FBiH Government: We helped Aluminij, but the debt still grew by about 30 million annually

SARAJEVO, (Patria) - The Federal Government, with its 44 percent capital share in the company Aluminij d.d. Mostar, undertook a series of activities primarily aimed at finding ways to reschedule debts incurred due to the rise in electricity and raw material prices on the market, as well as problems with delayed payment of the Company's regular tax obligations, and actively participated in finding an optimal business model together with interested business partners.

This was announced by the Government of the Federation of Bosnia and Herzegovina after today's session where information on activities conducted in the company "Aluminij" Mostar in the period 2015-2019 was adopted.

Aluminij Director Dražen Pandža announced on Wednesday that the Mostar factory will be shut down at the first minute on Saturday, due to huge debts that it can no longer finance. 

In the past few years, Aluminij has been operating at a loss, and the company's total debt is almost 400 million marks, of which more than half is debt for consumed electricity.
Around 150 workers of Mostar's Aluminij set off today from Mostar towards Sarajevo, where they will ask the Government for help for this company that is on the verge of collapse, as well as for the prosecution of those who brought Aluminij to bankruptcy.

The Government announced that during 2018, the FBiH Government made several interventions towards Aluminij: Approved funds in the amount of 2.1 million KM for the payment of contributions for 884 workers for the last quarter of 2017; gave consent for the rescheduling of Aluminij d.d. Mostar's debt to JP Elektroprivreda HZ HB in the amount of 207 million KM; allocated funds in the amount of 1.1 million KM for conducting a business audit for restructuring or privatization purposes; adopted a Decision on financial consolidation of the company Aluminij d.d. Mostar, thereby once again approving the rescheduling of debts recorded until 30.9.2013; gave consent to the companies JP Elektroprivreda HZ HB d.d. Mostar and Aluminij d.d. Mostar to undertake activities within their competencies to resolve the supply of electricity to the company Aluminij d.d. Mostar...

“From all of the above, it is evident that in the past period, the Government of the Federation of BiH has actively worked on finding solutions to the problems encountered in the company Aluminij d.d. Mostar,” the Government announced.

In the explanation of the FBiH Government regarding the Government's relationship with Aluminij, it is further stated:

“It is important to emphasize that on 31.12.2014, the debt of the company Aluminij d.d. Mostar to JP Elektroprivreda HZ HB d.d. Mostar amounted to 128.2 million KM, and that as of 30.6.2019, this debt amounts to 293 million KM. 

This indicates that the debt of the company Aluminij d.d. Mostar to JP Elektroprivreda HZ HB d.d. Mostar has been growing by about 30 million KM annually. Despite this, the Government of the Federation of BiH adopted the reports of JP Elektroprivreda HZ HB in the period 2015-2018, aware that any other decision could have unforeseeable consequences for both companies, and primarily for
Aluminij d.d. Mostar.

In the previous period, the FBiH Government, in cooperation with the Management of Aluminij d.d. Mostar, held a series of talks with interested investors. However, the issue of electricity prices remains a burning problem for Aluminij d.d. Mostar, which potential investors are also aware of. The price of electricity is formed on the electricity market, and the FBiH Government has no way or mechanism to influence it in any way. It is strictly dictated by supply and demand, as well as the influence of major producers on the market.

As a priority when making individual conclusions and decisions, the Government of the Federation of BiH was primarily guided by the concern for about 900 jobs that would be directly threatened in the event of the worst-case scenario, i.e., the shutdown of the production cells of the company Aluminij d.d. Mostar.

This stance was clearly communicated to all interested investors without the possibility of negotiation on the topic of jobs.“

The FBiH Government stated that every job is important and that this is the primary prerequisite presented to interested potential investors. Aluminij d.d. Mostar, as a significant economic entity, the Government stated, requires joint action from all owners and employees to overcome this difficult period and successfully complete the restructuring process of Aluminij.