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The Croatian government has intensified its plans to take full control over oil group INA, setting up a model to buy out Hungarian state-owned MOL’s 49-percent share in the company whose sale has been a major political scandal.
MOL, one of the largest foreign investors in Croatia, became the largest shareholder in INA in October 2008, and has invested over US$1.49 billion (€1.4 billion) in the Croatian oil company since 2003. The Croatian Government holds a 45 percent stake in INA.
The sale of the 49-percent stake in INA has been the undoing of governments and the background to a debilitating corruption scandal. The scandal erupted when it was revealed that the wife of the then-deputy prime minister had received some US$60,000 as a ‘consulting fee’ from a lobbyist working for MOL.
In June 2016, the issue led to the collapse of the government, with a no-confidence vote that ousted then-Prime Minister Tihomir Oreskovic, who claimed he was targeted precisely because he had tried to resolve the ongoing dispute over managing rights between INA and MOL.
Croatia now wants more influence in decision-making at INA, while MOL is fighting to retain the management rights that come with a larger share in the company.
This special committee formed on Thursday to create a model for buying the INA shares back is chaired by Prime Minister Andrej Plenkovic.
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INA's current market capitalization would value MOL's stake at about 2 billion euros (US$2.13 billion), but it’s a price tag that will be hard for the Croatian government to meet considering the hefty public debt.
“I call upon those who believe they have a good model for this operation to present it publicly,” said Plenkovic. “We will consider all the options and choose the most efficient one, taking into account that we do not want to raise the public debt,” he said, adding that he expects to hold talks with MOL next week.
Croatia is in the midst of a strenuous battle with public debt, which sits at 85 percent of gross domestic product (GDP). The government was considering an initial public offering to help to fund an INA buyout by selling 25 percent of state power board HEP.
“I see it [the HEP sale] as a suitable model for buying out INA shares, but as a responsible premier I want to hear other ideas coming from experts in the energy and financial sector, including those from other political parties,” Plenkovic was quoted as saying Thursday.
By Damir Kaletovic for Oilprice.com
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Damir Kaletovic is a veteran investigative journalist covering Europe and the Middle East, and a senior consultant for Divergente Research.