ECONOMY

ELPE may seek friendly settlement of OKTA dispute

State-controlled Hellenic Petroleum (ELPE), Greece’s biggest oil refining and marketing company, is to seek a friendly settlement of its dragging dispute with the government of the Former Yugoslav Republic of Macedonia (FYROM) concerning the operation of its subsidiary OKTA refinery, sources said. ELPE in March filed for international arbitration with a Paris court, as provided for by the 1999 contract of OKTA’s majority acquisition, claiming compensation for losses incurred due to violation of terms by the FYROM government. The OKTA acquisition was described from the outset as high risk, mainly due to the prevailing political instability in FYROM in the year of the crisis in Kosovo. The sale of the country’s sole refinery and biggest industrial concern became a bone of contention between the country’s main political parties, denounced by the then-opposition leader and present Prime Minister Branko Crvenkovski. The sale contract provided for a transitional five-year period during which OKTA would operate under two basic privileged terms designed to ensure its viability and competitiveness after market deregulation in June 2004. These terms envisaged a ban on imports of products similar to those produced by OKTA and the absorption of specific quantities of fuel oil by the FYROM government. ELPE maintains that these two terms were violated soon after the acquisition, with FYROM liberalizing imports much earlier. This is claimed to have resulted in OKTA posting losses in the last two years. ELPE claimed to have exhausted all room for negotiation during the tenure of the previous PASOK government but to no avail, and filed for international arbitration. Company sources are now taking the view, however, that a friendly settlement would be the best solution for both sides. In the meantime, another legal case is pending, brought by Greek fuel marketing company Mamidoil-Jetoil against OKTA for violating the terms of a contract signed before its acquisition by ELPE. Mamidoil-Jetoil was initially vindicated by a London court, which ruled OKTA had to pay 16 million euros in compensation. The legal battle is now in a FYROM court over implementation of the ruling. ELPE officials point out that the contractual terms provided that any such compensation would be met by the FYROM government, not OKTA.