City Gasworks Zagreb-Supply filed a lawsuit against HERA

City Gasworks Zagreb-Supply has filed a lawsuit with the Administrative Court in Zagreb against the decision of the Croatian Energy Regulatory Agency (HERA) dated May 29, 2024, regarding the determination of the supplier under the public service obligation for the distribution area of the City Gasworks Zagreb for the period from October 1, 2024, to September 30, 2027. The administrative dispute was initiated since there is no possibility of appeal against the decision of HERA made on May 29.

In its lawsuit, GPZO emphasizes a number of arguments indicating that the tender was conducted unlawfully and should be annulled, of which we highlight only a few here.

First of all, GPZO argues that the Gas Market Act stipulates that the criterion for selection is the technical and professional capacity of the bidders for performing the supply under the public service obligation, while HERA did not stipulate in the tender that energy entities submitting a bid for the public service supplier are required to provide proof that they have concluded an appropriate legal transaction for gas supply with another market participant.

Regarding financial capacity, HERA only required non-binding letters of intent from business banks or founders as proof, which in itself has no legal significance, i.e., cannot be relevant evidence that the bidder is indeed financially capable.

HERA published its tender on its website on May 16 with a deadline until May 24, but according to the Law (Article 61, Paragraph 2), the notice of the tender must be published in the Official Gazette, which only happened on the last day of the tender and the opening of bids, i.e., May 24. The same article of the Law also stipulates that the notice of the tender must be published in the Official Journal of the European Union, and HERA failed to do so, putting suppliers in a disadvantaged position.

Also, the Law stipulates in Article 62 that a procedure for the temporary revocation of a license has never been initiated against an energy entity, while HERA arbitrarily shortened this period in the tender to the last 5 years from the moment the tender was initiated, contrary to legal provisions.

In light of the above, GPZO expects that the Administrative Court will rule in favor of the company and annul the tender that was conducted unlawfully.