25 Mar 2021, 13:50 PM

Head of Slovenian Hoteliers' Association: "I Cannot Express How Awful the Situation Is"

STA, 25 March 2021 - The head of the Slovenian Hoteliers' Association, Gregor Jamnik, has described the situation in the industry as disastrous, warning that the bulk of businesses are not generating any revenue and even though most are still able to keep their heads above water, they will need long-term state aid as the industry will not fully recover in a decade.

"I cannot express how awful the situation is," Jamnik, director of Hotel Slon in Ljubljana, has told the STA. "We're one hundred percent dependent on state aid. We're not generating any cash flow or revenue."

He noted that the state was refunding only part of fixed costs, but that those who had used up all their cash during the long-running crisis "cannot even be helped by the state".

Ljubljana hoteliers are still coping, having awaited the Covid-19 crisis in quite good shape financially. However, in some other parts of the country, for example in Maribor, hotels are said to be closing down and are being repossessed by creditor banks.

At any rate, hoteliers are on artificial life support "We don't know what will happen when state aid ends, we fear that," said Jamnik, who expects the road to recovery to be very long.

It will take at least five years for tourism to recover, or even ten years in case of cross-Atlantic travel and conference tourism. "The figures we saw in 2019 are unlikely to be seen again this decade."

Still new hotels are being built in Ljubljana, which means even more beds and consequently further pressure on prices; Jamnik warned of the danger of a price war such as Ljubljana had seen out of season already before the pandemic.

The outlook for the summer is uncertain. While coastal regions report good bookings and people can hardly wait to travel, restrictions are expected to persist and PCR tests are expected to be required, which would make holidays even more expensive.

Another problem is the slow vaccination rollout, not only in Slovenia, but also elsewhere.

"People will head out if they feel safe and if they don't have to pay hefty sums for PCR tests. There's considerable risk that this year's season will be even worse than last year's, which was bad anyway."

Jamnik regrets that the government would not allow tourism and "doesn't understand hoteliers aren't a source of infections". Only business people, diplomats, athletes and people getting treatment are allowed to stay in hotels at the moment.

As an example that Slovenia could follow Jamnik offered Croatia where tourism has been allowed and hotels at seaside destinations weathered the winter well being full with local guests every weekend.

He hopes the government will allow tourism to reopen as soon as possible, so that tourism vouchers could be spent and at least May Day holidays could be rescued.

Similar demands have come from the trade union of hospitality and tourism workers, which urged Milan Krek, the head of the National Institute of Public Health, to provide arguments and data showing why the sector is an infection risk.

23 Mar 2021, 14:18 PM

Hospitality Industry Begs for More Help, Including Outdoor Service for All Slovenia

STA, 23 March 2021 - The Trade Union of Hospitality and Tourism has made another stern appeal to the government to help the sector during the epidemic, including by a reasonable easing of coronavirus restrictions across the country, by increasing subsides for furloughed workers and expanding the use of tourist vouchers beyond accommodation facilities.

"We would like to let you know that we cannot do it anymore! That seven months of non-work and social isolation has been more than enough! That too much damage has already been done to people and the economy," reads the letter addressed to the Prime Minister and the ministers of economy, finance and labour on Monday.

Due to such a long closure, many bars and restaurants have closed shop because employers were not eligible for subsidies, with many workers ending up out of a job or hardly making ends meet on the furlough scheme.

The government should thus allow bars and restaurants to serve customers outdoors in the entire country, not just in what are currently three yellow-coded regions.

All workers should get not only 80% of their wages as part of the furlough scheme but 100%, the union says, arguing the majority are facing poverty.

The difference to 100% wage subsidy should be paid retroactively for all furloughed workers for the last three months, from December to February.

The government should make it into a law that employers receiving a subsidy for furloughed workers since epidemic was declared on 19 October, cannot lay off furloughed workers at least six months after they no longer receive it.

Those few workers in the hospitality and tourism sector who do work should meanwhile receive a special crisis allowance of at least EUR 200.

The union says that tourist vouchers should be expanded to other businesses in the sector than just accommodation facilities.

Hospitality establishments should be allowed to sell drinks rather than just food at their take-away points.

The ministers were urged to start easing the restrictions for hospitality and tourism across the country rather than by regions.

The union indicated that, should the government not heed its call, it could resort to protests such as those by taxi drivers and primary and secondary school pupils.

"All the other segments of the economy and the public sector work and as we know, it is there that infections also originate from, while no production facility has been closed. What is more, you do not even talk about these infections in public, whereas the sector that is closed is being suspected of spreading infections."

A similar call was made by the OZS chamber of small business, which urged the government on Monday not to close small businesses if the epidemiological situation should worsen.

It believes that "services and retail have never been a source of infections, so potentially closing them again in the third wave of the epidemic would make no sense".

23 Mar 2021, 12:46 PM

Ascent Resources Starts Arbitration Process Against Slovenia, Claims Over €100mn Damages

STA, 23 March 2021 - The British company Ascent Resources has announced it will initiate arbitration proceedings against Slovenia over the dispute over permits for the extraction of gas by means of hydraulic fracturing in Petišovci (NE), after the state had failed to set forward a damages proposal. The company has estimated damage to be in excess of EUR 100 million.

Claiming that Slovenia is breaching its obligations to the detriment of the company's investments in Slovenia, procedures to start an investor dispute at international arbitration were formally started by Ascent Resources last July.

This could not happen before a three-month period has passed in which the parties would have the opportunity to settle the dispute amicably.

The two sides entered negotiations last October, but the British company said this would not prejudice its rights to pursue its investment treaty claim under the UK-Slovenia bilateral investment treaty and the Energy Charter Treaty.

The deadline for a possible settlement in the direct negotiations had been set for 19 March this year.

The latest announcement from Ascent Resources comes after the State Attorney's Office told the STA last Saturday that Slovenia had rejected an amicable settlement with the company as the deadline for the decision expired on Friday.

The British company said on its website it "intends to initiate arbitration proceedings against the Republic of Slovenia" and "confirms that an amicable settlement is presently not achievable."

It added that as part of direct pre-arbitration settlement discussions, it had "submitted a damages calculation to the state totalling significantly in excess of EUR 100 million."

The Slovenian Environment Agency issued a decision in March that an environmental impact assessment is needed before a permit can be issued for extraction of gas in Petišovci by re-stimulating two currently producing wells as planned by Ascent Resources and its Slovenian partner Geoenergo. The decision was upheld by the Administrative Court in June this year.

Ascent Resources said in the same release that "it is ultimately expected that the pressure at PG-11A will decline to unsustainable levels without mechanical stimulation (which forms part of the damages claim against the state)."

However, it added that it was pleased PG-11A was currently producing and that it intended to continue production whilst it was possible to do so.

All our stories on Ascent Resources and Slovenia

20 Mar 2021, 11:25 AM

Slovenian Firms in Better Shape than Expected, But Hospitality Hit Hard (Feature)

STA, 20 March 2021 - Slovenia has spent billions to help companies weather the coronavirus crisis and keep unemployment low. Business associations say companies are currently in good shape overall, but they highlight pockets of problems, especially among SMEs and in industries that were shut down for a long time.

The state has put in place measures such as furlough payments, subsidised short-time work, coverage of fixed costs, new lending facilities, loan guarantees and a 12-month loan moratorium.

The Chamber of Commerce and Industry (GZS) says the current liquidity of the corporate sector is "relatively good" thanks in particular to loan deferrals, which GZS's chief economist Staš Ivanc estimates are worth a combined EUR 2.1 billion.

"Companies and banks will probably be able to agree a continuation of loan payments, but it is of course possible that this will not be viable in all cases," Ivanc says.

Loans that are more than 90 days overdue have in fact declined year-on-year and in December accounted for just 1.3% of all loans, show GZS data.

And a full 85% of companies polled by the GZS said they had a positive EBITDA last year despite the epidemic.

Another metric that indicates the economy is in good shape is the number of bankruptcies.

Last year a total of 1,125 bankruptcies were initiated, according to the Agency for Public Legal Records (AJPES), down significantly from the year before and the lowest figure since 2015.

In the first two months of this year there were 187, fewer than in the same period last year.

And central bank data show non-performing loans up only slightly last year, by 0.1 percentage points to 1.9% of total loan portfolio at the level of the entire sector.

Nevertheless, the central bank data also show a significant increase in the share of non-performing loans to the restaurant industry, which account for a tenth of all non-performing loans.

The Chamber of Trade Crafts and Small Business (OZS) says the epidemic has been hard on specialised stores as well as services activities such as restaurants and bars, which were either shut down or were severely constrained during the epidemic.

The OZS says the majority of SMEs had decided to retain staff on state subsidies rather than making layoffs, but despite the subsidies and the gradual reopening of all industries, it estimates it will take long before business is back to pre-pandemic levels.

"We expect the recovery to last long, two to three years. This is why we are appealing to the government to spend the bulk of EU economic recovery funds on industries that have been hit hardest," the OZS says.

The GZS's Ivanc notes that most of the measures which have propped up liquidity will be phased out this year. The coming months, when loan deferrals made last spring will expire, will be "a test of the resilience of companies and banks".

The country's largest banks are bullish.

"The situation in the economy is significantly better than we had dared to expect when the first wave of the epidemic hit... We do not expect major problems with loan payments," says Andrej Lasič, executive director at NLB responsible for large corporate and institutional investors clients.

Both NLB, the market leader, and NKBM, the runner-up, say they will work with closely with companies in industries such as tourism to find the best solutions on an individual basis.

"We're aware of the important role we're playing in mitigating the consequences of the economic crisis caused by the Covid-19 epidemic, which is why we are a responsible partner to our clients," NKBM said.

18 Mar 2021, 13:19 PM

Adient Closes Slovenj Gradec Factory: Costs Too High in Slovenia

STA, 18 March 2021 - The US multinational Adient today explained its decision to close down its Slovenj Gradec affiliate by saying that "internal assessments and discussions with key clients have shown that Slovenia is no longer considered a best cost country".

As a result of the discontinuation of production of components for car seats and interiors in Slovenj Gradec in the northern Koroška region, 412 people will lose their jobs by the end of the year and a further 18 in May next year when the operation will have closed down.

"The local and regional management teams have relentlessly been striving to find new business opportunities for the Slovenj Gradec site, but with no significant results," Claudia Steinhoff, director communications EMEA at Adient, told the STA.

A release from Adient said "negative future prospects and declining cost competitiveness for Adient in Slovenj Gradec have forced the intended closure of the plant".

The company said it had thoroughly considered all alternative scenarios to preserve operations and employment in Slovenj Gradec but "the analysis has not led to any other conclusion than to close the plant."

Adient, a global leader in automotive seating, says it has worked out a plan to ensure an organized, reconcilable phase-out of production activities by end of 2021

Responding to the news, the employees said that they did not understand why the owner had made such a decision practically overnight given the company's good results.

The trade unions urged the government to take action. "I'm disappointed they decided without any social dialogue," Jaka Šilak of the ZSSS trade union told the press, noting that the company's workforce accounted for 10-15% of all active population in the Mislinja valley and announcing efforts to convince the Adient management to remain in the region.

Igor Hovnik of the works council said that the company was doing well, adding that the Slovenj Gradec plant was costlier though than other affiliates, with workforce cost presumed to be the main reason for that.

The Economy Ministry told the STA that it would do everything in its power to help the employees, adding that it would respond to an invitation to a visit to the company as soon as possible.

Labour Minister Janez Cigler Kralj will visit the company in the near future, the ministry said, pointing to a number of measures designed to help workers who had lost their jobs find another one.

Jani Prednik, an MP of the opposition SocDems who hails from Koroška, highlighted that closure as well as other layoffs or threats of downsizing in Koroška would mean a social catastrophe for the region.

The Koroška arm of the Chamber of Commerce and Industry (GZS) said that Adient was one of the key employers in the region. And while there are signs of hiring by other manufacturers in Koroška, it is unlikely all the Adient employees would find another job.

The company's latest annual report shows the Slovenj Gradec plant posted just over EUR 90 million in revenue in 2019, 10% less than a year before.

Adient's other production site in Slovenia, in Novo Mesto, manufactures car seating for Renault and Daimler. Borut Varga, an official of the Novo Mesto operation, told the STA Adient was not shutting down anything in Novo Mesto.

18 Mar 2021, 10:43 AM

Unofficial Report Claims Slovenia Will Reject Fracking Settlement with Ascent Resources

STA, 18 March 2021 - The newspaper Delo reported unofficially on Thursday that Slovenia was not to accept a settlement with the British company Ascent Resources over the dispute over permits for the extraction of gas by means of hydraulic fracturing in the north-east of the country.

The two sides entered negotiations last October, but the British company said this would not prejudice its rights to pursue its investment treaty claim under the UK-Slovenia bilateral investment treaty and the Energy Charter Treaty.

Claiming that Slovenia is breaching its obligations to the detriment of the company's investments in Slovenia, Ascent Resources formally begun procedures to start an investor dispute at international arbitration.

According to Delo, the deadline for Slovenia to announce its decision runs out on Friday, and the State Attorney's Office told the newspaper that Slovenia would inform the other party about its viewpoint within the agreed time.

"Since the negotiations about a possible solution of the dispute with a mutual agreement are still confidential, we are not able to provide more information," it added.

The negotiations are being held as a damages lawsuit by Ascent Resources is looming, with the company, according to Delo, expected to demand EUR 120 million in compensation.

The company alleges that through Slovenia's violation of its obligations under the two treaties, it has sustained considerable harm, as it has invested more than EUR 50 million in the development of the Petišovci oil and gas field.

The Slovenian Environment Agency issued a decision in March that an environmental impact assessment is needed before a permit can be issued for extraction of gas in Petišovci by re-stimulating two currently producing wells as planned by Ascent Resources and its Slovenian partner Geoenergo. The decision was upheld by the Administrative Court in June this year.

All our stories on Ascent Resources and Slovenia

17 Mar 2021, 12:31 PM

New Opposition to Development of Plečnik Stadium

STA, 16 March 2021 - The Institute for the Protection of Cultural Heritage opposes a project to revamp a rundown sports stadium in Ljubljana that was designed by Slovenia's best known architect Jože Plečnik. The decision was made last month after the Culture Ministry annulled a previous positive opinion, Dnevnik reports on Tuesday.

The Ministry of Environment and Spatial Planning told the newspaper that the Bežigrad Sports Park project (BŠP) planned by entrepreneur Joc Pečečnik had received a negative opinion from both the Institute for the Protection of Cultural Heritage and the Culture Ministry.

plecnik stadium wikipedia.jpg

The stadium in better days. Wikipedia

The ministry would not comment on how this will affect the process of issuing a construction permit.

The company in charge of the project, BŠP, filed a request for a construction permit in December 2018 and supplemented it in May 2019. The Institute for the Protection of Cultural Heritage gave its second consent at the end of last January.

The project had already had the institute's consent but had to obtain it again after a demand was filed for an integral construction permit under new legislation, which was to speed up the project.

Photo: Alja Mravljak

However, the Culture Ministry, acting as a supervisor of the Institute for the Protection of Cultural Heritage, told the Environment Ministry last August that the BŠP project was not in line with a decree declaring Plečnik's works in Ljubljana national monuments.

The Environment Ministry replied it was obligated to take into account the institute's positive opinion unless the Culture Ministry annulled it.

Subsequently, the Culture Ministry reviewed the consent to find it "illegal". It annulled the institute's decision last September.

The ministry said that Pečečnik's plans did not envisage renovation and conservation of all elements of the Plečnik stadium and that construction in the area of the monument was problematic.

In November 2007, the city of Ljubljana joined forces with businessman Pečečnik and the Slovenian Olympic Committee to turn the dilapidated stadium, built in 1923, into a sports park.

They set up the company BŠP, planning a EUR 253m project which would renovate the stadium in line with Plečnik's plans. Also planned in stadium area was a new multi-storage building housing a hotel, a sports clinic and department stores.

However, the project has seen many setbacks since with its opponents demanding renovation of the stadium in its original form.

Last March, the pan-European Europa Nostra organisation put the stadium on a list of seven most endangered European cultural heritage sites.

09 Mar 2021, 16:48 PM

New Court Auction Website Sells First Apartment, 300 More to Sell in April

STA, 9 March 2021 - The newly established auction web portal of all Slovenian courts (sodnedrazbe.si) saw its first flat sold on Tuesday. The auction took 40 minutes and the flat was sold at nearly double the asking price. Next month, some 300 flats are to go on the portal's auction block.

The E-Auction website will gradually come to replace websites of individual courts. It will feature the sales of all real estate, movables and rights called after 1 February.

To take part, bidders must register with their online certificate and pay the security deposit. The portal enables auctions of real estate and rights in enforcement procedures, while other types of auction are explained on the portal, the Supreme Court said on Tuesday.

It added that the portal is easy to use and that the bidding is completely anonymous. Credibility of bidding is ensured, as bidders are not allowed to either withdraw or deny their bids, they also cannot bid outside the designated time frame.

The portal, set up in February, works on all computer operating systems and mobile devices and is accessible also to the visually and hearing impaired.

You can visit the portal here

09 Mar 2021, 14:48 PM

3 of 5 Suspects Arrested in UK-linked CEO Fraud Case

STA, 9 March 2021 - Slovenian police have arrested three of the five people they suspect were involved in a racket known as CEO fraud, a scam in which criminals impersonate executives to fool employees into making unauthorized wire transfers. The fraud was perpetrated mostly in the UK, while the money was laundered in Slovenia.

Martin Rupnik, the head of the white collar crime department at the Ljubljana Police District, told the press Tuesday that investigators had conducted 25 house searches during which three suspects were apprehended. They remain in detention.

The suspects are believed to have laundered the proceeds from criminal activities, mostly in the UK, after creating fake CEO identities and convincing employees to wire money to corporate accounts opened by a Slovenian legal entity.

They received wire transfers of around EUR 300,000, of which the police managed to seize EUR 170,000. The investigation is ongoing.

Police believe three to five foreign companies fell victim to the fraud, but the exact number will not be known until the investigation of electronic devices is completed.

"The pre-trial stage regarding fraud is under way abroad, not here. The Slovenian police have taken over the money laundering investigation," said Rupnik.

Večer writes that NLB bank alerted law enforcement authorities of bankers who gave loans to Raščan.

Money laundering in a criminal organisation carries a prison sentence of up to ten years in Slovenia.

08 Mar 2021, 14:21 PM

Proposed Hospitality Bill Would Tighten Rules on Slovenia’s 9,700+ Airbnb Properties

STA, 8 March 2021 - A new hospitality bill that has recently been sent into public consultation brings stricter rules for renting out flats and houses to tourists on platform such as Airbnb. Service providers will have to get registered, have an identification number, and obtain certain permits, while facing high fines for breaking the new rules.

The Economy Ministry has drafted the hospitality industry bill following a growing trend in short-term renting of private property to tourists in recent years.

Over 9,700 pieces of flats or houses in Slovenia were advertised on Airbnb in 2019, generating EUR 66.5 million in revenue, it said.

The figure compares to the combined 2019 revenue generated by Slovenian tourism companies Istrabenz Hoteli and Terme Krka with their 17 top-class hotels, the ministry added.

There has been a lot of rule-breaking in short-term rental business, while property owners do not have to get a permit from other owners in multi-apartment buildings.

The new trend has also a negative impact on the competitiveness of other, traditional accommodation, while also affecting housing policy in major Slovenian tourist towns.

The draft bill allows short-term renting of own or leased homes or holiday homes with up to 15 beds up to 30 days to a physical person as landlord, a sole proprietor as an individual, to an association or a legal person.

The provider of the service must obtain a permit from the municipality in which the property is located, while for two- or multi-apartment buildings, the municipality can limit the period in which such rental is possible.

The service provider who rents out own or leased property to tourists in a multi-apartment building up to 90 days a year and has up to five beds will be obliged to obtain consent from 75% of the apartment building owners.

Providers of the service will also have to get registered in the country's business register, the main public database of all businesses.

They will have to get a special identification number for marketing purposes. The number will not be public, known only to the service provider and oversight bodies.

An individual or a legal entity will face a fine of EUR 4,000-10,000 for failing to obtain a municipal permit or a permit from other property owners.

A fine of EUR 40,000-100,000 is meanwhile envisaged for a legal entity running a public booking platform for not enabling rental service providers to display their identification number.

The draft bill, sent into a public consultation period at the end of last week, also relaxes the strict definitions of individual types of hospitality establishments.

The change was promoted by the emergence of new types of accommodation such as glamping or other innovative types of outdoor accommodation and by the fact that the line between establishments offering food and drink, such as a cafe, confectionery, snack bar, is often blurred while still heavily regulated by law. This at times has a negative impact on the development of innovative products.

If the new bill is adopted, hospitality establishments will be able to set their working time on their own, while municipalities will still have an option of limiting it, yet only in the period between 10pm and 6am.

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