Former Finance Minister Criticizes Government’s Plans for INA

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Boris Lalovac does not believe the government should buy back MOL’s share in INA.

Former Finance Minister Boris Lalovac (SDP) said on Wednesday that he disagreed with the announcement that the government will purchase MOL’s share in INA, because there is no clear plan where the money will be found and what is precisely the government’s strategy, reports N1 on December 28, 2016.

“INA’s refineries have not been modernized and they will not create additional value. MOL turned INA into a trading company and the question is why we would buy such a company. If we want to recapitalize it, and we have to, we cannot do it without the European Commission, because it would be considered to be state aid”, warned Lalovac.

In addition, there is no clear plan how the government will buy MOL’s share, where it will find the money, what is the general strategy, whether INA will be owned just by the state or together with a strategic partner. “We can forget about pension funds, they have legal limits how they can invest their money, and no one wants for their retirement funds to be managed in this way. Croatia does not have the money for it in the budget, and if you take out a loan, the question is how you will return the money. We should be reasonable and realistically see what the future is. Emotions are something else”, he said.

At the same time, Lalovac warned that there was no more cheap money and that the price of loans would grow, while the transaction with INA shares cannot be done in a few days, but in a year or two. He also wondered how the state will provide extra money for recapitalization and what will happen if the European Commission does not approve it. It could happen that the state would buy the company at a high price, realize it cannot recapitalize it, and finally sell it at a low price.

We should see with MOL what their plans are, because hasty decisions just go in favour of MOL. “The announcement of the purchase itself goes in favour of MOL, since the price of shares is rising. They are in a good position and they can blackmail the government and increase premium on the price”, added Lalovac.

He believes that the whole story about the purchase of shares looks like a “counter-information operation”, released to the public because of the news that Croatia had lost arbitration proceedings. The majority of citizens are still emotionally attached to INA, although Croatia has not been managing it for the last five to six years.

Lalovac was asked if anyone could force MOL to sell its shares. He recalled the transaction which occurred earlier, when the OTP Bank entered the Croatian market. “It came after MOL bought INA, and now it has about 11 percent of the Croatian banking market. This means that OTP is seriously planning to stay in the Croatian market, and for this they need INA. MOL is the one which will ultimately decide what will happen, no matter what the politicians are trying to say”, concluded Lalovac.


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