EC Allegedly Agrees with Interim Financing of Uljanik Shipyard

Total Croatia News

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ZAGREB, February 19, 2019 – The European Commission has nothing against the government and the strategic partner participating 50:50 in the interim financing of the Uljanik shipbuilding group until a restructuring programme is drawn up, Croatian Economy Minister Darko Horvat said on Monday.

“The European Commission does not explicitly ban interim financing but still insists that it be 50:50. This interim financing would be part of the restructuring programme and will be part of the total volume once it is adopted,” Horvat told Croatian reporters after a meeting at the Commission.

He estimates that 600 million kuna is necessary to revive the Uljanik and 3. Maj docks, which would include unfreezing their bank accounts, completing the ships under construction, and the payment of three overdue salaries.

About 107 million kuna is necessary to unfreeze 3. Maj’s account, 65-68 million kuna to unfreeze Uljanik’s account, 100 million kuna for overdue salaries, and 300 million kuna for completing four ships.

Horvat said a decision on how to find the 600 million kuna would be adopted in the next few days.

On Sunday, a meeting was held with Luxembourg’s JDN group, which commissioned one of the ships for which the government issued a 124 million guarantee. At the end of January, the group cancelled its contract with Uljanik because the dock could not deliver the ship as agreed. About 30 million euro is necessary to finish the ship. If finished, the state guarantee would not be enforced.

Horvat said a memorandum of understanding would be hammered out over the next three weeks with JDN. Under the memorandum, JDN would provide 8 million euro, while the Uljanik Group, its strategic partner and the government would put up 22 million euro.

He said that after last Sunday’s meeting, JDN decided the ship would stay at the Uljanik dock in Pula to be finished.

Asked if the government could take part in the financing without the European Commission’s permission, he said they were told at today’s meeting that “any damage reduction would be considered a positive effort made by the Croatian government”. “We have no other option but to come up with a financing model together with the client,” he added.

“We realise now that the European Commission will not have a rigorous position, that Croatia, if it can, has the right to reduce the damage to the national budget. We know how much it would be if we did nothing. It’s very pragmatic and justified businesswise to invest 120 or 130 million kuna to salvage 970 million kuna,” said Horvat.

As for an overhaul programme, which Uljanik’s management must come up with together with the strategic partner, he said it would be ready in about a month, after which the Commission would need three to five months to analyse it.

Asked how long the government would finance shipyards with taxpayers’ money, Horvat said these were old projects for which guarantees were not given by the incumbent government.

“This government has said it very clearly – enough. These aren’t new projects, this is dealing with the situation that was encountered and problems left by some past governments. As a responsible government, we must pay all the guarantees given by past governments,” he added.

The meeting in Brussels was also attended by Tomislav Debeljak, owner of the Brodosplit dock, which Uljanik’s management selected as the group’s strategic partner.

More news about Uljanik can be found in the Business section.


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