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Minister gets green light to sign Magna contract

Ljubljana, 12 October (STA) - The government on Thursday gave the green light to Economy Minister Zdravko Počivalšek to sign the contract for the construction of a paint shop near Maribor with Magna Steyr and the Municipality of Hoče-Slivnica. The ministry will also sign a contract on the financial incentive with the Austrian investor on Tuesday.

Počivalšek told the press after the cabinet meeting that the Canadian-Austrian automotive giant will commit with the contract to create at least 1,000 jobs and invest at least EUR 100m in the paint shop within 10 years.

"The contract is drafted so that it protects the interest of our state, does not burden the state budget and binds the investor to fulfil the goals of the contract," the minister stressed. Otherwise, the state could demand damages, he added.

Should Magna fail to start implementing the investment within five years, Slovenia could claim up to EUR 5m in damages, the minister illustrated, listing exceptions, such as the state not fulfilling all the requirements for the investment such as environmental approval, building permit and land.

According to the minister, all the requirements for the first phase, which is to cost EUR 146m and create some 400 jobs, have been met.

On the other hand, the state is not liable for meeting the requirements and the investor is not eligible for damages if they are not fulfilled.

In addition, Magna will have to report on its investment with yearly and ad hoc reports and the government will have the ability to control the investment on site.

In the event of a legal dispute, a Ljubljana-based tribunal of three arbiters will rule on the issue in line with the Slovenian law.

Both the strategic investment contract and a EUR 18.6m incentive contract - both have been okayed by Magna board in Canada - will be signed on Tuesday, when the ground is to be broken on the construction site.

Počivalšek stressed that the government had done its job after more than a year of hard work and sent a positive message to domestic and foreign investors that business and investment environment in Slovenia was changing.

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