Canadian investors still interested in investing in energy hub on Krk island

Representatives of Canadian investors Pulsat Global Capital and BSH Group that are interested in investing in energy projects on the northern Adriatic island of Krk, worth US$ 4.7 billion, sent an open letter to the director of LNG Croatia, Mladen Antunovic, criticising him for spreading inaccurate and misleading information about their intentions but stressing that they were still prepared to cooperate with the Croatian side to realise the project.

They accused Antunovic, among other things, of personally refusing to allow the said Development Group of investors to participate in the Call for Equity.

"In fact, sir, you refused to allow the Development Group to participate in the Call for Equity so it is incorrect to state that any company or entity had a "right to participate" when those supposed
‘rights’ were arbitrarily restricted by LNG Croatia. Furthermore, you imply that, since the Development Group did not participate in the Call for Equity, that we were attempting to participate in a ‘non-transparent’ manner which is incorrect and prejudicial statement. The fact of the matter is that we have been not just participating but leading the Krk LNG Development long before LNG Croatia issued any calls for tender, received EU funds, or undertook any activity for that matter," the group said in the open letter to Antunovic.

The letter also brings a chronology of meetings with former Economy Minister Ivan Vrdoljak, saying that since the very beginning, the investors had been nothing but transparent about their intentions to develop, hopefully cooperatively, an LNG terminal at Krk.

"Since 2013 we have made repeated offers to cooperate with LNG Croatia, and advised that our stakeholders were also prepared to join in the discussions when the government indicated serious interest,," the group said adding that Antunovic and then-Minister Vrdoljak refused to discuss potential cooperative development.

The Development Group commenced its efforts to acquire the Dioki property (including the LNG land) in 2013 which was obstructed by certain persons and we will not publicly discuss at this time, the groups said. "Our development work in the past 5 years was valued by our stakeholders at over $30M USD last year (and is significantly more now that we are closer than any other entity to acquiring the necessary property rights for the Krk onshore terminal)," read the letter to Antunovic.

Commenting on statements by the former government, the group said the former Croatian government had repeatedly stated that it will simply expropriate the land for the LNG terminal and that LNG Croatia suggested that was consistent with "EU Directive". "In our letter of September 09, 2015 we asked for clarification as to the supposed 'EU Directive' that authorises expropriation and what the conditions and process of such expropriation entails," the letter said.

"As with most of our communications to you and then-Minister Vrdoljak and other government officials, we never received the courtesy of a reply. You have never indicated that LNG Croatia had obtained a proper legal opinion pertaining to expropriation of property that could be owned by foreign nationals. We invited your legal advisors to speak with our legal advisors to clarify what applicable laws authorize such an extensive expropriation and the applicable procedures. The fact of the matter is that, such an extensive expropriation will be an extremely complex procedure that will take a long time to negotiate, which may be appealed and could ultimately be determined by the European Court of Human Rights (which has ultimate jurisdiction over expropriation of foreign-owned property)," the letter said.

The groups also criticised Antunovic failing to brief new Economy Minister Tomislav Panenic about the LNG project on Krk in detail.

"Our intent is to expedite development of the Krk LNG Project and we would like to discuss a potential Private Public Partnership (PPP) or similar framework of cooperation with LNG Croatia. Our approach has always included a significant portion of domestic content in developing the Project and we would be pleased to also engage in discussions with Croatian companies. We are genuinely interested in helping to improve the Croatian economy and this project could have a significant positive effect on economic recovery for Croatia," the group said in their closing remarks.

Last update: Mon, 09/05/2016 - 19:18

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