Page 98 - SE Outlook Regions 2023

Zadar region. Parallel loans will be provided by Zagrebacka Banka d,d.
and the Croatian Bank for Reconstruction and Development, to create a
total debt financing package of €126mn.

The energy sector was marred by a large scandal involving Croatian oil
and gas company INA. In August, the country’s anti-corruption body,
USKOK, arrested five people suspected of reselling natural gas that
belonged to INA, causing damages worth HRK800mn (€113mn). In
October, USKOK arrested more people involved in the scandal. INA’s
management has resigned following the scandal, which has also
shaken the image of the ruling HDZ party whose members were among
INA’s managers.

In October, INA picked KPMG to carry out an external audit in order to
improve its gas trading business. KPMG will consult INA’s new
management on how to improve gas trading operations and which
corrective or preventive actions should be taken. It will also review
INA’s gas trading portfolio since 2020.

The latest request from Croatia for a review of a UN ruling in a dispute
between INA and Hungary’s MOL was rejected in October. The Swiss
Federal Supreme Court turned down a request by the Croatian
government to review a 2016 ruling by the United Nations trade tribunal
upholding a deal that gave control of INA to MOL.

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 a 2009 deal that allowed MOL to obtain
a dominant position in INA. MOL won the arbitration case in December
2016.

According to the Swiss top court, there was disagreement between
Croatian courts and international arbitrations on the reliability of
witnesses, but that gave no solid ground for challenging the UN ruling,
as Croatian courts had to rule on the criminal aspect of the case, while
UNCITRAL was in charge of the civil aspect.

3.4.5 Construction

Croatia's construction output increased by 3.9% y/y in the first nine
months of 2022, showing a stable recovery after the recession caused
by the coronacrisis. It was backed by the country’s recovery from two
devastating earthquakes in 2021.

Meanwhile, in July a major construction project was completed, the
Peljesac bridge that connects the Croatian mainland with the Peljesac
peninsula, giving Croatia a continuous land link that bypasses Bosnian
territory. The bridge has put an end to hours-long lines in which traders,
commuters and tourists were forced to wait at the border with Bosnia &
Herzegovina and was set as a top priority for Zagreb. After the collapse
of former Yugoslavia in the 1990s, Bosnia maintained its coastal

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