Could a Croatian Shipyard Build Jadrolinija’s New Fleet?

Lauren Simmonds

Jadrolinija’s fleet renewal action plan has been being mentioned for some time now, but nobody has really spoken about it in any particularly specific terms.

As Poslovni Dnevnik/Marija Brnic writes on the 8th of November, 2019, regardless of the fact that Jadrolinija is doing well and is liquid, successfully servicing Croatian tourism and “carrying” the season on its proverbial shoulders, Minister of Maritime Affairs, Transport and Infrastructure, Oleg Butkovic, has stated that this national shipping company has a worryingly old fleet and estimates that “the acquisition of a new fleet should have gone better” than it did.

He emphasised this in an interview with Croatian Radio over recent days. He is at the same time critical of the current way of ”filling” the fleet, as it primarily involves procuring used ships on the world market. He placed emphasis on the fact that these vessels should be new, and on top of that, they could be made right here, in a Croatian shipyard.

The minister said that the company has an action plan for the procurement of new ships, and announced the contracting of the first ships early next year. As stated, Jadrolinija’s fleet renewal action plan has been being mentioned for some time, but no one has yet spoken about it in any real specific terms. This remains the case.

At the request from Poslovni Dnevnik to the company headquarters in Rijeka, they confirm that a procurement plan for the next three years has indeed been prepared, and that the strategic goal is to renew the fleet. What the actual value of the planned investment is, and what the dynamics of the planned implementation are, were not revealed by Jadrolinija. They say the plan is to buy used ships, but also to start building new ones.

”Besides the construction itself, it all involves the preparation of different types of documentation and projects. Some of the investment value ​​will depend on multiple aspects, most notably the current supply in the used boat market when it comes to buying, as well as the state of the shipbuilding market when it comes to building new vessels for the Jadrolinija fleet,” a short clarification from Jadrolinija stated.

The most recent acquisitions of more than a year ago were two new builds contracted for around 70 million kuna plus VAT per ship, and two used ships, each coming with price tags of 63 million kuna plus VAT. About twenty days ago, through a negotiated procedure which went without public announcement, the company procured a passenger ship worth 63 million kuna plus VAT from a Greek seller.

The implementation of this procedure is also interesting due to the fact that in the spring, when the construction of new ships for Jadrolinija was mentioned as one of the ”saving solutions” for the ailing shipyards in Pula and Rijeka (Uljanik and 3 Maj), the obligation to conduct public procurement turned out to be an obstacle.

Economy Minister Darko Horvat, as it was said at the time, had submitted a request to the European Commission to try to negotiate a way to exclude these procedures, but until yesterday there was no feedback on the results of these possible negotiations.

In the meantime, the situation is such that Uljanik, as a now bankrupt company, would not be able to apply for this job. It is unlikely, interlocutors say, that even 3 Maj (without major support from the government and the approval of the Commission) would be able to compete for these works. Brodosplit and Dalmont from Kraljevica and possibly Tehnomont from Pula, could compete with local shipbuilders for the kind of ships Jadrolinija needs.

However, more detailed information on the sizes and strength of the ships they intend to build, which would certainly like to be heard by local shipbuilders, isn’t something Jadrolinija is willing to publicly provide as yet.

”The company’s strategy is to ensure that Jadrolinija has faster, younger, bigger and more comfortable ships on the most important lines than it has today, but also to ensure that the vessels are accessible to every island in the most comfortable and efficient way. In addition to fast ships, our goal is to rebuild the fleet in the ferry segment for local ”short lines”, but also to replace the oldest ships in the fleet,” they say from Jadrolinija, which successfully transports more than 12 million passengers and 3 million vehicles per year.

Jadrolinija will finance the new passenger ships, which are also a prerequisite for the future ability to duly fulfill the concession contracts, partly from its own funds and partly from loans it has taken out. However, the cost of modernisation still remains unknown.

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