February 21 (SeeNews) - The government of Bosnia's Federation entity will not support the latest proposal of Israel's M.T. Abraham Group and its Chinese partners for a long-term lease of the production assets of ailing Aluminij, the Federation's energy minister said.
The representative of the Federation government will vote against the proposal at the general shareholders' meeting of the aluminium company scheduled for February 21 because of numerous errors in the proposed draft leasehold contract which is unacceptable for the Federation in its current form, energy minister Nermin Dzindic said in a statement on Thursday.
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The Federation, however, will give 30 days to the management and supervisory boards of Aluminij and to all participants in the process to correct the errors, Dzindic said.
He said that the Federation had received the initial offer of M.T. Abraham Group at the end of 2019 and following a detailed consideration sent a letter to the interested investor pointing at all unacceptable elements.
At the beginning of 2020, the Israeli group submitted its final leasehold memorandum for Aluminij, which however still fails to meet the main demands of the Federation and the government is therefore again turning it back, Dzindic said, calling on the representatives of M.T. Abraham to propose to the government a new model for cooperation, in line with the valid legislation.
"Our primary goal is for the partner to guarantee to keep employees, rather than have the contract signed by a business entity that has not been registered at the tax administration and does not have a bank account," Dzindic concluded.
Earlier this month, local media reported that the supervisory board of Aluminij will propose to the Federation government to accept the latest proposal of the Israeli-Chinese partners.
The Federation's government controls 44% of Aluminij, followed by the government of neighbouring Croatia with 12%, with the remainder held by smaller shareholders. The Federation is one of two autonomous entities forming Bosnia and Herzegovina. The other one is the Serb Republic.
In December, M.T. Abraham Group said that together with its partners, China Machinery Engineering Corporation (CMEC) and China Nonferrous Metal Industry’s Foreign Engineering & Construction (NFC), it has submitted a second and final proposal for leasing Aluminij's production assets, which was revised and amended to take into account the remarks of the Federation government on its original proposal submitted in October and rejected by the entity's government.
"M.T. Abraham Group and its partners are ready and willing to immediately start implementing the strategic plan. If our final proposal is accepted, our professional teams, partners and resources are available and ready to move forward without further delay," it added.
Even though it did not reveal any details of the proposal, M.T. Abraham has said its primary objective is to reactivate and stabilise the existing smelter operations, introduce new operational efficiencies, open a new modern production line and enhance management practices in order to ensure long-term stability and profitability.
Aluminij shut down operations in July after its power supply was cut off due to swelling unpaid bills. Following the shutdown, the Federation's government decided that Aluminij should continue to operate and come up with a rescue plan by the end of 2019.