Tim Gosling in Prague -

Slovak Prime Minister Robert Fico announced on August 20 that a probe at the country's largest power generator Slovenske Elektrarne (SE) will show that it was privatized below value. The comments come a day after the PM said the state has a plan to increase its stake in the utility as majority owner Enel looks to sell its 66% holding.

"I am very glad that proceedings have begun in the case of Slovenske Elektrarne's privatization," Fico told journalists, according to Bloomberg. "Demonstrably, a revaluation of assets took place before the privatization that significantly reduced the value," he added.

Police raided SE offices and facilities across the country on July 23, hunting for documents related to its 2006 privatisation. One of the locations hit was the Mochovce nuclear power plant. Enel has come under huge criticism from Bratislava over delays and budget hikes on expanding the facility. The Italian company pledged to add two new blocks as part of its purchase of the controlling stake in SE with a €840m bid. 

The raids came less than two weeks after Enel, following months of speculation, announced on July 10 that it will seek to sell its Slovak assets as part of a debt reduction drive. The Slovak state retains the remaining 34% in SE, and has the right to approve any buyer of the Enel stake.

Continuing his August 20 statement, Fico claimed that the accounting operations being investigated by police saw SE valued at SKK32bn (€1.05bn). "Several weeks" after the sale went through, another review of assets raised its value to SKK54bn, he said without elaborating.

Forbidding

The PM's claim of dodgy dealing looks especially forbidding for Enel given the bashing he offered the Italian company the previous day as he explained that the Slovak government wants to raise its stake in the utility. State pressure on the company will clearly not do much for SE's valuation. 

"If Enel decides to sell its share in Slovakia, we are ready to significantly strengthen the state's position," Fico said according to the Sita newswire. The PM added that he has a "plan" to achieve his aim, although did not reveal details.

That raises suspicion that the ruling Smer party may have been watching events across its southern border. In Hungary, Prime Minister Viktor Orban has overseen a campaign of regulatory and policy pressure on utilities and banks that has seen the state buying out several. It is widely suggested that the pressure is planned to convince the foreign owners to sell, and at bargain prices.

Fico - a long time opponent of privatization - echoed Orban's mix of populist and nationalist rhetoric as he slammed Slovak politicians and foreign investors for their roles in shortchanging the population. 

"People who literally passed around state property and put it into the hands of foreign owners are behaving like protectors," the PM continued. "These people who talk about strategic companies should be silent. First of all, I would recommend that they go and look at how the French and German owners treated SPP [gas utility Slovensky Plynarensky Priemysel], and how Italian company Enel behaves towards SE."

Suitable suitors?

However, unlike Orban, the Slovak PM has no state cash to throw around. He has instead overseen deals that have seen Western giants sell to CEE-based investors with ties to Bratislava, with the state then handed some greater degree of control. That could be the model Fico envisages for SE.

France's GDF Suez and Germany's E.ON sold SPP - which owns the main pipeline bringing Russian gas into the EU - last year to EPH. That rapidly growing regional energy group is controlled by Slovak financial group J&T. A deal was then sealed this year that saw the state handed full ownership of the gas importing part of the business. Fico, and several senior Smer figures have close ties to Moscow, and have been notable for their reticence over sanctions or aiding Ukraine during the current crisis.

As is compulsory in any energy related sale in the region these days, EPH is noted as a potential suitor to buy Enel out of SE. Czech state giant CEZ is another frontrunner. However, speculation in local media is also rife that Russian state nuclear agency Rosatom is keen, despite the obvious geo-political barriers. Rosatom is the ultimate supplier of technology and fuel for Mochovce.

An €870m loan from Russia's Sberbank to SE in June sparked that talk. Analysts have noted it's around the volume of cash needed to finish the expansion of Mochovce, and also that such a sizable credit line is rare in Central Europe to be offered without syndication. It has also been suggested that the Russians must have been granted a deep look into SE's accounting and other paperwork to agree the deal.