The City of Dubrovnik wants 30 million kuna and 30 percent of future revenue for the use of the popular Srđ cable car without a concession contract.

As Marija Crnjak/Poslovni Dnevnik writes on the 21st of March, 2019, the several year long ''argument'' over the concession of the Srđ cable car has escalated to the extent it has because the City of Dubrovnik filed a lawsuit against Excelsa nekretnine (real estate) owned by the Lukšić family, accusing them of the unlawful acquisition of money. The amount that City of Dubrovnik is seeking for the use of the popular cable car without a concession agreement is 30 million kuna, as Dubrovnik's mayor Mato Franković announced last week.

He also explained that DORH had given the company a deadline which is the end of this month to comply with the law of the Republic of Croatia, to pay a concession fee to both the City of Dubrovnik and to the state, and by April the 1st, they are obliged to sign a concession agreement with the City of Dubrovnik.

If this doesn't happen, the cable car will be closed because its use would then be illegal, Mato Franković said, adding that a new report showed that the concession fee of 15 percent is too low and the belief is that it should be 30 percent. At the next session of Dubrovnik's City Council, a proposal to annul the old motion and to propose a new one will take place. In an interview with Poslovni Dnevnik, Anto Rusković, the director of Excelsa nekretnine explained why a concession contract has not yet been signed and that the company will not agree to an even higher fee than the one which was previously proposed.

Do you admit that there is a 30 million kuna debt to the City of Dubrovnik? Do you consider that the city's claim is justified?

The City of Dubrovnik filed a lawsuit against Excelsa nekretnine in the amount of 20.1 million kuna, and Excelsa nekretnine will pay as much as is determined by a final court judgment. Given that such verdicts still haven't come to pass, and in order to ensure that the City will be able to be paid if the court's verdict goes in its favour, we have offered the City of Dubrovnik the appropriate means of securing its eventual receivables in good will. It should be stressed that, if [any debt] exists at all, then it has arisen because the City of Dubrovnik hasn't offered a conclusion to the concession contract to date.

Why has a concession agreement between Excelsa nekretnine and the City of Dubrovnik not been signed yet?

Excelsa nekretnine has applied for a concession, with the concessionary terms agreed with the City of Dubrovnik, filed in August 2015, while the City of Dubrovnik hadn't issued a concession decision in accordance with the agreed terms until April 2018. In the meantime, the city brought in and then revoked several concession-related decisions, and the last one from April 2018 hasn't yet been implemented. It's necessary to clarify that we have been seeking concessions since 2010, but we had to wait for the applicable legislation by the state. The law granting concessions to cable cars entrusted to local self-government units was passed in 2014 and then we started negotiations with the city, finally agreeing on the concession conditions in July 2015. Since then, the process has only become more complex and has led us to the situation in which we find ourselves today. If the concession contract was signed in 2015 as was agreed, the City of Dubrovnik would have got its concession fee the entire time and there would be no dispute today.

Is the closure of the cable car expected?

In the potential situation of the closure of the cable car, all sides will suffer significant losses, especially Excelsa nekretnine and its partners, since the work of the cable car provides jobs for a significant number of people.

Furthermore, if the cable car closes, the state budget will lose part of the tax revenue, and the City of Dubrovnik will not receive any revenue from the concession. It's important to note that since the beginning [of the work of the cable car] Excelsa nekretnine has contributed more than 122 million kuna in taxes and contributions to the state budget, predominantly based on the cable car's business.

We believe that the scenario of its potential closure should be avoided, but we're not in a position to make such a decision. Not only are we disappointed in the way the authorities are acting, but we're also frustrated by the fact that, unsuccessfully, we've repeatedly tried to solve this problem with a reasonable and rational approach. Unfortunately, this negative attitude towards investors will not contribute to improving the investment climate in Croatia.

Do you have a license from the Ministry of Transport to work on the lift and on what basis does has it been provided?

Excelsa nekretnine received approval from the Ministry of Transport for the carriage of passengers by cable car before the cable car even started working back in 2010. At that time, such approval was granted instead of a concession due to the long duration of the concession-issuing procedure, as is written in the very approval. Had Excelsa nekretnine not received explicit permission to carry out activities of the carriage of passengers by cable car, we wouldn't have even begun doing so.

The mayor has announced that he will seek 30 percent of the revenue in the concession contract, which should be signed by April the 1st. Are you ready to agree to that?

We still haven't had any insight [into that] and we don't have access to the new expert testimony mentioned by the mayor which points to the need to increase the fee by 30 percent, so we can't comment on it either. On the basis of the previous expert testimony, we can see that such fees, twice the amount previously agreed, is unfounded. The City Council already approved the concession fee in April last year. We consider that the City of Dubrovnik should send a contract under the previously agreed terms and end this whole situation, which has already been going on for far too long.

Make sure to follow our dedicated business page for much more. If it's just Dubrovnik and the extreme south of Dalmatia you're interested in, give Total Dubrovnik a follow.

Click here for the original article/interview by Marija Crnjak for Poslovni Dnevnik