ELPE waiting on OKTA

Hellenic Petroleum’s (ELPE) investment in the Former Yugoslav Republic of Macedonia (FYROM) is weighing on the Greek company’s bottom-line figures as a dispute over the acquisition terms of FYROM’s OKTA refinery continues. ELPE bought a majority stake in the country’s largest refinery, OKTA, from the FYROM government in 1999, in a deal which has since been labeled illegal. The European Union has also said certain terms of the OKTA deal are against the Stabilization and Association Agreement signed with FYROM in 2001. Branko Crvenkovski’s government, which took office in September 2002, holds that the ELPE-OKTA deal, concluded by his predecessor, granted OKTA import tariff privileges that amount to monopoly rights. It has striven for a revision. Sources say that talks between the two sides have come to a standstill as the Greek company is now considering resorting to legal action despite recent reassurances that a settlement was on the cards. An international arbitrator’s possible decision in favor of ELPE is seen as having a limited impact given that a change in market conditions is needed for its investment to turn profitable. Earlier this year, ELPE said the group was in the process of reaching a friendly settlement with the FYROM government over the OKTA refinery. Conditions surrounding the initial purchase deal point to a transaction which utilized favorable conditions and political figures rather than business criteria. The OKTA issue is the latest twist in a standoff that has involved both countries’ governments in recent years. In December 2002, a FYROM court declared unconstitutional the law ratifying a bilateral deal for construction of a Thessaloniki-Skopje oil pipeline and the importation of fuels by OKTA under privileged terms.

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