The government on Friday gave its consent to the HEP state power provider to borrow a billion euros to finance the procurement of electricity supplies, coal and heating energy as well as to purchase gas supplies which the company will store in the Okoli underground natural gas storage facility.

Economy and Sustainable Development Minister, Davor Filipovic, said today that the consent was motivated by plans to make sure that there would be enough energy supplies for households and the enterprise sector against the backdrop of the war in Ukraine.

Thus, HEP has been given the green light to borrow €600 million from commercial banks for the procurement of electricity, gas, coal and heating energy.

HEP is allowed to borrow up to 400 million euros for the purpose of ensuring 270.83 million cubic metres of gas and store it in Okoli.

The government will provide guarantees for both loans.

The gas stored in Okoli will be managed by the crisis management team tasked with the implementation of intervention measures necessary to secure the provision of gas supplies to Croatia.

The state budget will allocate funds to cover the difference between the asking and selling prices of gas on the market.

In late April, the government decided to fill the Okoli underground storage facility after its lessees showed no interest in filling the storage capacities because of high gas prices.

The decision was made based on the intervention plan to respond in time to potential gas supply disruptions, at the proposal of the crisis management team established to monitor gas supply security.

The team has ordered that Okoli should be full at 90% of capacity at the start of the next heating system, by 1 November.

The decision allowing the government to intervene and fill the Okoli gas storage facility entered into force in late April.

Under the decision, lessees are required to fill 63% of the capacity they leased by 1 August, 68% by 1 September, 74% by 1 October, and 90% by 1 November. If they do not plan to use the capacity they leased, they are required to notify the Ministry of Economy and Sustainable Development. In that case, they will lose the right to store gas at Okoli so that strategic gas reserves can be made by the government.