Hungarian bidders reportedly eyeing Slovenske Elektrarne

By bne IntelliNews November 10, 2014

Carmen Simion -


Two Hungarian companies are considering bidding for Enel’s 66% stake in Slovak electricity utility Slovenske Elektrarne (SE), according to local press. However, there is reportedly concern in the West that they could be operating as a front for Russian companies.

Alongside state-owned holding MVM is oil and gas group MOL, which is 24.6% state owned, according to Hungary's news portal, which is a staunch critic of the government in Budapest, quoting "unnamed sources". 

While MVM refused to confirm the claim, the company, which has been touted as a "national champion" by Prime Minister Viktor Orban, told news agency MTI that it is seeking opportunities to expand its involvement in the energy sector to the region. The state holding, which has been busy absorbing the Hungarian utilities that the government has been buying out over the last 18 months or so, added that it is happy to assume the role of exiting multinationals in Central Europe.

Russian front

However, according to, the European Commission is suspicous that MVM may in fact be negotiating as a front for Russia companies.

When Enel put SE up for grabs in the summer, it was widely assumed in Slovakia that a Russian bid was on the way. The Slovak utility had just recieved an unusually large loan from Russian state-owned Sberbank, which at €870m was around the level of financing needed by SE to finish the problematic expansion of the Mochovce nuclear plant. 

At the time, the Slovak government was resisting Brussels' hard line towards Moscow and was slow to reverse pipeline gas flows to help Ukraine. However, Bratislava has since changed its tune, and is sounding and acting like a stalwart of Western strategy. That means it is unlikely to openly support the sale of European nuclear plants to Moscow.

Hungary, on the other hand, has been pushing relations with Brussels and Washington to straining point. At the root of that friction is cooperation in the energy sector with Russia over the past year or so.

In January, Hungary accepted a €10bn loan from Moscow in return for handing Russian state-owned nuclear company Rosatom a deal to expand the Paks nuclear plant. Rosatom was the main suitor mentioned earlier this year for Enel’s stake in SE. Meanwhile, Hungary in September halted reverse gas flows to Ukraine and cut a deal with Gazprom to boost domestic gas reserves, prompting several fights between Budapest and Washington, with Hungary showing no signs of backing down. 

Debt-burdened Enel, meanwhile, is desperate to sell as soon as it can, with credit ratings agencies threatening to downgrade the Italian company unless it sells assets including SE by the end of the year. Without Russian bidders, Czech utility CEZ and compatriot energy holding EPH are seen as the only likely suitors.

However, with Mochovce muddying the waters, and the Slovak state making it clear that it wants more say - and perhaps a bigger stake in SE - front runner CEZ has been trying to talk down its interest in recent months. While Enel insists it expects binding bids for SE by the end of November, and claims Chinese interest, it has yet to come up with details.

CEO Daniel Benes said in October that CEZ will not bid for the Slovak utility until the risks associated with Mochovce are clarified. He added that given that Mochovce is based on Russian technology, it would be better if Rosatom takes that project on. Meanwhile, CEZ is preparing to reopen a tender on expanding its Czech nuclear plant at Temelin. Rosatom was seen as favourite for the €10bn job when the last competition was scrapped in April.

Major obstacle

The construction of the two new reactors at Mochovce is the biggest obstacle claimed by known suitors in SE, and continues to plague relations between Bratislava and Enel. According to a recent statement made by the CEO of the Slovak company, Luca D'Agnese, the two reactors are now not set to launch until the third quarter of 2016 and 2017 respectively.

Moreover, the project continues to suffer huge budget increases. Building the two new reactors was initially projected at €2.8bn, but has since been revised up to €3.8bn. The Slovak government, which holds 34% in SE, is now locked in talks with Enel regarding a further €800mn hike.

A decision regarding that was expected at an EGM on November 7, but postponed to November 21. According to Pravda, SE said the reason for the delay is the need to assess measures designed to improve the project teams appointed by both shareholders.

Apart from these two new reactors, Slovakia also has plans to build a new nuclear plant at Jaslovske Bohunice, to replace two units at the nearby V1 power plant that are being decommissioned. According to Tomas Vavruska, a representative of Slovak Nuclear Energy Company (JESS), the new plant is likely to produce electricity by 2030. According to the initial plans, the facility should be completed by 2020, although 2025 has also been mooted. Currently, the project is undergoing an environmental impact assessment (EIA) which is expected to be completed by mid-2016.

The construction of both Bohunice and Mochovce is included in Slovakia’s new energy policy, adopted by the government in Bratislava on November 5. The new act, which will replace a policy adopted in 2008, states the country’s priorities in the energy sector until 2035. Apart from the construction of the nuclear plant, hydroelectric power plants at Sered and Ipel are also included. 

According to the policy, the country should also relaunch the construction of selected wind farms, while photovoltaic facilities will now only appear on buildings. In the gas sector, the act mentions the construction of interconnectors to Poland and Hungary. 

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