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Croatia Government Will Not Support Bailout Of Uljanik Group

Croatia government will not support bailout of Uljanik Group

Croatia Government Will Not Support Bailout Of Uljanik GroupSource: Luka Rijeka d.d.

Pula, Croatia (PortSEurope) April 2, 2019 – The Croatian government cannot endorse the proposed restructuring of the ailing Uljanik Group, as that plan would entail huge financial exposure of the state to the problem, however, the government is open to seeking additional solutions for the shipyards in Pula and Rijeka, Prime Minister Andrej Plenkovic said.

Plenkovic recalled that last week the Croatian public was informed of the figures and costs of restructuring entailed in that plan and that would need to be covered by taxpayers.

The plan recently proposed by the strategic partner, Brodosplit and its owner Tomislav Debeljak, means that the aggregate costs of restructuring could reach as much as HRK 10.8 billion ($1.45 billion), or a minimum of at least HRK 7.5 billion ($1.01 billion), he said.

“Implementing this type of restructuring programme would require a huge additional financial exposure, which undoubtedly be a huge burden for all Croatian citizens and all taxpayers. Taking all the circumstances into account, that leads us to conclude that the viability of the proposed restructuring concept is uncertain, and consequently the government, at this moment cannot support this type of restructuring and we remain open to seeking additional solutions for the shipyards in Pula and Rijeka,” the prime minister said opening the cabinet meeting on Thursday.

He recalled that in the period between 1992 and 2017 a total of HRK 31.7 billion was spent on bailing out the shipyards or in the form of state subsidies.

Of that amount HRK 4.3 billion went to the Pula-based Uljanik dock and HRK 9 billion was earmarked for the 3. Maj shipyard in Rijeka or a total of HRK 13.3 billion for the Uljanik Group.

“That reflects the great solidarity of all Croatian citizens with the shipbuilding industry overall and in particular with Pula and Rijeka,” Plenkovic underscored.

According to data he presented the state’s total exposure to the Uljanik Group on 15 October 2018, amounted to HRK 4.3 billion and because the group could not settle its dues, contracts were cancelled and a total of HRK 3.1 billion was paid out of the state budget on March 11 for enforced state guarantees.

“All these payments were made with the consent and coordination of the State Prosecutor’s Office. All those agreements were once again reviewed and endorsed. Once the state issues a guarantee of that kind, in this case guarantees for ships, there is no option than to settle those dues,” the prime minister said.

He underscored that the government was working on the issue of Croatia’s shipbuilding, it analyses the crisis in Uljanik and all the aspects involved – political, economic, financial, social, regional, structural.

The government is supposed to make a decision that is “responsible and defensible in all aspects,” Plenkovic said.

Source: Government of Croatia

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