If MOL agrees to sell its share, the government should adopt a strategy what to do with the company.
According to unofficial information, the government will as early as this week announce a model how to buy back MOL’s share of INA, provided that the Hungarian company agrees to it. The government does not want to talk about what model it would use, but sources say that the Saturday’s decision to buy back the shares was not made overnight and that it was under consideration for some time, reports Večernji List on December 27, 2016.
The decision is supported by major political parties, and also by many experts, who point out that such a decision should have been made much earlier, because MOL’s policies towards INA demonstrated that there was no reason to believe in the further development of the Croatian national oil company in the future, which was also confirmed in the recently published strategy of MOL. INA is in a bad shape, its oil and gas reserves have been reduced, there was no investment in refineries, while the number of employees has been reduced by a quarter.
However, now when the decision has been made, it is necessary to devise a good strategy what to do with the company in the future. The government reportedly has a plan to establish an energy holding company which would include INA, Croatian Electric Company (HEP) and Petrochemical Company (Petrokemija). However, it would have to be led by professional management, and not by politically appointed representatives.
According to reports, the government has already started working on an energy strategy. Other countries also have energy holding companies, but they are not completely owned by the state. But, the first issue is where to find the money to buy back INA. “All decisions will be carefully prepared and announced, and the final model will not affect the public debt levels”, said a source from the government.
The government has the option of borrowing the funds and using INA shares as a collateral. There is enough money on the market, and some discussions with the banks have already been conducted. In addition to banks, foreign investment funds and Croatian pension funds also have money, but they have still not been contacted. One of the models is to finance the purchase of MOL’s shares with an IPO of HEP, but given the fact that it would take a lot of time, it is unlikely that the government will decide for that option.
When it comes to the price which Croatia would have to pay for MOL’s share of INA, oil expert Jasminko Umićević says that, with regards to energy companies, the most important factor is the value of oil and gas reserves, which in INA’s case have decreased by about 40 percent since MOL entered the company. INA’s refineries are also no longer particularly valuable. Another oil expert Davor Štern estimates that the value of MOL’s share could be between 700 and 800 million euros.
