The government on Thursday adopted a decision to issue a shareholder loan to the state-owned HEP power company in the amount of €400 million and to launch the process of the company's recapitalisation.

Prime Minister Andrej Plenkovic said the government’s decision was the first step in helping the energy company function normally, as well as enabling it to make investments in the context of energy transition.

Economy and Sustainable Development Minister Davor Filipovic said that the government’s decision would make it possible for households to continue having one of the lowest prices of electricity in the EU, securing good inputs for the business sector as well as the normal functioning of HEP.

HEP needs financial aid because of losses incurred due to the government’s package of aid measures, with emphasis on a regulation removing disruptions in the domestic energy market, adopted to help households and other vulnerable energy buyers, in the amount of up to €900 million.

In order to stabilise HEP’s business operations, the government has therefore decided to grant the company a shareholder loan of €400 million, to be issued by the Economy and Sustainable Development Ministry.

The loan will be paid in two installments – one, in the amount of €265 million, will be paid upon the signing of the agreement, and €135 million will be paid in July this year at the latest.

The annual interest on the loan is 4.5%.

The loan will be repaid in one go and it matures 24 months from the day the second installment is used.

The loan can be repaid by transforming the amount of the principal due for payment into equity.

Immediately upon the signing of the agreement, HEP will commit itself to hand over to the Ministry payment insurance instruments – six blank accepted promissory notes and a debenture.

After it grants the shareholder loan, the Economy and Sustainable Development Ministry will inform the European Commission accordingly.

The ministry will take all the necessary activities to recapitalise HEP, that is, increase its share capital in the amount of up to €900 million. The total value of recapitalisation includes the €400 million to be granted in the form of a shareholder loan.

The government today also changed two decisions on government guarantees for loans to HEP. Minister Filipovic noted that last year the government gave its consent for HEP to take a €400 million loan to fill the gas underground storage facility Okoli and a €600 million loan to secure the supply of energy products. Today’s decisions prolong the repayment of those loans by 24 months.