Croatia's government on Thursday rejected a restructuring plan designed to save its biggest shipbuilding group from bankruptcy, putting the future of the once prosperous industry in limbo. The Uljanik shipbuilding group, which runs two docks and is 25 percent state-owned, has been struggling to avoid bankruptcy for months, sending workers on strikes over unpaid wages.
On Thursday conservative Prime Minister Andrej Plenkovic said the government would not accept a restructuring plan proposed by the company and its local strategic partner, calling its viability "questionable."
"It would be a big (financial) burden for our taxpayers," he said during a cabinet session.
The Prime Minister added that the government is "open to other solutions" but did not elaborate. Uljanik is the key player in a shipbuilding industry that employs about 7,000 people, plus thousands of subcontractors, and accounts for around two percent of Croatia's gross domestic product (GDP).
The government has pumped around four billion euros ($4.5 billion at the current rate) into the sector in recent decades, according to the Institute of Public Finance.
Earlier this week, police arrested 12 people linked to Uljanik on suspicion of causing more than 130 million euros in financial damage. The move came after a several-month investigation into "possible illegalities within the Uljanik group," Interior Minister Davor Bozinovic told the state-run HINA news agency.
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