ECONOMY

Greece, FYROM far from resolving OKTA dispute

Negotiations between the government of the neighboring Former Yugoslav Republic of Macedonia (FYROM) and government-controlled Hellenic Petroleum (ELPE) over the future of FYROM’s biggest refinery, OKTA – 80 percent-owned by ELPE since 1999 – and the extension of a pipeline to Kosovo appear to be stagnating, despite efforts by both countries’ governments in recent months. According to sources, a visit to Skopje early this week by the Development Ministry’s general secretary for energy, Giorgos Agrafiotis, proved fruitless as the FYROM government appeared not to budge from earlier positions. Branko Crvenkovski’s government, which took office last September, holds that the ELPE-OKTA deal, concluded by its predecessor, granted OKTA import tariff privileges that amount to monopoly rights and has striven for a revision. The European Union has also said certain terms of the OKTA acquisition are against the Stabilization and Association Agreement signed with FYROM in 2001. In early May, Development Minister Akis Tsochadzopoulos indicated a willingness on the part of the Greek government to compromise, but complications have since arisen, including the proposed extension of a crude oil pipeline from the OKTA refinery to Kosovo. The Skopje government committed itself in May to working toward a trilateral agreement with OKTA and Kosovo authorities for construction of the pipeline, but the project does not currently appear to be on its list of priorities and is, therefore, making no progress. It also committed itself to resume purchases of fuel oil from OKTA and pay compensation for the contractual quantities it had not bought in the previous two years. This has not happened and is still creating serious problems for OKTA’s viability. The refinery recently reached a deal, effective as of July 1, to supply finished products to local distribution firm Mak Petrol for six months; Mak Petrol is one of FYROM’s largest chains and the deal is expected to give OKTA a good financial breather, but the refinery is still expected to report losses for the current fiscal year, and the future is uncertain after the expiry of the current deal. A third thorn is the sum of $17 million in compensation, which a London arbitration court has adjudicated to be paid by OKTA to another Greek fuel distributor, Mamidoil-Jetoil, and for which the FYROM government is said to have assumed responsibility but appears unresponsive. Above and beyond such problems, OKTA is also currently facing an urgent need for a share capital increase to finance its investment plans, notably a gasoline station chain, for which it has chosen a number of sites. A fourth round of negotiations has been scheduled for the end of the month, to give the two sides time to work on some «new ideas.»