Economy Minister Tomislav Panenic said on Thursday that a European Commission note had arrived at the ministry in which the cooperation between the Croatian power company HEP and Japan's Marubeni in the construction of the Plomin C thermal power plant was assessed as unacceptable support and that it expected responses from both HEP and Marubeni.

Speaking to reporters in Split, Panenic said the note would be considered. He said it was very important that both companies responded to the Commission's opinion so that "a final solution regarding Plomin C" could be reached.

Asked what the final solution was, he said HEP and Marubeni "should see to that because this model is considered unacceptable." Asked if the investment into Plomin C would be scrapped if the European Union were to continue to see the cooperation between HEP and Marubeni as an unacceptable state subsidy and if HEP would leave the project, he said "this stigma that politics makes decisions" should be taken off the agenda.

Panenic said he expected the supervisory and management boards "to know what unacceptable support is, how to approach it and adopt solutions. If politics starts making decisions in every company, I think we are on the wrong track."

Media recently reported unofficially that last week the Economy Ministry and HEP received the opinion of the EC regulator for competition to the effect that HEP, as a state-owned company, could not finance the Plomin C construction project as it would constitute state aid.

According to the media, the European Commission considers the contract between HEP and Marubeni unacceptable because, if the project runs into financial problems, the state would step in to help and not HEP, while Marubeni would be a preferred investor.

The media also reported that the Commission did not find it problematic that HEP, under the contract, would have to buy half the electricity produced from Marubeni at a price much higher than the market, but the fact that HEP is a state company under a lot of political influence.

Asked about the media reports, the Commission and HEP told Hina that they could not comment at this stage.

The Commission is in contact with Croatia's authorities about this issue. At this stage, we have no further comment, Ricardo Cardoso, Spokesperson for Competition Office in the EC, said yesterday.

HEP said today that its communication with the Commission's Competition Office concerning the business model for Plomin C envisaged periodical meetings and that exchanging information and documents was part of the procedure. HEP too added that at this moment it could not go public with the details.

In July 2012, HEP began the selection of a strategic partner for Plomin C. Three bids were submitted and that September HEP chose Marubeni, signing an exclusive contract in March 2015. 

The 500MW coal-based thermal power plant Plomin C, whose value is estimated at EUR 800 million, is to replace the existing 125MW power plant Plomin 1.

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