SMEs minister:: Investors from China and Arab countries eye projects in Croatia

Foreign investors have recognised Croatia's great potential and are willing to invest considerable amounts of money, however, Croatia should make courageous political decisions and ensure new models for capital attraction, Croatian Minister for Small and Medium-Sized Enterprises, Darko Horvat said in an interview for Hina in Sarajevo on Thursday.

In the Bosnian capital, the Croatian minister was attending the two-day Sarajevo Business Forum that brought together several hundred entrepreneurs, bankers and officials from south-eastern European countries, China and Arab countries.

Horvat told Hina that during their meetings with him, Chinese partners said they were interested in becoming investors in the Croatian port of Rijeka and that they had heard of Croatia's plan to build and enhance the lowland railway from Rijeka to Zagreb and Budapest.

"It is true that Rijeka has all prerequisites to be a European Union gateway. China and the Arab world are aware of that, and now it remains to be seen whether we will be courageous enough to make political decisions conducive to letting those partners invest and build the Port of Rijeka," Horvat said.

He noted that the Chinese investors were already taking part in the financing of the construction of a rail-line from the Serbian capital of Belgrade to Subotica and Budapest, and he believes that this project is compatible to the Croatian lowland rail-line.

According to him, Chinese investors are seeking a broad range of projects in which they can invest "their capital surplus which they definitely have".

The minister warns that the Chinese are cautious of investments models Croatia is offering. Horvat believes that an optimal model is a strategic public and private partnership with products' placement on the market serving as the return on investment.

For instance, the German RWE partner in Croatia's Plomin thermal power plant offsets its investment through the electricity sale, which Horvat finds to be "a mature model" and which Croatia should exploit to a larger scale, following the example of Ireland.

The Croatian minister admits that the Chinese as well as Saudi Arab investors seem more inclined to become one of proprietors as soon as their investments are launched.

"Those models are not acceptable to us currently, particularly not in the energy sector," Horvat said adding that the Croatian authorities are, nevertheless, open for talks on the matter.

Horvat said that the Chinese side seems willing to invest in a 30-million-strong market, and that development projects could not be limited to only one country, and he holds that agriculture, tourism and infrastructure are sectors of a joint concept involving more countries.

The minister said that, when it came to the electricity sector, Croatia would continue relying on electricity generated in nuclear power plants, and that it would like to ensure the stable provision of electricity counting on two such plants as sources.

One is the Krsko nuclear power plant in which Croatia holds a 50% interest, and the other is the purchase of electricity which comes to the market from the Paks nuclear power plant in Hungary, he said.

The Paks power plant was built during the Soviet era and a few years ago the Hungarian authorities decided to expand it to build two more units which was why they selected Russia's Rusatom to build the new blocks. This has triggered off disputes between Budapest and the European Commission that has criticised Hungary of how it conducted the procedure.

Reuters has citied minister Horvat as saying that Croatia "is interested in the project and is exploring a most suitable business model to help meet local demand,"

"The EU's executive Commission has been holding talks to try to resolve differences after Hungary chose Rosatom in 2014 to build the two new reactors, partly financed by a favourably priced Russian loan worth 10 billion euros," Reuters reported.

"Apart from the alleged breach of public procurement rules, the Commission also has concerns the Paks plant would be overly dependent on Russia. The Hungarian government has said it respected all relevant laws when it awarded the contract for the construction of the two new reactors and the refurbishment of two others," according to Reuters.

Last update: Thu, 05/05/2016 - 18:25

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