Bosnia, Hungary: Gov wants to cancel Energopetrol privatization contract with INA MOL

Published on 20. January 2016., SEE Energy News

Government wants to cancel contract with INA MOL for the privatization of Bosnian oil company Energopetrol, despite INA-MOL claims that they fulfilled all contract obligations. Government investigation found irregularities in 75MEUR investment cycle which was obligatory for INA MOL privatization of Energopetrol.

In the report of the Working group formed by the Government of the Federation BiH, led by the prime minister Fadil Novalić to analyze the issues regarding the fulfillment of obligations from the Contract on Energopetrol share capital increase, it says that INA-MOL consortium was obliged to invest 75 million euro, but that it was not fulfilled.

Suvad Osmanagić, the president of the Working group, told us yesterday that the Contract on Enmergopetrol share capital increase is bad and harmful for the Federation, which was determined by this group at the request of the Government of FBiH.

Terminating the contract

Their intention was to terminate the privatization contract. The working group announced the engagement of the new independent audit company to do the target analysis of the money Energopetrol received from the Consortium, and additional audit of the contractual obligations. INA-MOL consortium sued the Government of FBiH based on legal procedures that they took over with Energopetrol share capital increase in March 2006 and now they are demanding the payment of 32 million euro.

There is an arbitrary procedure in front of the International Chamber of Commerce in Paris, but in the report of the Working group it says that the Government of FBiH is the one that should have sued the Consortium because they did not fulfill its contractual obligations and not the other way round. It says in the report that the arbitration is without grounds, but that the Government will be happy to enter the arbitrary procedure. There are nine cases being led at the Cantonal Court in Sarajevo for facilitating a harmful contract in connection with the Energopetrol share capital increase.

In the report of the Working group it says that the main issue in the share capital increase is the investment, so the Working group concluded that after the expiration of the three year contract, out of planned 75 million euro only 16 has been invested, and out of which 10 million was used to pay the advance to INA.

Audit reports

-It is clear that the share capital increase contract has not been fulfilled and that 16 million euro has been invested, while 60 million was not invested at all even though it was provided so in the contract – the report says.

When it comes to business operations of Energopetrol, the Working group determined that continuation of operating with losses in the past three years shows that this is the case of bad management of the company.

According to the audit report for 2014, only in the past two years (2013-2014) members of the consortium gained profit from Energopetrol in the total amount of 196.3 million euro while EP itself made profit of only 450.000 euro. Based on interests to the loans from the Consortium alone EP had costs in the amount of 7.8 million euro in two years – says the report.

We have fulfilled the contract

INA-MOL consortium has completely fulfilled all contractual obligations from the Contract on share capital increase. It was confirmed by the international audit company Deloitte in the report done at the request of the Government of the Federation BiH.  The Consortium invested around 75 million euro into the development of Energopetrol, out of which 31 million was invested into the modernization of the retail network of Energopetrol, with new investments still to come in the next period – they told us at the Consortium, transmits Serbia-energy.eu