Investment potential amounts to 174 projects worth 22 billion euros

Dragan Marčinko from CEI, the moderator of the discussion on national and regional projects, briefly reviewed the plans and implementation of investments in the energy sector up to 2020. The total investment potential amounts to 174 projects worth 22 billion euros. Private investors are sought for a total of 25 projects, valued at eight billion euros.

Regarding energy, there are a total of 36 projects in the sector worth nine billion euros, and 10 projects worth five billion euros are seeking private investments. HEP is practically the bearer of the investment cycle, along with Janaf and Plinacro, and this year plans to realize investments worth 436 million euros, which is an increase of 115 percent compared to last year.
Speaking about the electricity sector, Marčinko emphasized that the energy strategy is based on the assumption of a 2.7 percent growth in final energy consumption, which is not in line with the current state of a 1.3 percent annual decrease in consumption. It is necessary, he says, to revise the estimates as the projected growth will obviously not occur, and the decrease in consumption also affects the achievement of the share of renewable sources.

Regarding the structure of the electricity production portfolio, Croatia imports almost 26 percent of energy, which is also the average share of exports over the last five years, so it is necessary to reduce dependence on imports. 

-New capacities are necessary due to the high dependence on imports, and renewable sources are the best long-term option – emphasized Marčinko, adding that the Energy Strategy’s development of the share of renewable sources in gross final consumption is mostly based on the construction of wind farms.

The strategy has set a goal of building at least 2400 MW of new thermal power plants, 300 MW of large hydropower plants, and 1655 MW from renewable sources by 2020. Currently, there are 1655 MW of renewable sources on the grid, which is about 14 percent of the Strategy’s target. The strategy, says Marčinko, is not firmly set, and projects will be built at their own pace. 

When looking at large capital investments, and investments are also needed in renewable sources, the start of construction of Plomin is planned for the second quarter of 2014, and there are also development projects in the gas system: the expansion and construction of gas storage facilities, the IAP gas pipeline, the LNG project, and the branch of South Stream. Croatia, he believes, has great opportunities to be in the ring of large gas pipelines, and increasing the security of the gas system and diversifying routes are goals for further development. However, currently, the most important legislative framework for the exploration and exploitation of hydrocarbons is crucial.
-They will open doors for many companies as Croatia becomes much more attractive. The realization of projects is a guarantee of the country’s development. I believe that there should be no problems regarding the realization of projects – concluded Marčinko.

After his presentation, the discussion continued on a panel where it was heard that there is interest in investing, but that Croatia must also appropriately position itself energetically in relation to the region.

Gordana Sekulić from Janaf emphasized that this company, due to the obligation to create mandatory state reserves, has recently made a significant investment effort and significantly modernized the system. She also stated that the EU’s goal is not only to increase supply security but also to foster competition among oil pipelines, which is something that Janaf pays great attention to.
Ljubica Cvenić from HEP warned that HEP must pay attention to the dynamics of energy projects in the environment, where neighboring countries want to maximize their resources, as it must align its investments with this.
-One of the models we use in financing is also the joint venture model, and the details depend on the type of specific project and are assessed for each project specifically – said Cvenić, explaining that there are different investors, and those who want a quicker capital turnover generally invest in renewable energy sources. 

However, in traditional energy, she added, the return on investment is longer, so investors must have a broader perspective. 
Regarding the perspective of INA within MOL, Goran Šaravanja spoke, highlighting the research and investments that INA is conducting throughout Croatia, as well as the presence of this company abroad where it competes for concessions in Iraq and Lebanon. He also stated that the overall legal framework in Croatia must be as clear and fair as possible.

Dragan Marčinko claims that foreign investors see potential for project development in Croatia, but that most of them would prefer to have long-term contracts, which is no longer possible.
-Croatia needs to invest in all energy segments available to us, as rain falls one year and not the next – said Marčinko, emphasizing that efforts were made to reach projects that are presumed to have the least problems for potential investors. He also announced the arrival of major players in the market who will take advantage of its opening.
Mladen Vedriš, a professor at the Faculty of Law in Zagreb, emphasized that Croatia must find the appropriate “energy investment mix,” and that each investment must have a specific partner who will lead the entire process.
-Electricity is becoming a commodity that is available from various sources, and Croatia has its chance in utilizing hydropotential – said Vedriš, adding that every investment in energy also increases GDP.

Vladimir Đurović from Plinacro emphasized that Plinacro has just submitted a plan for a new 10-year cycle, and it remains to be seen what the new regulator will allow.
-There is also market risk as consumption is decreasing. The question is whether we will be granted a tariff that will guarantee the continuation of investments – concluded Đurović.