Croatian HEP to get hydropower plants back prior to partial privatization

The Croatian government has put up for public debate its draft law on waters that would give back to the Croatian Electricity Company (HEP) ownership of hydro-power plants, Croatian media reported. Experts cited by the media said that would make the HEP more valuable and would bring in more money from the sale of shares that the government is allegedly planning.

The Croatian government took ownership of the reservoirs, dams and other infrastructure of the 26 hydropower plants owned by the HEP in 2011 without paying anything for them and making the HEP a concession holder.

Experts said that it was clear that the law on waters would have to be changed from the moment when Prime Minister Andrej Plenković said earlier this year that the government was planning a partial privatization of the HEP through an IPO.

According to Croatian energy sector experts, the government wants to sell 25 percent minus one share in HEP for enough money to buy the 49.1 percent of shares that the Hungarian MOL holds in the Croatian state-owned Ina oil company.

The HEP used to be owner of hydropower plants in Croatia but they were taken out of the power company which now only owns the equipment in those plants but not the plants themselves. Former HEP Chairman Damir Begović told the press in Zagreb that the return of the hydropower plants would greatly raise the value of HEP.

The Ministry of the Environment and Energy said in a statement that the state plans to return the hydropower plants to HEP but means to keep the waters and land around reservoirs and give HEP the right to manage those natural resources and build new infrastructure for the next 50 years.

The Croatian government also announced that it was looking for an investment advisor for the purchase of the shares from MOL.

The public debate on the draft law on waters will be opened until September 9 but HEP has already said it will file amendments.

One unnamed local energy sector expert told the press that selling the hydropower plants would be absolutely senseless since they are the most valuable asset and have paid for themselves long ago.

The government’s draft law says that the Republic of Croatia is transferring ownership over all water infrastructure used to produce electricity to the HEP.