A rather strange plan to save Uljanik.
On Friday afternoon, the government sent to Brussels a proposal for the restructuring of the Uljanik shipyard, despite open warnings about it sent to the government by Finance Minister Zdravko Marić, reports Poslovni.hr on July 16, 2018.
The programme had to be sent by the end of this week, but it was concluded that no further changes will be made. Local authorities in Pula have obviously succeeded in convincing the government that the shipyard’s bankruptcy would be much more unfavourable for the state budget, with the activation of 600 million euro guarantees issued to Uljanik and a loss of about 4,000 jobs in Pula and Rijeka.
Instead, the programme submitted to the European Commission foresees that the state would immediately pay about 300 million euro for the repayment of loans and advances for ships whose construction will be cancelled. However, the total state’s involvement in Uljanik would be considerably larger, since it is also envisaged that the state will provide support to the shipyard’s future strategic partner, as well as take part in a construction project of a residential-business complex located at the current shipyard’s site.
One of the state’s conditions is that Danko Končar, who will be the shipyard’s strategic partner, recapitalizes Uljanik with 24 million euro. The recapitalization will follow after the European Commission and the government approve the restructuring programme.
Part of the whole deal is the construction of a large residential-business complex on four levels with about 300,000 square metres of useful area, which would be realized over the next three to seven years. This part of the project will have an estimated value of 600 million euro. The real estate would eventually be sold, and the state would receive about 200 million euro. As part of this complex plan, it is also envisaged that Uljanik will find about 30 million euro for the construction of a mega-yacht marina, which would be run by Končar.
Still, many open questions remain. It is unknown how many of the 17 ships which Uljanik currently has ordered will be cancelled and how many will be completed. It is also not clear how much in additional debts has been accumulated due to delays in construction of ships.
By submitting a programme with numerous open issues, the government is obviously buying time and letting the European Commission have the final say. However, even if the programme is green-lighted, it has surprisingly little to say about the future of shipbuilding itself. As far as the costs for the state are concerned, in case of bankruptcy, the budget would have to pay 600 million euro, while the implementation of this project will cost roughly 500 million euro, which is not a large difference.
Still, the local authorities support the second option, and they have obviously managed to make a deal with the government, as seen last week in parliament where local MPs, despite being in opposition, supported some of the government’s proposals.
Translated from Poslovni.hr.
