The government decided to issue the guarantee bearing in mind that negotiations on the construction of four tankers were wrapped up at the end of June, before negotiations were opened in the Competition Policy chapter in Croatia's European Union entry talks and before it was given benchmarks for closing this chapter, also bearing in mind that this is an advance guarantee and not a financial guarantee which provides for the completion of a job important for the shipyard's credibility.

The government also noted that this decision was an exception and that it remained determined to meet all the benchmarks set for closing the Competition Policy chapter and to successfully privatise state-owned shipyards.

Earlier on Thursday in Rijeka, the city council adopted Mayor Vojko Obersnel's motion to give 3. Maj US$ 24.5 million in city guarantees for building two tankers for Sweden's Wisby Tankers AB unless the shipyard's majority owner, the government, did so in fast track procedure.

Obersnel said he had made the proposal despite the fact that it was against the Budget Act, given that the City of Rijeka is not the majority owner in 3. Maj and should not give it guarantees, adding that several banks, which he would not name, had agreed to the city's terms.

Obersnel said the city supported any restructuring model for 3. Maj based on technological development, that it supported the shipyard management's efforts to keep the deal with the Swedish client, and urged the government to authorise the Finance Ministry to issue advance guarantees to bolster the contracts.

After being informed about the government's decision, the mayor said he was happy about it, but wondered why it had taken the government so long to adopt it.