July 1 (SeeNews) - Bosnia's ailing aluminium producer Aluminij is in a critical state, having contracted electricity supplies for only a day ahead, and its management plans to resign over unresolved power price issues, local media reported on Tuesday.
"The situation is very bad, the conditions in which we are working have reached a state that jeopardises the company's existence," news wire Klix.ba reported, quoting unnamed sources close to the company management.
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"Considering the government's stance, the current management does not see any light in the tunnel," the source added.
According to the report, Aluminij's manager Drazen Pandza and its executive directors Boris Vican and Ivan Cale are expected to file their resignations at the company's supervisory board meeting scheduled for Wednesday, unless there are some viable changes regarding Aluminij's fate in the next 24 hours.
The management has been pushing the government of Bosnia's Federation to introduce subsidised electricity prices and allow the company to overcome a lasting power supply crisis.
However, the government has been reluctant to pay for Aluminij's electricity since the expenses from the proposed subsidies would cost the tax payers more than 50 million marka ($28.9 million/25.6 million euro) annually, Klix.ba reports.
According to earlier media reports, Aluminij's outstanding debt to power producer Elektroprivreda HZHB has reached 280 million marka and the supplier is no longer willing to provide the aluminium smelter with electricity unless it shows clear bank guarantees it would pay its bills.
The aluminium smelter is based in the Federation, one of the two autonomous entities that form Bosnia. The other is the Serb Republic.
The Federation government controls 44% of Aluminij, followed by the Croatian government with 12%, while the remainder belongs to smaller shareholders.
Last week, the Federation government launched negotiations with British-Swiss company Glencore on finding ways to rescue Aluminij. The talks were focused on a possible restructuring of Aluminij, which would involve establishing of consortium of companies led by Glencore and comprising Bosnian aluminium processor Feal, Zagreb-based PPD and Bosnian company Erdal.
Earlier this week, local media reported that a multinational company based in Dubai is interested in taking over Aluminij and its representatives are coming to Sarajevo to discuss the issue with the Federation's government on July 4.
Klix.ba speculates that the fate of Aluminij could turn into a political issue on selecting the best possible scenario for the troubled firm.
Thus, the Croatian government would rather support the entry of the Glencore-led consortium, while the Federation would opt for the Dubai-based investor and for another interested company coming from the Emirates.
(1 euro = 1.95583 marka)