Slovakia puts more obstacles in way of Slovenske Elektrarne sale

By bne IntelliNews December 5, 2014

bne IntelliNews -


Slovakia is set to terminate Slovenske Elektrarne's (SE) lease of the huge Gabcikovo hydropower plant, Prime Minister Robert Fico said on December 4. The move throws up another potential problem for Enel’s planned sale of its 66% stake in the utility.

Fico claims the Italian utility has blocked access to information that would allow Bratislava to assess if the plant’s profit is fairly distributed between Enel and the Slovak state, TASR news agency reported. Moreover, Fico added, the Italian company has not presented any plans for the overhaul of the plant on the Danube river.

SE has denied the allegations, insisting it has not violated the contract that allows it to operate Gabcikovo, and adding that it does not rule out legal measures to protect its rights. According to a spokeswoman, SE currently receives 35% of revenue from the plant, while covering all operating and maintainance costs.

She added that both SE shareholders, Enel and the Slovak state, which holds the remaining 34% in SE, agreed on November 21 on a major overhaul of a turbine, two years ahead of scheduled.

The hydro plant was spun off from SE ahead of the utility's 2006 privatisation to Enel, and added to the assets of state-owned water utility Vodohospodarska Vystavba (VVS). A lease agreement was then signed with SE, giving it the right to operate the plant for thirty years. 

Another spanner in the works

The spat only throws up more problems for Enel's effort to sell its stake in SE, which have been hit by the poisonous atmosphere surrounding the long-delayed and over-budget expansion of the Mochovce nuclear plant. On top of that, suitors have been put off by the government's highly public claims that it wants to increase its 34% holding in the company, despite its own budget constraints. 

SE was expected to draw huge interest when it went on sale in the summer, but Enel has been fighting in the media against claims from suitors that the problems over Mochovce may need to be resolved seperately. Enel's case was not strengthened by a series of raids just after it announced it was looking to sell, with Bratislava claiming it wants compensation for failure to live up to the privatisation agreement.

Last month, the Italian company, which is facing a potential downgrade from ratings agencies unless it reduces its debt burden significantly by the the of the year, claimed to have received two non-binding bids by the deadline. Hungary's MVM and Mol said they have submitted a joint bid. Czech power group CEZ said it sent a letter of interest.

Czech-based energy holding Energeticky a Prumyslovy Holding (EPH), controlled by closely-held Slovak financial group J&T, has also shown interest. The owners are reportedly close to Fico, and last year bought EDF Suez and E.ON out of Slovak gas utility and pipeline operator SPP, in a sale that also saw the government putting off bidders as it pushed for a greater say. This summer, Bratislava bought EPH out of the loss-making gas sales unit, leaving EPH with the lucrative distribution and transmission parts of the business.


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