Chinese investors want to export goods to Western Europe through Rijeka

- Chinese investors showed a lot of interest in projects in Croatia and it is up to us to decide what we want and how - revealed an unnamed Government official for the Croatian daily Jutarnji list after the Government delegation headed by PM Andrej Plenković returned from China.

Meetings between ranking representatives of Chinese companies and Croatian delegation were informative, with no deals finalized, but that was enough for Croatian PM and ministers Oleg Butković and Gabrijela Žalac to get an impression that Chinese investors really want to invest in Croatia.

The Pelješac Bridge

Our source revealed that representatives of the China Road and Bridge Corporation (CRBC) presented coming stages of construction of the Pelješac Bridge in detail, after which Plenković said he is convinced the Bridge will be constructed.

After the CRBC, the delegation attended meetings with representatives of Chinese national railway operator and ports. Some of the most important topics discussed were investments in modernization and construction of railways in Croatia as well as concessions to Chinese companies on freight ports in Croatia.

The focus in this case was on ports of Rijeka, Zadar and Ploče and ways for securing financing for construction of the stretch of railway between Zagreb and Rijeka. When it comes to Port of Rijeka, the most important question is filling capacities of the nearly finished freight terminal Zagrebačka obala. Potential partners from China were offered lease of parts of Zagrebačka obala so they can export their goods through Port of Rijeka to Western Europe. If Zagrebačka obala terminal could get additional 600,000 Twenty-Foot Equivalent Unit (TEU)s of goods, it would bring the Port to a new level considering that the Brajdica terminal already operates at this capacity. In that case, the railway would be needed and constructing it would be profitable.

Price of modernization and construction of the stretch between Zagreb and Rijeka stands at some EUR 1 billion, while price of modernization and construction of the stretch from Rijeka to Hungarian border is estimated at 3.6 billion. While Minister of Maritime Affairs, Traffic and Infrastructure Oleg Butković has been announcing the project for months as a large investment in infrastructure, HŽ Infrastruktura railway infrastructure maintenance company did not find time yesterday to provide us with basic information about the project.

The first stretch of railway between Zagreb and Rijeka is 45 kilometers long, between Hrvatski Leskovac and Karlovac. Cost of reconstruction of existing and construction of the second track is estimated at EUR 300 million, with 85% of funds secured through EU funds. According to available information, competition for implementation of the project should start next year. The project was presented to Chinese investors and they were instructed to respond to the competition.

Tenders

International competition must be launched for all projects co-financed through EU funds. Chinese investors were instructed to respond to tenders, which they have been doing thus far. They presented an offer for construction of railway stretches between Zabok and Zagreb as well as Vinkovci and Vukovar, but their offers were among the most expensive ones.

According to claims of our sources, there is room for Chinese direct investments in the stretch between Goljak and Skradnik, with value of the job estimated at EUR 650 million.

This is the most demanding stretch of the railway, including construction of the Karlovac bypass, reconstruction of existing stretch between Karlovac and Mostanje, construction of one-track railway between Mostanje and Belaj station, construction of new two-track railway up to Skradnik, connecting Skradnik and Josipdol, and reconstruction in Josipdol.

Construction of the stretch between Oštarije and Škrljevo 114 kilometers long will be very demanding. European Commission (EC) consultants deemed construction of this stretch unprofitable, which opened doors to Chinese investors. If they are to become involved, Croatian Government would have to adopt a decision on offering that stretch for concession.

In that scenario, Chinese companies would finance construction and construct the stretch of railway. This would directly increase Croatia's public debt, which is why the Government has to weigh the good against the bad when it comes to Chinese direct investments in railway infrastructure.

However, our sources pointed out that the most important thing is to secure goods for Port of Rijeka as this is required for construction of railways and a new freight port on the island of Krk.

Chinese goods would make Port of Rijeka strategically important in Europe

There is room for Chinese direct investments in the railway stretch between Goljak and Skradnik, with value of works estimated at EUR 650 million.