Croatia, Government approved loans of up to 1 billion euros to HEP to finance the purchase of electricity

, SEE Energy News

The Croatian Government approved loans of up to 1 billion euros to state-owned power utility HEP to finance the purchase of electricity, natural gas and coal, as well as additional gas volumes to fill Croatia’s sole underground gas storage (PSP) Okoli.

Minister of Economy and Sustainable Development Davor Filipovic said that the Government’s move was motivated by providing enough energy for citizens and the economy, affected by the crisis in Ukraine.

HEP was granted an approval to take a loan from commercial banks up to 600 million euros to finance the purchase of electricity, natural gas and coal. The Government also instructed HEP to secure 270.83 million cubic meters of gas in order to secure gas supplies in Croatia and store it at PSP Okoli. For this purpose, HEP was granted an approval to take a loan from commercial banks up to the amount of 400 million euros. The state will issue guarantees for both loans.The state budget will also provide funds to HEP to cover the difference between the purchase and

market price of gas. The decision to allow the state to fill underground gas storage facility at Okoli if its lessees do not do so, was made in late April. It appears that the lessees are not willing to fill the storage for now, due to high gas prices on the European markets.

Last month, the Government granted approval to HEP to take out a loan worth around 172 million euros from the OTP Bank Split. HEP is planning to obtain two loans from OTP Bank Split: one worth 51 million euros and the other worth some 122 million euros. Minister of Economy and Sustainable Development Davor Filipovic said that HEP plans to obtain these two loans because, in 2015, it issued bonds worth 550 million dollars with an interest rate of 5.87 %, while borrowing from OTP Bank has significantly lower interest rates . For the first loan, the interest rate is 0.62 % and for the other is 0.42 %.

HEP recorded a net profit in the amount of 173 million euros in 2021, which is 30 % lower compared to the previous year.