Interview for Glas Istre with Ph.D. Ivan Herak, member of the Management Board of ACI d.d. for finance, corporate law and human resources, we transfer in full.
Author: Milan PAVLOVIĆ
Photo: Milivoj Mijosek
Ivan Herak, member of the ACI Management Board: We want to create an elite marina with a categorization of 5 anchors, which only three Croatian marinas can boast of, among which two are ACI marinas
ACI-Gitone d.o.o. was established for the purpose of building and managing the port of nautical tourism ACI Marina Porto Baroš in Rijeka. The future ACI marina Rijeka received a concession from the Croatian Parliament and the Government of the Republic of Croatia for a period of 30 years, on the area of maritime property of 105,897 square meters. The biggest investment in Croatian nautical tourism ever, the organized sea area will provide mooring services and accommodation for guests on vessels, and the land coastal zone will offer catering, shopping and numerous other facilities.
The project has entered a high stage of realization, as the location permit is expected to be issued this month. It was also the occasion for a conversation with Dr. sc. Ivan Herak, member of the Management Board of ACI d.d. for finance, corporate law and human resources, who we initially asked what their next activities are after obtaining the location permit for the project.
Location permit until May 21st
– All mutual relations between partners in the project, including all necessary activities, are regulated by the Social Agreement and the Agreement on Joint Investment, mutually concluded by ACI and Gitone-Kvarner. The aforementioned documents strictly define the deadlines for the fulfillment of obligations by both the ACI-Gitone Company and the founders. By May 21 of this year, the Company is obliged to obtain an executive location permit, which is a prerequisite for concluding a concession contract. Within three years from the date of the conclusion of the concession contract, it is necessary for the Company ACI-Gitone to invest a total of HRK 363 million as an investment investment, in accordance with the Economic Justification Study. Likewise, within the longest period of three years from the date of the conclusion of the concession contract, ACI-Gitone is obliged to complete the construction of the port of special purpose – the port of nautical tourism Porto Baroš, all in accordance with the Study of the economic feasibility of the construction of LNT Porto, and to obtain and hand over to the Concessionaire the Ministry of the Sea , traffic and infrastructure use permit.
In nature, the path to the realization of the project is divided into four phases. The first phase of the project, which was successfully completed, was completed by the Decision of the Government of the Republic of Croatia by which the project was awarded to us. The second phase refers to the preparation of documentation, obtaining permits and documents that are a condition for concluding a concession contract, and setting up the financial structure necessary for the realization of the project and the organizational structure necessary for its management. The third phase refers to the closing of the financial structure, preparation of technical documentation, obtaining a building permit, contracting works and equipping the project, and obtaining a use permit and categorization. The fourth phase assumes project operations and project management.
– How are the mutual relations, rights and obligations of ACI and Gitone-Kvarner in the joint project regulated in the documents you mentioned? I mean the rights and obligations of individual partners, as well as the responsibility for the implementation of the project.
– It is a lucrative project, an entrepreneurial idea that was conceived by the partners in the project, ACI and Gitone-Kvarner, with the help of the Government of the Republic of Croatia. Both companies have the expertise, capital and references for the realization of this project. The company ACI-Gitone is the formal holder of the project and the instrument through which it is implemented. It is a very demanding project for which we estimate that, in the event that the ACI-Gitone Company was left to its own devices, it would have great, dare I say insurmountable difficulties in fulfilling future obligations and realizing the project. In other words, not only did ACI and Gitone Kvarner design the project, but ACI and Gitone-Kvarner also provided guarantees for the loan that will largely finance the construction of LNT Porto Baroš. Likewise, we as partners bear all the business and reputational risk of the project.
When it comes to the responsibility of the ACI Management in relation to the mentioned project, it is important to emphasize that it has two dimensions. The first dimension of responsibility is related to the joint project, i.e. the successful realization of the construction of the LNT Porto-Baroš, while in the second part the aforementioned project with regard to the investment volume, planned revenues, expenses, i.e. the business results of the joint project, in the proportions of our 50 percent ownership share in the mentioned To the company, it has a direct impact on the business results and balance sheet of ACI. The responsibility of the ACI Management comes from the fact that, in accordance with positive legal regulations, the ACI Statute and the Rulebook on Risks, for every investment, including this one, we are obliged to make filigree assessments of all possible risks, primarily project, financial, credit and business, and enter them in the Risk Register. Our responsibility stems from the fact that ACI Company is 78 percent owned by the Republic of Croatia, as well as a company of strategic importance for the Republic of Croatia. In addition to all of the above, ACI is also a company listed on the stock exchange and the Management Board of ACI is responsible not only to the Republic of Croatia as the majority owner, but also to more than 600 shareholders of ACI. And finally, since as members of the Management Board we are responsible with our assets for business decisions, that is, for the business outcomes of the decisions we make, we have responsibility towards ourselves and our families.
In addition, the importance of the project stems from the fact that it represents a litmus test for Croatia, a “demonstration exercise” of the entrepreneurial climate necessary to win the trust of foreign investors, at the same time it should show that companies in majority state ownership are capable of designing and implementing such a demanding project .
Transformation of the Rijeka economy
– What does this project mean for Rijeka and the wider region?
– Observed locally, the project on a real and symbolic level initiates the transformation of the archaic structure of Rijeka’s economy according to the content of the tertiary sector and significantly contributes to the integration and rounding of the destination tourist product of Kvarner. And not least, bearing in mind not only the economic benefits expected from this investment, but also the fact that most of the contents in the marina will be public, we feel a great responsibility towards the citizens of Rijeka.
Therefore, at the moment, together with colleagues from Gitona-Kvarner, we are working on the operationalization of the Social Contract as well as the Joint Investment Agreement, i.e. we are implementing operational implementation procedures and supervisory mechanisms in them, which are very necessary for the project to develop with the imagined dynamics. Likewise, considering that the majority of the investment in LNT Porto Baroš will be financed with a bank loan, we have also started communication with commercial banks.
– You mentioned the profitability of the project. On the other hand, in your interviews you point out that ACI’s income structure is unsatisfactory? Does the concept of LNT Rijeka offer a different approach in this matter?
– The answer is yes. Specifically, the total value of the concession is HRK 1,165,410.265 excluding VAT. The total area of the port for which we have a concession is 105,897 square meters, the coefficient of utilization is 0.59 percent, while the coefficient of construction is 25 percent. The land area of the port is 29,979 square meters, while the water area of the port is 75,918 square meters. The planned capacity of LNT Rijeka is 260 berths, of which 182 charter berths and 89 berths for ship owners. The parking lot of LNT will be formed on the exterior surfaces and in the new garage building. In total, LNT will have 532 parking spaces, of which 252 will be in the garage. The central building of the marina, which will be designed in the original architectural style, will have a total gross developed area of 13,505 square meters, and it will house commercial, office and restaurant spaces, accommodation units for sailors, wellness/spa, warehouses, storage rooms, swimming pool, etc. further. LNT Porto Baroš will also house a gas station for maritime transport, a travel lift and a number of other facilities. Such a structure of the offer will also result in a planned revenue structure in which revenues from connections will participate with approximately 17 percent, while the largest part of the Company’s revenue will be generated by revenues from catering operations, approximately 36 percent, rental of premises and facilities will carry 12 percent, parking services 10, services 9 percent, income from accommodation units for sailors 7 percent and so on.
– What new will the ACI Marina Rijeka project offer to the market and which markets are key to its development?
– ACI marina Rijeka is of strategic importance for the development of nautical tourism in Croatia. In cooperation with our partner, GITONE Kvarner d.o.o., we want to create an elite marina with a 5-anchor classification that only three Croatian marinas can boast of, two of which are ACI marinas, in Rovinj and on Cres. The rare and prestigious 5 anchors guarantee to clients the fulfillment of the highest level of quality in terms of a series of special conditions and high standards of equipment and the appearance of the premises in which the activity is carried out, the way in which the services are provided, the content that the marina offers and ultimately, also in terms of the application of the principles of environmental protection in everyday business.
The ACI Rijeka project is a unique project that we have not had the opportunity to see in Croatia until now, since it offers the highest level of service quality, not only for sailors, but also for citizens, and that in the very center of the city. The geotraffic position of the marina is extremely favorable, it is only a few hours by car from most broadcasting markets, and since several airports are located in the immediate vicinity of the marina, we expect an influx of guests from more distant destinations. We must not forget the local sailors, whose number is increasing every year, which makes us extremely happy.
The project changes the future of the city
– Ultimately, what does ACI gain from the partnership, and what does GITONE Kvarner gain?
– The joint company ACI-GITONE was founded for the purpose of building and managing the port of nautical tourism ACI Marina Rijeka. On the one hand, ACI, as the largest chain of marinas in the Mediterranean, brings the knowledge and experience of a leader in nautical tourism in Croatia, while on the other hand, GITONE Kvarner contributes with its in-depth knowledge of high-quality tourist services. In synergy, these two companies united in ACI-GITONE with their experience, knowledge, tradition and innovation want to create a unique project that changes the present and future of the city of Rijeka and the entire Rijeka region for the better, while also improving tourism in the area of Kvarner and Croatia in general. Nautical facilities in the marina, such as piers for boat accommodation, reception, boat maintenance and repair workshop, boat service area and the like, will be managed by ACI, and catering and tourist facilities, i.e. tourist services in congress tourism, accommodation units for boaters, restaurants, shopping facilities and similar facilities GITONE Kvarner.
The citizens of Rijeka and the entire Primorje-Gorski Kotar region benefit the most from this partnership. The ACI Marina Rijeka project represents a major step forward for the entire Croatian nautical sector, and especially the nautical segment. Interests of the company ACI d.d. and GITONE Kvarner d.o.o. in this cooperation, they are undoubtedly equal and have a common goal – to improve the tourist image of Rijeka and position Kvarner on the nautical map of Croatia and the Mediterranean.