Energy market is in a state of shock, gov't will act

Economy and Sustainable Development Minister Tomislav Ćorić said on Monday the government would adopt a decree today regarding oil prices considering their growth, repeating that it would present its set of measures to alleviate the impact of rising gas and electricity prices by the end of February.

"The government will respond... today," the minister said when asked by reporters if a decree to cap fuel prices was being considered considering that oil prices are again very high.

In mid-October the government capped fuel retail prices and the relevant decree remained in force until 7 December.

Gas price rise as drastic as latest one unexpected

Ćorić repeated that the current drastic rise in gas prices had not been expected by anyone, when asked by reporters about the gas price growth and an increase in costs also for users of the central public procurement system in light of variable gas prices and a framework agreement on gas supply, which is in the remit of the Central State Office for Public Procurement.

As regards cases for which the central state office for public procurement is in charge, the methodology applied dates back to 2016. According to the central state office, the methodology was adopted after consultations with relevant stakeholders, the then energy ministry, the Hrvoje Požar Energy Institute and the HERA regulator, Ćorić said, adding that "it was successful during the period when there were no price shocks."

The original agreement, which amounts to HRK 187 million without VAT, will increase for the central procurement office by an additional HRK 55-56 million for January.

Asked who would provide the money, Ćorić said that it would come from the state budget.

If the Central State Office for Public Procurement, which buys gas for an entire set of budget users, is concerned, the additional cost will be covered with funds from the state budget, he said.

Asked why the state did not agree on a fixed gas price for its institutions, Ćorić said the methodology was set in 2016 and that he believed the then ministry and HERA had acted in the best faith.

Gov't to launch review before Swiss Federal Supreme Court in INA-MOL case

The minister also said that the government would launch a review of the United Nations Commission on International Trade Law (UNCITRAL) arbitration decision of December 2016 in the INA-MOL case before the Swiss Federal Supreme Court on time, the deadline being 8 February.

Asked about claims by Damir Vanđelić, former head of the Zagreb Reconstruction Fund and former chair of the INA Supervisory Board that all Croatian governments so far had acted to the detriment of INA, Ćorić said that he had cooperated well with Vanđelić at the time he chaired INA's Supervisory Board but that his latest statements seemed to show he was considering a political career.

INA has major investments in the Rijeka Oil Refinery, Ćorić said, adding that he hoped it would also launch a biorefinery project in Sisak and expand in Slavonia.

Asked why the government had never made INA's biggest individual stakeholder, Hungarian oil company MOL, any offer regarding INA's takeover, Ćorić said that an offer had been made but that agreement had evidently not been reached on the price.

Late last year the government decided to halt talks on buying back MOL's stake in INA until the completion of a review of the 2016 UNCITRAL arbitration ruling, and when asked if the reason for suspending the talks was arbitration or the failure to reach an agreement, Ćorić said that agreement had not been reached on the price.

The talks on buying back MOL's stake in INA were suspended due to new circumstances arising from a Croatian Supreme Court decision upholding a verdict against former prime minister Ivo Sander, convicted for taking bribes from MOL CEO Zsolt Hernady.

The Economy Ministry was entrusted with launching a review of the 2016 arbitration ruling before the Swiss Federal Supreme Court with the aim of determining the nullity of changes to an INA shareholders agreement and a contract on the gas business of January 2009.

The government said at the time that the ministry would also continue with activities in the arbitration proceedings launched by MOL in 2014 before the International Centre for Settlement of Investment Disputes (ICSID).

Text: Hina

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