Will Government Nationalize INA?

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The incoming government will have to solve the problem of relations with MOL.

The recent transport of relatively insignificant 600 tons of crude oil to the INA refinery in Rijeka is just an indication of more serious problems which the incoming government will have to deal with. One of the two main problems is related to disputes between INA’s main shareholders, the government and Hungarian MOL, which have escalated with two lawsuits which have been filed at arbitration courts, while the other main problem is operational management of the company, reports Jutarnji List on October 12, 2016.

The main front in the battle is Sisak, where MOL clearly wants to close down INA’s refinery, allegedly due to its unprofitability. On the other hand, possible investments in complete modernization of a refinery in Rijeka are also not entirely certain, which means that in the near future Croatia could lose both of its oil refineries.

Therefore, the new government has a difficult task ahead. Legal outcome of arbitration procedures is uncertain and it is probable that for both sides it would be better to come to some sort of agreement. The problem is that the idea of abandoning arbitration proceedings against MOL has been permanently politically poisoned by non-transparent relations between former HDZ president Tomislav Karamarko and MOL, which makes it almost impossible for any government, especially one led by HDZ, to accept any kind of settlement. After all, what Croatian government could afford to legalize the way MOL has been managing INA, given the track record of the Hungarians, or the fact that MOL is still led by a man who is on the run from Croatian justice system? On the other hand, MOL will certainly not give up its management rights which it currently has in INA.

The third possible solution is a quiet divorce between shareholders and search for a new strategic partner for INA. The problem is that INA, in its current state and with the market which it covers, is not attractive for major Western companies. Russians are interested, but their companies are unacceptable for political reasons.

And then there is the fourth option – the government could buy MOL’s shares. SDP did talk about it during the election campaign, but it will spend the next four years in opposition. On the other hand, HDZ has been rather vague about its intentions. In the absence of good solutions, along with the pressure from MOST, which build a major part of its political support precisely on the idea of opposing MOL, we should not be surprised if the nationalization of INA soon finds its way to the government’s agenda.


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