Slovak government mulls Slovenske Elektrarne bid

By bne IntelliNews April 14, 2015

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The Slovak government is putting together a plan to raise its stake in power producer Slovenske Elektrarne (SE), Prime Minister Robert Fico confirmed on April 13. The announcement will do little to help Enel gather binding bids for its 66% stake by its early May deadline. 

The economy and finance ministries have been ordered to submit proposals on whether the country should try to buy a stake from the Italian utility, which put its stake up for grabs last summer. Bratislava currently holds the remaining 34% in Slovakia's main power producer.

“In a short time, the economy minister – in cooperation with the finance minister – is obliged to submit to the government a proposal assessing whether and under what conditions Slovakia will apply to buy the privatised 66% stake or another stake," Fico said, according to TASR news agency.

So far, a consortium of Hungary's MVM and MOL, as well as Czech utility CEZ, have said they have submitted non-binding bids. Czech energy holding EPH has also shown interest, while Finnish energy producer Fortum is also reportedly eyeing the company. Enel has set May 9 as deadline for binding bids for SE.

Trump card

However, the government has made the sale as tough as possible on Enel. Police and tax officials raided SE almost as soon as it went on the block, while Bratislava has pushed it out of the lease on a hydropower plant. 

That has done much to concentrate the minds of potential suitors, who have also complained that the delayed completion of the Mochovce nuclear plant is a big a risk to take on. Fico also reiterated on April 13 that the government opposes Enel’s plan to sell its stake in SE before it completes the over-budget project.  

"The sale of the stake in SE will, without doubt, jeopardise the completion [of Mochovce nuclear power plant], which is unacceptable for the Slovak government,” the PM - no fan of privatisation at the best of times - stressed.

Enel has insisted that Mochovce will meet its latest deadlines - to which Bratislava agreed bad temperedly late last year alongside yet another budget hike. The first of the two new reactors is now set to come online next year. The project is a priority for the company and will not be affected by the sale, the Italian company's CEO stressed earlier this month.

However, Slovakia clearly holds the trump card. CEZ CEO Daniel Benes suggested recently that any investor would be crazy to go ahead without the state's blessing. 


Should Slovakia decide to boost its stake, it is likely to try to use funds from the planned IPO of telecom operator Slovak Telekom (ST). Bratislava has suggested it hopes to reap up to €1bn from the sale of its 49% stake in the telecom company, which it plans to list in Bratislava and London in the first half of the year.

However, analysts have hinted Bratislava’s estimation could prove optimistic. The float comes after the government gave up a hunt of several years for a strategic investor.

Enel’s stake in SE could be worth some €3bn, according to an unnamed source quoted by Reuters. However, the final price will depend on provisions for the nuclear power plant, the source added.

At the same time, Fico's Smer party also needs cash to help it cover budget spending, especially with elections scheduled within the next 12 months. The government had earlier said it was likely to use the proceeds from the ST sale to cover financing needs in 2015.

According to local media, the country is about to submit documents to the EU admitting already that it is set to miss its budget deficit target for this year. The submission sees the gap at 2.55% of GDP, compared to the budgeted target of 2.29%.

Even that target was already on the move, however, illustrating the pressures. With Smer fighting a battle to secure a second term in office without a coalition partner, Fico announced on April 13 that the governing Smer party will okay a second social package on May 23. The first set of measures announced last year hiked the 2015 deficit target from the 1.98% previously set.


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