PM Explains Why Motorway Lease Makes Financial Sense

Croatia’s Prime Minister Zoran Milanović has defended his government’s stance in wanting to lease out the nations motorways to a private firm, despite a backlash from the public…

Last week a referendum initiative against the government monetising 1,017 kilometres of motorways was launched, with 160,000 signatures gathered in just 3 days. Many in the country are opposed to yet another ‘sell off’ to a private foreign firm, but in a TV interview this week Milanović explained why it was necessary that they pushed on with monetisation.

The PM said that the state-owned motorway operators were in debt to the tune of over 4 billion euros, and in reality Croatia did not own the motorways now anyhow, but they belonged to the foreign banks which issued the loans to build it. Milanović said that a lump sum obtained from a 30-50 year concession on the motorways would go to paying back the majority of debt, instead of paying long-term interest payments for the next 25 years to the banks.

Currently fuel excise duties is going towards paying back the debt, and Milanović stressed that by this money could be better spent on other projects around the country instead of servicing debt.

“We could also use that money on the railway infrastructure, and in that case we would pay back to foreign banks twice as less money as we should now when we have a repayment period of 25 years, as we would save 30 billion kuna on interest,” said Milanović.