Hungarian MOL ready to sell INA stake to Croatian government

Hungarian MOL ready to sell INA stake to Croatian government
By Akin Nazli in Belgrade May 8, 2017

Hungarian oil company MOL is ready to sell its stake in Croatian energy company INA to the Croatian government, Sandor Csanyi, vice chairman of MOL and CEO of Hungary’s OTP Bank, said on May 5. 

Croatia owns a 44.85% stake in INA, while MOL holds a 49.1% stake and management rights. The two shareholders have been locked in a long dispute over control of the company. Budapest and Zagreb have been battling over the issue for years, with the Croatian side insisting control was handed over illegally via a bribe to former Prime Minister Ivo Sanader.

“If the Croatian government is not able to buy INA stake, MOL could sustain it,” Csanyi said at an event in the Croatian town of Split to mark the recent takeover of Croatia’s Splitska Banka by OTP, Croatian news agency Hina reported.

“However, it is not easy to sustain the stake after Croatian constitutional court annulled MOL’s two verdicts (regarding the controlling rights at INA),” the MOL vice chairman added. 

Croatian Prime Minister Andrej Plenkovic announced in December that Zagreb intended to buy MOL's 49% stake in INA, but it was not clear whether the Hungarian shareholder was willing to sell. Zagreb previously suggested it planned to privatise a 25% stake in state-owned power company Hrvatska Elektroprivreda (HEP) in order to finance the acquisition.

However, in February, Hungary’s Foreign Minister Peter Szijjarto said cooperation between the two countries had become “untenable”, and the only way forward would be to “end the cooperation”.

Csanyi also called on May 5 for Croatia to remove the European arrest warrant on MOL CEO Zsolt Hernadi.

Hernadi was charged in Croatia with bribing Sanader to help MOL obtain a dominant position in INA back in 2009. Sanader was sentenced to ten years in prison in 2012 for taking bribes from Mol and Austria's Hypo Alpe Adria bank. In 2015, however, the constitutional court annulled the convictions, citing procedural errors. In November the following year, Hernadi was removed from Interpol’s wanted list.

Last month, the Swiss Federal Court rejected the Croatian government’s appeal to delay the implementation of an arbitration ruling in favour of MOL regarding a dispute over INA.

Croatia turned to the Arbitral Tribunal of the United Nations Commission on International Trade Law (UNCITRAL) in Geneva in 2014 with the aim of cancelling the 2009 deal that allowed MOL to obtain a dominant position in INA. MOL won the arbitration case in December 2016. 

Another arbitration case, launched by MOL in 2013 against the Croatian government at the International Centre for Settlement of Investment Disputes (ICSID) in Washington, is still ongoing. In that case, the Hungarian company - in which Budapest holds 24% - claims Croatia failed to fulfil obligations detailed in the 2009 deal.

INA is the largest Croatian company involved in oil and gas exploration and production, oil processing, and oil and oil products distribution activities, and also has a strong position in the region. It manages two refineries at Rijeka and Sisak, and a regional network of 495 petrol stations. In addition to its operations in Southeast Europe, it also has exploration and production operations in Angola and Egypt.