There is money, but even more ambiguities

Since April this year, when the Ministry of Economy and Sustainable Development began issuing public calls for the allocation of non-repayable funds from the National Recovery and Resilience Program (NPOO), four calls have been published. Entrepreneurs have shown great interest, and so far, 186 million kuna in support has been allocated, but many are only preparing projects for application to the competitions. The most money is intended for ‘Support for companies in the transition to an energy and resource-efficient economy’ – as much as 1.9 billion kuna.

In second place is ‘Commercialization of Innovations’ with 380 million kuna, ‘Non-repayable grants for digitalization’ have 206 million kuna, and ‘Non-repayable grants for newly established companies’ have 141.7 million kuna. Of the four published calls, three are intended for small, medium, and micro entrepreneurs, and medium-sized companies, so-called mid-caps with up to 3000 employees, can also apply for ‘Support for companies in the transition to an energy and resource-efficient economy’, but not micro entrepreneurs. This is how the implementation of the National Development Strategy until 2030 looks on paper, with an emphasis on the development of entrepreneurship and crafts.

As part of this strategy, the mentioned ministry has initiated the development of the National Plan for Industrial Development and Entrepreneurship for the period 2021 – 2027, which will ensure the realization of the full potential of industry and entrepreneurship as drivers of economic development, change, innovation, and growth in competitiveness. Within the National Plan, necessary financial resources are planned in the state budget for 2023 and projections for 2024 and 2025, which will mostly be secured from European funds.

Ambiguous competition

In the National Recovery and Resilience Program (NPOO 2021 – 2026), in the component ‘Resilient, Green and Digital Economy’, activities aimed directly at entrepreneurs are planned through the allocation of non-repayable funds with a total value of 2.86 billion kuna, directed towards the transition of the economy to an energy and resource-efficient economy and towards innovations, development, and application of new (digital) technologies.

In addition to non-repayable funds, through the NPOO, funds have also been secured for investments in strengthening competitiveness through HBOR and HAMAG BICRO in the amount of 2.3 billion kuna for SMEs, for medium-sized companies and large entities, but also for public sector entities through direct loans, interest subsidies on loans, a guarantee fund for investments of medium-sized and large companies, as well as a venture capital fund.

Although there is great interest among entrepreneurs for non-repayable funds from the NPOO, they are facing problems with ambiguities in the competitions. The company Premis intends to apply for non-repayable funds through the competition ‘Support for companies in the transition to an energy and resource-efficient economy’ with a project for the construction of a new logistics center worth 12 million kuna.

The logistics center with cold storage would be completely self-sustainable, meaning it would produce electricity for its needs and enable the expansion of the existing production facility and increase production. However, according to Zoran Premeru, the commercial director of Premis, they do not know if they will ultimately be able to do this because the competition is quite ambiguous.

– Most of the conditions that trouble others we pass without problems. But our problem is that we are growing a lot, and according to the conditions of the competition we must reduce consumption of electricity by 2026, which means we need to reduce total energy consumption in the company, but this does not apply to reduction per unit of product. In the end, any increase in production can only create problems. I would like to point out that the installation of the solar power plant we have planned does not exclude the aforementioned – emphasizes Premeru.

The company’s management has not yet made a final decision on whether they will actually apply for the competition. They will not do so if they see that they will not meet some conditions or that they will ultimately not be able to meet the conditions set in the mentioned competition.

Entrepreneurs’ experiences

For business development and project realization, the company Ferrodus has so far partially relied on money from European Union funds and has not been interested in funds from the NPOO. However, this process has recently been completed, and they have now engaged a consultant who will prepare the application for the competition.

– This is a project to increase production capacity through laser welding and generally raise business capacity and quality through new employment in the company – says Vedran Presečki, the owner and director of Ferrodus.

The director of Tesla Cables Zoran Pavletić emphasizes that successful business operations in 2021 and 2022, as well as in previous years, have enabled the company to independently finance its operations, planned investments, and development projects without any major experience with the NPOO.

– We had attempts in the area of digital transformation, but we did not participate in NPOO funds since we did not meet the conditions regarding our activity (wholesale of cables) and the status of the size of the company (large company since we are part of the Meinhart Group – the largest cable group in Europe). The development of ERP and the introduction of WMS is worth about 110,000 euros – emphasizes Pavletić.

The company Rasco has so far had the opportunity to use funds from the NPOO as a continuation of the call for the construction of renewable energy capacity. This call was originally not related to the NPOO, but due to the great interest of the company on the waiting list, after the original budget of the call was exhausted, they received financing from the NPOO. Rasco was at the top of that waiting list and ultimately their project was financed with NPOO funds.

Changes in calls

In addition, according to Ivan Franičević, the president of the management board of Rosco, there is no other call or source for them to use NPOO funds. This company intended to apply for the call ‘Support for companies in the transition to an energy and resource-efficient economy’, but after the change of the call, which followed shortly after the announcement, it no longer meets the criterion of the minimum share of energy costs in business revenues – it is too energy efficient for that call.

– We have a ready project of about 60 million kuna intended for that call, but it is, unfortunately, now completely postponed. The project includes numerous energy efficiency measures, from replacing inefficient old machines to a new solar power plant – states Franičević.

According to him, financial support in the context of the Croatian NPOO compared to other EU member states means maintaining the competitiveness of companies, especially those competing in the EU market.

The company Orqa has also used money from European funds, and its project manager Dragan Kovačević claims that they now have high expectations from the NPOO competition as well. However, he emphasizes that there were many negative reactions during the preparation of project proposals from the NPOO in the first calls due to the type of call, specifically due to the Open procedure for allocation until the funds are exhausted (known as ‘first come, first served’).

– The negative reactions of entrepreneurs regarding the relevant criteria for the allocation of non-repayable funds were justified because this way, the speed of submitting the project proposal is placed ahead of quality. In later competitions, the type of call has changed, and all submitted project proposals will be evaluated based on the quality of the application, which is supported by the majority of entrepreneurs – explains Kovačević.

So far, Orqa has submitted three projects to calls within the NPOO. For the project from the call for Commercialization of Innovations, the phase of evaluating the quality of the project proposal has been completed, and a decision on financing and the conclusion of a contract for the allocation of non-repayable funds is underway.

– The other two project proposals are in the evaluation process, and we expect results by the end of this year. The total value of the submitted projects amounts to 6.52 million kuna, of which a total of 4.07 million kuna are non-repayable funds – emphasizes Kovačević, adding that these are projects for establishing new production processes, improving and strengthening IT infrastructure, and establishing systems for certification and distribution of new products.