April 13. 2024. 6:21

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Croatia announces €900m capital boost to state-owned power utility

National state-owned energy company HEP will be recapitalised with €900 million, including what Prime Minister Andrej Plenkovic called a €400 million “shareholder loan,” the Croatian government announced Thursday.

HEP is responsible for electricity generation, transport, and distribution in the EU’s newest member Croatia.

The Economy Ministry will issue the loan in two tranches, worth €265 million and €135 million, with the latter expected to be issued by July.

In addition, the repayment of two earlier loans HEP took out last year to weather the energy crisis – a €400 million loan to finance the purchase of natural gas for the Okoli storage facility and a €600 million loan to finance resources needed for energy production – would be postponed.

According to speculation in the local media, the 100% state-owned utility company incurred heavy losses in the second half of 2022 due to the government’s price caps on energy for households and other vulnerable groups, which the government says cost around €900 million.

“This is being done to allow citizens to keep paying some of the lowest electricity prices in the EU, and also for the industry to maintain a stable input, and to ensure the stability of HEP’s business,” Economy Minister Davor Filipovic said in a televised government session.

However, when asked about the level of HEP’s losses, Filipovic told reporters after the cabinet session that he did not have access to this data and added that the figures would probably be published in the company’s 2022 financial report.

The deadline for the report is Friday but according to figures floated by local media, the company’s losses in 2022 might amount to as much as €1 billion.

Apart from the loan, the government’s plan to save HEP involves directly pumping another €500 million into the company to boost its liquidity. Since both are forms of direct state aid, Plenkovic said his government is in talks with the European Commission about the plan to make sure it does not violate the EU’s rules.

(David Spaic-Kovacic | EURACTIV.hr)