Gas is the best fuel for scandals in Croatia. The criminal and bankruptcy model under which HEP bought gas from Ina for 47 euros and then sold it back to that company for 13 euros is still unfolding, and a new ‘scandal’ has already shaken the capital.
Zagreb residents will heat with ‘Međimurje’ gas from autumn. Namely, the city company Međimurje-plin from Čakovec (24% owned by the City of Čakovec and co-owned by another 24 Međimurje local government units) offered a lower price than the Holding’s subsidiary company Gradska plinara Zagreb – Opskrbe (GZPO). Immediately, heavy political accusations began – for managerial incompetence caused, of course, by the incompetence of Tomislav Tomašević and his team, along with parallel concerns from the purgers about ‘Međimurje’ gas. However, there is neither Međimurje nor Zagreb gas on the market. This energy source will be purchased as before on the European market or will arrive at the LNG terminal; only the end users will pay it to a different account.
Old roots of a new scandal
The question of managerial and political responsibility is already a bit more complicated. The roots of the current gas story date back to the autumn of 2021, when the then management of GPZO played with procurement and welcomed the energy crisis and drastic price increases without secured quantities of gas for the next winter, which forced it to buy at current, significantly higher prices. Entrepreneurs felt this acutely, but households did not. The company plunged into the red, and the then director (still from Bandić’s era) had to leave because of this, but the issues remained.
In 2021, a loss of over 47 million euros was reported, just four million less than total revenues. This is also the key reason, as explained by gas issue experts, why GPZO could not offer a lower price in the tender, and thus it will be out of work from autumn. The Međimurje company offered its supply cost of 9.5 euros per megawatt-hour (mWh), which is seven percent less than GPZO’s (10.2 euros) and one percent lower than the previous 9.6 euros per megawatt-hour. However, this is just a small part of the total price on the bills, which mostly depends on suppliers and the state of the global market, and in recent years the government has kept those gas prices under control (the current package of energy subsidies is in effect until the end of September). The average Croatian household consumes about 11,000 kWh of gas, so the consumer in Zagreb will pay the supplier’s margin of 104.5 euros – just 1.1 euros less than before. If GPZO had won the tender, that cost would have been 112.2 euros, or 6.7 euros a year more than for ‘Međimurje’ gas.
After the first Zagreb gas crisis, there was also talk of GPZO’s bankruptcy, and the sale of the company was mentioned. The city opposition strongly opposed this because it is ‘easy to sell off everything that is ours’. But how much is the gas business even ‘ours’ after the supply was liberalized under the ultimatum of the European Union?
According to the tender concluded last week, 95 percent of the Croatian gas supply market will be occupied by seven suppliers over the next three years, while six small ones will share the remaining five percent. Their ownership structure shows the face and the back of liberalization. Mostly, these are companies that local government units established for gas supply in their area. Some of them have expanded, mainly to nearby areas, so today Varaždin’s Termoplin supplies not only Varaždin but also the areas of Ivanec, Konjščina, and Sveti Ivan Zelina, while the Plinara of Eastern Slavonia, owned by Vukovar-Srijem County, has expanded to the area of Slavonski Brod. In this business, the law of large numbers is relentless: it is not profitable for the small ones, so they drop out of the game. That is why the Međimurje company found Zagreb attractive, sacrificing even the supply of its home county – although without the owners’ knowledge. Namely, regulation limits each supplier to a maximum of 20 percent of the market, with the only exception being Zagreb (43 percent).
