Plinacro Awarded $95 mln Loan for Starage Facility

May 14, 2009
Igor Ilic, Reuters

Croatia's state-owned gas pipeline operator Plinacro signed on Wednesday a deal with the European Bank for Reconstruction and Development (EBRD) on a 70 million euro ($95.54 million) loan to finance its takeover of the country's gas storage business.

"Involvement in gas storage is an important business step in liberalising (the Croatian) gas market," Plinacro Chief Executive Branko Radosevic told a signing ceremony.

The gas storage business was previously managed by oil concern INA INA.ZA (HINAq.L), whose biggest shareholder is Hungary's MOL MOLB.BU. The Croatian government agreed with MOL in January to take over the gas business from INA to increase the country's energy independence.

The EBRD loan, worth 70 million euros, has a six-year maturity with a one-year grace period. The interest rate is one percent over Libor.

Plinacro said it planned to pay back the loan with income from providing services in the storage facility Okoli in central Croatia, which it will buy with the EBRD loan.

Croatia consumes some 3.4 billion cubic metres of gas per year and covers some 60 percent from its own gas fields. The rest is imported from Russia. The capacity of the Okoli gas storage is somewhat above 500 million cubic metres of gas.

Radosevic said Plinacro would soon submit to the government its five-year plan to expand gas storage business through investments into new storage facilities.

They would then serve not only Croatia, but also other countries in the Balkan region, many of which were severely hit during the gas crisis in January, caused by a row between Russia and Ukraine over gas transport prices.

EBRD's chief representative for Croatia, Charlotte Ruhe, said the bank would this year extend loans worth between 300 and 400 million euros in Croatia, thus increasing EBRD's overall investment in the European Union candidate to some 2 billion euros.  

- Copyright 2009, Reuters. All rights reserved.