Minister Ćorić: In two weeks we will have the valuation of Ina

Minister of Environment and Energy Tomislav Ćorić stated on Tuesday that the Government is interested in a strong Ina, and that the Memorandum of Understanding between Ina and Janaf, which Nacional reports on, aims to maximize the business results of these two companies.

"Since 2016, the Croatian Government has been interested in a strong Ina and a robust energy sector in Croatia. Ultimately, this will be the subject of our communication in the upcoming election campaign. In the context of our reflections on Ina, we aim to return Ina to Croatian hands," said Ćorić, announcing that on June 9, the Government will receive a preliminary report from Lazard and its partners on the valuation of Ina, after which further steps will be taken.

Regarding the Memorandum of Understanding between Ina and Janaf, which Nacional reports on today, Ćorić said that it is a memorandum that projects the business interests of the two business entities, Ina and Janaf, all with the aim of maximizing their business results. 

Nacional reports that it has obtained a secret memorandum between Ina and Janaf, which, as stated, allows the Croatian Prime Minister to permit the export of Croatian oil to the Hungarians, with 247,000 tons of oil transferred from Sisak to Hungary instead of Rijeka since the beginning of 2020. On behalf of Ina, the memorandum was signed by CEO Sandor Fasimon and board member Niko Dalić, on behalf of Janaf by CEO Dragan Kovačević, and on behalf of the Ministry of Environment and Energy by Minister Tomislav Ćorić, as reported by Nacional in a text claiming that the memorandum undermines national interests.

"This memorandum primarily implies the connection of the Oil Refinery in Sisak to Janaf’s storage, which is located in the area of Sisak. On the other hand, it implies certain works in the port of Rijeka, which enable more efficient functioning of Ina and Janaf’s transport system. And finally, it implies Ina’s commitment to direct as large quantities of oil as possible from Janaf’s terminal in Omišalj as a member of the MOL group to the refineries in Hungary and Slovakia," said the minister.

He added that the Ministry of Environment and Energy, or he personally, is not a signatory to that memorandum. "I am not a party to this memorandum. We witnessed this memorandum. In the context of business reflections on Ina, or Janaf, I witnessed this memorandum and I co-signed it," he said. 

Ćorić also stated that he has no objection to the memorandum being published. He emphasizes that the functioning of Ina as a successful company is in Croatia’s interest, regardless of ownership shares.

"At this moment, we do not have a dominant ownership share. Ina could not be a successful company in a situation where its refinery business operates at about 70 to 80 percent capacity at the Rijeka Oil Refinery, while at the Sisak Oil Refinery it operates at 20 to 30 percent capacity. Therefore, the business decision made in the past period, to convert the Sisak Oil Refinery into a logistics center, with certain parts of production, is a decision that has been understood by the Ministry of Environment and Energy," he stated. 

Ćorić sees Ina as a vertically integrated company with all its components, as a company that strengthens its production in the context of the third generation of fuels and the Sisak Refinery, which is intended to be converted into a bioenergy plant in the upcoming period.

When asked by a journalist whether it is financially more viable to send oil from Croatian fields to Hungary for processing and return it from Hungary to Croatia or if it is cheaper to process it in Rijeka, Ćorić replied that sending means selling.

"Oil from the Sisak area is transported in smaller parts to the Rijeka Oil Refinery, and in larger parts to Hungary. Regarding the profitability of operations, the variant in which part of the oil is sold and part of the oil is processed is long-term better than the variant in which one refinery operates at 70 to 80 percent capacity, while the other operates at 20 to 30 percent," he said.

Ćorić also stated that the Prime Minister was informed that the memorandum would be signed, but was not informed of the details. He justified the signing of the memorandum by the long-term benefits for Ina and Janaf, one of which is co-owned and the other is wholly owned by the Republic of Croatia.   

In the memorandum, both Ina and Janaf clearly define their interests; for Ina, it is the connection of the refinery in Sisak to Janaf’s storage, which is located about a kilometer away from that access point. For decades, the refinery in Sisak has been isolated from the transport system, and this memorandum expresses the willingness of both sides to make that connection happen. Janaf’s interest is that Ina, as part of the MOL group, clearly expresses its intention in this memorandum that in the upcoming period, a larger quantity of crude oil will be transported from the transport point in Omišalj to MOL’s refineries in Hungary and Slovakia.

Ćorić, responding to a journalist’s question, stated that he takes responsibility for every point of the memorandum since he witnessed it. When asked whether the promise made three and a half years ago, when the Government promised that Ina would return to Croatian hands, still stands, Ćorić emphasized that this promise was made in positive economic circumstances, but that a crisis with Agrokor occurred at that time. He recalled that the contract with the first consulting firm was terminated, which slowed down the entire process.

It was about a consortium that included Morgan Stanley, Intesa Sanpaolo Group, and Privredna banka Zagreb (PBZ), which were selected in 2018 as the Government’s investment advisor in the transaction for the possible purchase of shares of Ina from the Hungarian MOL and the possible subsequent sale of those shares to a new strategic partner of Ina.

However, after disputes arose regarding "the understanding of what needed to be incorporated into the representation agreement itself, especially regarding the technical aspects of engaging the advisors," the Government selected the investment bank Lazard as the new consultant on August 1, 2019. Ćorić stated today that the idea of purchasing Ina has not been abandoned, but he also emphasized that in recent years the Government has had a correct relationship with partners from the MOL Group.

"We have not abandoned that option, but for it to be realized, both sides need to find common ground, actually the other side needs to accept our offer. They, therefore MOL, are not against realizing such a deal, but the other side has its position in this business," said Ćorić, adding that the Government will make an offer for Ina, but he is not sure it will be accepted.

In a lengthy discussion with N1 television journalist Hrvoje Krešić, at one point Ćorić stated that "he accidentally knows that Krešić was very dissatisfied" with Ćorić’s choice of members of the Ina Management Board. Krešić reacted by stating that the minister is revealing private journalistic communication.

Minister of Economy Darko Horvat today, when asked for a comment on the memorandum of understanding between Ina and Janaf reported by Nacional, stated that he has not seen that memorandum and that it is not the department he is currently dealing with.

"I think that colleague Ćorić said everything that the Croatian public needs to know today. Honestly, don’t make me comment on press reports, I have never done that and I wouldn’t now," he told reporters before the awarding of contracts for non-repayable grants for innovations at the Ministry.

Horvat also reminded that energy is no longer in the Ministry of Economy. "For the last three years, I have been dealing with other things. Today, my priorities are investments, new technologies, industry 4.0, innovations. Energy is in another sector and colleague Ćorić coherently governs all topics related to the energy sector," he concluded.

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