WITH STRATEGIC PARTNER, INA SHOULD BECOME "REGIONAL PLAYER"

ZAGREB, Feb 22 (Hina) - The Croatian oil company Ina is ready for privatisation in which 25% plus one share would be sold to a strategic partner to merge it with a regional company and turn it into a regional player, the Croatian government concluded Thursday. The government sent bills on the privatisation of Ina and the power supply company HEP into parliament. The privatisation processes of the two companies would be carried out under different models. Ina would be privatised by selling shares to a strategic partner, while at least 15%, most probably 25% of HEP would be offered on a bourse via a public tender. The two bills have in common that seven percent of each companies' shares would without compensation be allocated to Croatian homeland war veterans, and seven percent to employees under more favourable conditions. The percentage of shares for veterans and employees, established at a session of the Economic and Social Council, is the same as was when the Croatian Telecom was privatised. According to the bill on Ina's privatisation, a strategic investor would be sold 25% plus one share, and via a public tender at least 15% would be offered to Croatian citizens under special regulations which would be set by the government, while the government would decide on the sale of the remainder of the shares, in line with market conditions. The bill stipulates that as long as the state is the owner of ten percent of Ina, nobody, without the consent of the government, can acquire more than ten percent of Ina's equity. Thus, the question was raised whether this restricted the strategic partner who, without the government's consent, cannot purchase or sell more than 10% of shares. This restriction could probably influence the price of shares, circles close to the government admit, but stress that when energy is in question, the state can hardly stand aside. In Ina's privatisation the state's intention is to keep 51% of ownership, and through privatisation via a strategic partner secure a merger to get a "strong regional player". It is well-known that Hungary's MOL and Austria's OMV have shown interest in Ina. By merging with one of these, or both, companies, or with some other partner, a strong new holding, a strong regional player would emerge, the government has said. With such a merger, Ina would be prepared for competition on the domestic market, and would also be able to invest into the necessary, such as pipelines and refineries. Two Croatian refineries, in Rijeka and Sisak, need modernisation to satisfy European standards for oil products. Exempt from the process of privatisation at Ina would be the transport of gas and oil (Janaf), which would be kept in state ownership, with the parliament deciding about their possible privatisation. Exempt from privatisation at HEP would be the transmission and distribution networks and the independent market operator. When the two companies might be privatised is as yet not known. However, Ina is prepared for the process which, in all probability, will begin this year, since the government budget, that is, the financial plan of the Fund for Development and Employment, mostly depends on the resources gained from Ina's privatisation this year. HEP's privatisation will have to wait for the company to complete its restructuring process, which is included in a provision of the bill. (hina) lml sb