Prime Minister Plenković is in talks with Hungarian Prime Minister Orban about buyback of MOL’s share in INA.
The Christmas Eve announcement by Prime Minister Plenković that the government would buy back MOL’s share in the Croatian oil company INA is the most intriguing decision made by the government in its first 100 days in office. It is known that Plenković supports the idea that the purchase of INA shares should be financed by selling one quarter of Croatian Electrical Company (HEP) and that the government had established a committee which will negotiate with MOL about the possible purchase of INA, reports Večernji List on January 28, 2017.
According to unofficial sources, the decision to purchase INA was made by the Prime Minister prior to the decision by the Arbitration Court of the United Nations Commission on International Trade Law (UNCITRAL) in Geneva that Croatia had lost arbitration proceeding started against MOL in November 2013. It is therefore likely that the Prime Minister had information that the Croatian side would lose the arbitration even before it was officially announced.
Prime Minister Plenković is already in contract about the purchase of INA with Viktor Orban, the Hungarian Prime Minister. “You know who calls the shots in Hungary”, said a government source. After MOL CEO Zsolt Hernadi said last year in an interview that MOL was ready to sell INA if it failed to come to an agreement with the Croatian government, the Prime Minister allegedly personally checked whether MOL was really ready to sell it. A few days ago, Plenkovic confirmed that he would not even start talking about the buyback of INA if he did not have clear confirmation that MOL was willing to sell its 48.09 percent stake in INA.
The major unanswered question is the price which Croatia would have to pay for MOL’s share. The price issue is the most delicate part of the whole arrangement, since it is subject to a number of regulatory and business restrictions. In order to determine what the actual value of INA is, the government will in due course announce the public competition to choose consultants who will analyze and determine how much is MOL’s stake in INA worth.
Although the public is suspicious about Prime Minister’s ideas about the return of INA to Croatian ownership, the impression is that people around him are still determined to implement one of the most complex business operations in Croatian history, which would include the IPO of 25 percent of HEP in order to finance the buyback of INA. HDZ’s coalition partner MOST supports the return of INA to full Croatian ownership. However, they do not agree with the partial privatization of HEP, unless it is accompanied by amendments to the Constitution which would ban further privatization of that and all other strategically important companies.
