Guy Norton in Zagreb -
As Slovenia’s July 13 parliamentary elections edge closer, the government has caved in to growing pressure to halt the sales of public assets to patch the gaping holes in the country’s fiscal balance sheet.
Following the latest cabinet meeting on July 3, outgoing Prime Minister Alenka Bratusek announced that her administration had suspended any preparations for state sales, effectively leaving the thorny issue of privatisation to be dealt with by the next government.
“We decided that no privatisation can be finished or started until a new government is formed,” said Bratusek at a news conference after the cabinet meeting. She claimed it was only fair that preparations for privatisation should be shelved during the politically heated election campaign.
Last year Bratusek’s centre-left coalition government put together a 15-strong list of companies to be sold off by the state in the coming two years. So far two companies - specialty paints firm Helios and laser manufacturer Fotana - have been sold off, while the sale of a number of others is moving into the later stages.
Among the high-profile privatisations currently scheduled for this year is the sale of a 72.75% stake in telecoms operator Telekom Slovenije. According to local media reports, three strategic and at least half a dozen fund investors have so far submitted non-binding bids to take control of Telekom Slovenije. Due diligence is set to be launched before the election, with final binding offers due to be placed by the end of August.
Those reported to have expressed firm interest in Telekom Slovenije include strategic investors Mobile TeleSystems (MTS) from Russia, Turkey's Turkcell and Germany’s Deutsche Telekom. Interest from financial groups has reportedly come from Apollo Global Management, Providence Equity Partners and Bain Capital from the US, UK firms Cinven, CVC Capital Partners and Apax Partners, while Czech tycoon Petr Kellner's PPF Group is also said to be in the running.
According to Slovenian business daily Finance, Deutsche Telekom has offered €140 per share - in line with the prevailing trading level of Telekom Slovenije shares on the Ljubljana Stock Exchange. Deutsche Telekom is seen as the favourite, although the paper claims that Apax Partners, Bain Capital and Providence Equity Partners have submitted higher bids, valuing the telecom firm at between €150 and €160 per share.
Meanwhile, France’s Vinci Airports confirmed to Reuters on July 3 that it is in the running to buy a controlling stake in Ljubljana airport. The Slovenian government had also set July 3 as the deadline for bids for the country’s second largest bank Nova KBM.
Bratusek’s announcement of a brake on privatisation drew a mixed reaction from her political peers and rivals. Uros Cufer, who served as finance minister in Bratusek’s government told Slovenian news agency STA that he disagreed with the suspension of state sales. "I see this as plain pre-election hysteria the government has fallen into and for which I see no smart reason, let alone an excuse."
During a political debate broadcast on Pop TV on July 3, the leader of the right-wing New Slovenia party, Ljudmila Novak, labelled the temporary ban on state sales an obvious election stunt by Bratusek, given growing public opposition to privatisation.
For her part, Bratusek rejected the claim that her perceived backsliding on promised asset disposals was a case of political grandstanding designed to boost the popularity of her own Alliance of Alenka Bratusek party, which she founded in June after being ousted as leader of the Positive Slovenia party. “This [suspending privatisation] has nothing to do with any political campaign, but is a responsible way to act with regard to state assets,” she claimed.
Several members of the outgoing government used the same Pop TV to express support for Bratusek’s stance. Social Democrat leader Dejan Židan, who served as agriculture minister under Bratusek and has been one of the most vociferous critics of privatisation in her cabinet, maintained that given growing indications of opaque dealings related to state sales it was only right that the government had decided to call a temporary halt to the privatisation process. Foreign Minister and leader of the DeSuS pensioners’ party, Karl Erjavec, also applauded Bratusek’s move on the same grounds as Zidan.
Separately, Miro Cerar, eponymous leader of the newly formed left-wing Miro Cerar party which is leading in the opinion polls in the run-up to the July 13 vote, has expressed his opposition to the planned privatisation programme, including the Telekom Slovenije sale. According to Reuters, Cerar claimed in June that, “We will aim to stop it if that will be possible,” adding that companies of “strategic importance” such as Telekom Slovenije should remain in public ownership.
Other minor left-wing parties such as the United Left and the Greens, which are vying to win entry into the next parliament, have also expressed their opposition to further privatisations.
Overall, the increasingly heated political debate over the pros and cons of privatisation reflects the traditional ambivalence towards the tenets of market capitalism that Slovenia has displayed since gaining independence from Yugoslavia in 1991. While the country has been an enthusiastic user of the international bond and syndicated loan markets, successive governments have traditionally been leery of allowing foreign ownership of prized Slovenian assets and of loosening their grip over large parts of the economy. Consequently, around two-thirds of Slovenia’s economy remains in state hands.
Given the fact that at the latest count, Slovenia’s budget deficit was running at 5.5% of GDP and public debt was at 78.1% of GDP at the end of the first quarter, revenues from potential state sales would provide a welcome boost to Slovenia’s economic fortunes. However, given the increasingly fractious and fractured nature of the country’s political scene, the only certainty about future privatisations is that for the time being at least they remain an uncertain prospect.
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