The trilateral contract between the Croatian state-owned power company HEP, the Sibenik-based light metal factory TLM and the aluminium factory Aluminij of Mostar, Bosnia and Herzegovina, is based on "a clear economic formula", the Mostar company said in a statement on Tuesday, presenting its position on an ongoing investigation in HEP.
The Croatian anti-corruption agency USKOK has launched another investigation of former deputy prime minister and economy minister Damir Polancec on the suspicion that he and former HEP and TLM executives, Ivan Mravak and Ivan Kostan respectively, defrauded HEP of around HRK 600 million (EUR 83 million).
According to USKOK, most of the funds in question were defrauded because HEP sold electricity bought on foreign markets to TLM at prices three times below its purchasing price. TLM later gave the electricity to Aluminij in Mostar.
The contract does not ensure cheap electricity for Aluminij, but precisely defines its obligation to annually supply TLM with 50,000-60,000 tonnes of homogenised aluminium alloy, which makes it possible for TLM to skip one stage of the manufacturing process and for Aluminij to receive in return electricity at a precisely defined price, the Mostar company said.
It said that the trilateral contract benefited both TLM and Aluminij, and that the privatisation of TLM would hardly be successful without it.
The statement said that the contract was concluded at the urging of TLM and the Croatian government after a consortium that planned to buy TLM made it a condition that TLM should have a secure annual supply of metal.
Under the contract, Aluminij supplies TLM with the requested quantity of metal, which TLM reciprocates by selling electricity to Aluminij at a precisely defined price. The electricity price accounts for 28 per cent of the metal price, which is determined by the London Stock Exchange. As the aluminium price since the signing of the contract has ranged between 1,200 and 3,200 US dollars per tonne, the electricity price has also varied, but was never fixed at 20.5 euros as is persistently claimed, the statement said.
By signing the trilateral contract, Aluminij did not cause any damage to Bosnian power companies Elektroprivreda BiH and EP HZ HB, the company said, adding that it pays 48 euros per mWh in Bosnia and Herzegovina, the highest electricity price in the aluminium industry in the world.
The statement said that the owner of 12 per cent of Aluminij was not TLM's new owner, the Adrial consortium, but the Croatian government through its Ministry of Finance.
Aluminij's management was angry that the company came under attack at a time when it was increasing its production and showing signs of recovering from a severe recession.
