The Slovenia Times

Former finance minster Mramor tells inquiry TEŠ 6 major risk


Appearing before the inquiry looking into political responsibility for the ballooning cost of unit 6 of the Šoštanj coal-fired power plant (TEŠ), Mramor said that by the time he started serving his second term in 2014, neither him nor the government had any leverage any more to streamline the project.

At the time, the unit was in test operation, more than 95% of the construction works on the project had been completed and more than 90% paid for, said Mramor, who resigned as minister last summer citing personal reasons (he also served in 2002-2004).

"The project represented a huge risk for the state, due to the nature of its financing," said Mramor, referring to the European Bank for Reconstruction and Development (EBRD), and the European Investment Bank (EIB) as the major investors.

TEŠ took out a EUR 550m loan with the EIB with the state guaranteeing for EUR 440m and for the rest a consortium of private financial institutions. The problem with the latter was that the guarantee period was only five years, while the loan maturity was due in 2025.

When the period lapsed, two banks could no longer give the guarantee, while for a further two EIB no longer deemed it acceptable because of deteriorated credit rating. As a result the portion of the loan - EUR 110m no longer had a guarantor.

"This means the EIB could have demanded the repayment of the whole 550 million euros," said Mamor, adding that in such case it could enforce the state guarantee, which would come as a major blow to public finances.

The problem was solved through the power utility HSE as TEŠ owner taking out a bridging loan to repay that part of the EIB loan plus some 20% of the EBRD's EUR 200m loan. This short-term bridging loan was later repaid by HSE getting a long-term loan, but Marmor was no longer minister by then.

Another problem that needed solving was that the commitments made on taking the EIB loan were not met, which meant the loan could have been cancelled. This resulted in annexes to the loan agreements, while the government pledged its guarantee would still be valid.

However, Mramor said that the annexes changing the loan commitments alone cost at least EUR 1.5m.

"I must admit that when I became minister there were so many problems that needed solving it was necessary to look ahead, and only so much back as to solve a problem for the future," said Mramor, adding he did not have time to get acquainted with details leading to TEŠ commitments.

Asked about a potential levy for preferential dispatch for TEŠ, which is being considered, Mramor said he would support it if anything jeopardised the state guarantee.


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