Slovak PM confirms talks on SPP stake

By bne IntelliNews April 12, 2012

Tim Gosling in Prague -

Slovak Prime Minister Robert Fico confirmed on April 11 that the government's privately-held partners in national gas utility SPP are looking to sell their stake. The state doesn't have the cash to buy them out the new PM said, which appears to leave Czech power holding EPH in the driving seat.

Fico's announcement backed up recent reports that France's GDF Suez and Germany's E.ON are looking to offload their 49% stake in SPP, whose major asset is Slovakia's gas pipeline network, which forms a vital link in the main line from Russia to Europe. "We are aware of the French and German shareholders' plan to sell their 49% stake," the recently reappointed PM said, according to AFP.

The confirmation follows claims by Petr Kellner - the Czech Republic's richest man thanks to his PPF financial group, which holds 40% in EPH - in an interview with Mlada Fronta Dnes on April 10 that the power holding is in talks with the French and German companies.

The pair bought the stake - along with management control - in 2002 for around $2.7bn. Kellner suggests in his interview that EPH is discussing a deal of around €2bn for the stake. Fico, who is no big fan of privatization, said the state would happily buy it if it could find the cash, "but given the current economic misery we can't afford it."

He did add however that should a deal go through, Bratislava will try to reverse the 2002 hand over of managerial control to the holder of the minority stake. "It doesn't make sense for the state to own a 51% stake in a company without managerial control," the PM stressed.

That is unlikely to help push through a deal. EPH has made its interest in SPP clear for some months, and the company has proved fairly ravenous for energy assets across Central Europe in the last few years. However, some commentators insist that there is no logic for the company to buy SPP - nor the Czech pipeline operator Net4Gas in which it has also expressed interest - unless it is working alongside Russian gas exporter Gazprom.

Kellner however clearly sought to answer those critics by stressing in his interview that a deal is some time away due to uncertainties over the volume of Russian gas transit through Slovakia in the future. "[The SPP stake] fits EPH's portfolio," Kellner said. "However, there is still a big question mark over the volume of gas that will be transported in the future. The question is whether will Gazprom will manage to build further pipelines to Europe. It's a difficult investment."

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