ZAGREB, March 13 (Reuters) - Croatia has abandoned a tender
to lease the operation of its motorways to foreign companies and
will instead offer motorway shares to local pension funds and
citizens, Prime Minister Zoran Milanovic said on Friday.
Addressing a conference of exporters outside the capital, Milanovic said there was a lot of resistance in the newest European Union member to leasing out motorways, with opponents calling it selling off the family silver.
"I disagree with that perception, but we're now going for an option that targets only local pension funds to run the motorways. Part of it will be offered to citizens as well," Milanovic said in comments broadcast by state radio.
"This way we will get less money, but it will be a completely Croatian story," he said.
The government had aimed to raise between 2.5 billion euros ($2.63 billion) and 3 billion euros, for a concession of between 30 and 50 years.
The controversial tender, opposed by some trade unions and civic groups, was meant to help state-run road companies to repay debts of several billion euros over the coming years.
The Social Democrat-led government, which faces a general election in late 2015, said last December it had received non-binding bids for running the motorways, which connect the countryside with tourist resorts on the Adriatic coast.
The government did not name the bidders but local media have named the three most likely bidders as a Goldman Sachs-led consortium including local pension funds, Austria's Strabag and Australia's Macquarie.
Independent economic analyst Damir Novotny described the government's change of tack as "political meandering in an election year".
"We needed a foreigner with enough funds to pay back the debt and manage the motorways long term. It is questionable if our pension funds have the capacity to run the motorways profitably," he said.
Croatia, which depends heavily on tourism income, took out loans over the previous decade to complete a motorway network of more than 1,000 km (620 miles) to improve access to the coast.
But public road companies have not been able to raise enough from tolls to repay the debt, while Croatia's public debt is already above 80 percent of gross domestic product and the economy has been in recession since 2009.
Trade unions in the state motorway management company HAC and civic groups have called for a referendum on the issue, saying the motorways should remain in government hands. ($1 = 0.9502 euros
Addressing a conference of exporters outside the capital, Milanovic said there was a lot of resistance in the newest European Union member to leasing out motorways, with opponents calling it selling off the family silver.
"I disagree with that perception, but we're now going for an option that targets only local pension funds to run the motorways. Part of it will be offered to citizens as well," Milanovic said in comments broadcast by state radio.
"This way we will get less money, but it will be a completely Croatian story," he said.
The government had aimed to raise between 2.5 billion euros ($2.63 billion) and 3 billion euros, for a concession of between 30 and 50 years.
The controversial tender, opposed by some trade unions and civic groups, was meant to help state-run road companies to repay debts of several billion euros over the coming years.
The Social Democrat-led government, which faces a general election in late 2015, said last December it had received non-binding bids for running the motorways, which connect the countryside with tourist resorts on the Adriatic coast.
The government did not name the bidders but local media have named the three most likely bidders as a Goldman Sachs-led consortium including local pension funds, Austria's Strabag and Australia's Macquarie.
Independent economic analyst Damir Novotny described the government's change of tack as "political meandering in an election year".
"We needed a foreigner with enough funds to pay back the debt and manage the motorways long term. It is questionable if our pension funds have the capacity to run the motorways profitably," he said.
Croatia, which depends heavily on tourism income, took out loans over the previous decade to complete a motorway network of more than 1,000 km (620 miles) to improve access to the coast.
But public road companies have not been able to raise enough from tolls to repay the debt, while Croatia's public debt is already above 80 percent of gross domestic product and the economy has been in recession since 2009.
Trade unions in the state motorway management company HAC and civic groups have called for a referendum on the issue, saying the motorways should remain in government hands. ($1 = 0.9502 euros
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