Corporation (CSIC) confirmed that they are indeed moving towards serious consideration regarding the enfeebled Uljanik and 3 Maj shipyards, which have undergone months of turmoil.

''The prime minister gave us a very serious and detailed presentation of the whole situation,'' Wenming said, adding that they saw that these two shipyards were a very important topic for the Croatian public. "Not only did we bring people from our company - they're in charge of planning, we've already called on lawyers and investment banks, so we will outline what their views on the matter are after visiting the shipyards," Wenming stated.

With that, a key ''tour'' begins, because if CSIC ends up actually not being interested in putting its money into the situation, it will be a hugely difficult task to find another candidate in shipbuilding, which is a big player and has an interest in joining the European shipbuilding industry. Otherwise, this would be the first case of a Chinese takeover of a foreign shipbuilding company, so it is speculated that extensive calculations are being made, and of course whether they even want to have their first European shipyard is being considered. The CSIC is looking at the situation deeply and from all possible angles.

This event all began with the recent announcement of the arrival of the CSIC in Croatia with the aim of visiting the troubled shipyards in Pula and Rijeka. As was then announced, the CSIC chairman contacted Chinese Prime Minister Li Keqiang during his stay in the Republic of Croatia where he attended the summit "16 + 1" and after talking with the Croatian PM about the dire state of Croatian shipbuilding.

As things currently stand, the general belief is that the Chinese decision won't take long to come - it will be a simple and express "no" or "yes", while the third option, more specifically an unconditional "yes", will likely need to be waited for a little longer.

What the outcome of the potential Chinese presence in the Croatian shipbuilding industry is anyone's guess, and while some remain very suspicious of Chinese motives in Croatia in general, despite them already working on the long-awaited Pelješac bridge down in southern Dalmatia, whatever comes of their potential entry has got to be better than the current situation, especially for Uljanik.

Make sure to follow our dedicated business page for more information on Chinese-Croatian business relations, Chinese investments and projects in Croatia, doing business and investing in Croatia and much more.


Click here for the original article by Suzana Varosanec for Poslovni Dnevnik

Friday, 26 April 2019

Darko Horvat Discusses Prospect of Chinese Investment in Uljanik

Next week, a delegation of eighteen people from the largest Chinese shipyard, the China Shipbuilding Industry Corporation, are set to visit Croatia's ailing Uljanik.

As Poslovni Dnevnik writes on the 26th of April, 2019, this is the second day is the National Economy and Entrepreneurship Consulting conference, organised by the Ministry of Economy and Entrepreneurship in Vodice. Economy Minister Darko Horvat told N1 televizija that the Republic of Croatia ''wants to become a country of investment and development, even if it isn't there yet".

"What I do dare to say, and with full certainty, is that Croatia has an innovative network, we have to make every effort to create positive trends, but we can't expect a big boom in just one or two intensive years, but the trends are changing. What makes me happy is that our own accumulation which has been earned by entrepreneurs is slowly returning back into circulation, that this money is no longer sitting in banks, in accounts. This gives us the encouragement that we'll gain that momentum this year, too,'' Darko Horvat stated.

How much have the problems with Uljanik slowed the economy down?

"They stopped any acceleration. Given the fact that so far, we've spent nearly three and a half billion kuna on guarantees,'' Horvat said.

The Dredging and Maritime Management company, owned by the Jan De Nul Group, requires Uljanik to refund all advance payments plus interest on a dredger which is being built in the Pula shipyard, whereby a refund of part of the advance has been secured by state guarantees. Such an outcome could cost the Croatian state almost one billion kuna.

"The contracted period is seven days, but I'm not sure that will happen in that time because Uljanik has no liquid funds and we'll have to continue talks and negotiations with Jan De Nul. And Mr. De Nul is aware that these talks end up going nowhere if he decides on the forcible charging of advances, he's aware that the shipyard in Pula isn't ready to complete that vessel. 

If the Chinese do decide to invest in Uljanik, then there are two variants, Horvat said: "to enter as a strategic partner, or to buy one shipyard, and the other, and become the 100 percent owners."

The court decision in Pazin has, for the third time, postponed the bankruptcy hearing for Uljanik. 

"Regardless of the court's decision, we'll continue talking with the Chinese," Horvat said.

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