After 17 years, State renounces special rights in Ina oil company

After 17 years, the Government is amending the Ina Privatization Act of 2002 and renouncing the special rights it has had in the national oil company thus far. The Ministry of Environment and Energy has announced the start of consultations on the draft law on the privatization of Ina, with the final proposal of the bill, to be closed on January 22.

Regulation because of EU

The government had to do it because the provisions of Article 10 of the current law are not in line with the acquis communautaire and will now be changed. That is why the European Commission initiated a procedure concerning a violation of EU law and decided to file a lawsuit with the EU Court in July 2017.

The controversial article gave Croatia the exclusive right of control over changes of the ownership structure, as well as the right to veto to certain decisions of the Management. The state also had the right of first refusal on the purchase of the whole or part of company assets in the case of bankruptcy, at the estimated market value. The current proposal is for the article to be amended, so that any potential acquirer who would cross the threshold of 25 or 50 percent of the shares should inform the Ministry of the fact and submit a long-term business management plan for Ina.

Based on the Minister's opinion, the Government would issue approval to acquire shares within 30 days — or deny it if it sees a serious threat to public security or an extraordinary threat to a secure, reliable and regular supply of energy and protection of infrastructure. Should the acquisition of shares be refused, they must be offered for sale to the state at a market price. If it is not done, the state may sue.

It is also proposed that Article 10a be added, whereby the Government may appoint two representatives to attend the Management Board sessions, without the right to vote, as long as the state owns one or more shares of Ina. Also proposed are the prescribed sanctions and the legal recourse in the event that the Management issues a decision seriously affecting the security of the energy supply and the security of the supply infrastructure.

In the attempt to determine the background to the proposed changes, which sound somewhat hazy, some experts commented that it was impossible to determine the direction in which the Government was going with it. "Will others be making money, while we manage things?" one of them asked. "What private company would allow that?"

Voting right

Others says that, contrary to the previous announcements, the Government is not going to nationalize Ina, but privatize it fully instead. "We will give MOL everything", one of the experts we talked to says, sourly and with resignation. Former Ina CEO Davor Štern says something similar: "The agreement between the Government and MOL has apparently been reached already, and this is just [formal] regulation of current and future relations."

Former Minister of Economy Ljubo Jurčić believes the proposed amendments are not the best idea because they put into the Ina Privatization Act things that do not belong there. He notes that there is talk about preserving national interests and appointment of two representatives, but without the right to vote. "Croatia is fumbling again", he says. "The main complaint by the EU was that there was no 'golden share'. The de facto message is 'we will privatize Ina fully, but will preserve the national interests so that the people do not complain'. The Government has greater power as the government than as a shareholder."