Croatia’s plan to monetise the €4.2bn debts of Hrvatske Autoceste (HAC), the national motorway authority, and Autocesta Rijeka-Zagreb (ARZ), the state-owned company that operates the Rijeka-Zagreb motorway, have come to an abrupt end.
On 13 March, prime minister Zoran Milanović announced that the government was cancelling the tender and replacing it with an IPO of 51% of Croatian Motorways Maintenance and Tolling (HAC-ONC), the agency jointly owned by HAC and ARZ.
This alternative was first made public earlier in March by Siniša Hajdaš Dončić, minister of Maritime Affairs, Transport and Infrastructure.
Croatia’s four mandatory pension funds, part of the original bidding consortia, would still be involved.
According to Croatian media, 80% of the available shares would be offered to the pension funds, and the remainder to the Croatian citizens and HAC ONC employees.
The prime minister said the IPO would relieve the state budget of principal and interest repayments, which would become the responsibility of the IPO investors.
Politically, the government’s decision allows it to sidestep a potentially embarrassing referendum against the monetisation programme that was awaiting clearance by the Constitutional Court.
Had it gone ahead, the referendum would have barred not just the HAC-ARZ concession but all similar future schemes.
Opinion polls suggested the concession was proving highly unpopular, and not just because of its perception as a privatisation of public property.
Ultimately, it would have been funded largely by higher motorway tolls and fuel excise duties.
There will nevertheless be financial repercussions associated with the last-minute cancellation, including potential lawsuits by the bidders to recover the costs incurred to-date.
The three consortia submitted non-binding bids in 2014 and were set to follow up with binding bids this April.
Meanwhile, the Croatian Democratic Union (HDZ), the largest opposition party in Parliament, has called for Dončić’s resignation, reminding him that he had earlier ruled out any alternatives to the monetisation concession, and had himself threatened to resign if it fell through.