Slovenske Elektrarne CEO hints that Enel might abort Slovak group's sale

By bne IntelliNews November 4, 2014

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Italy's Enel might yet pull out of plans to sell its 66% stake in  Slovenske Elektrarne (SE), the CEO of the Slovak power producer said on November 4. The statement reflects the uncertainty over the state's attitude to the sale, and growing pressure on Enel ahead of a SE shareholders meeting that will discuss the troublesome expansion of the Mochovce nuclear plant. 

The claim by Luca D'Agnese - quoted by TASR news agency - comes just days after Enel CEO Francesco Starace told Italian lawmakers the company still expects to receive binding bids for its Slovak and Romanian assets by the end of November. Moreover, Starace said Chinese companies are now interested in the acquisition.

The sale of the Slovak assets, announced by the Italian company in July, is looking more complicated by the day. Pressure is growing from the government in Bratislava, which insists it wants to try to buy some of the stake to increase its 34% holding. Meanwhile, the deterioration of relations between Moscow and the West excludes potential suitors from Russia. State nuclear group Atomstroy had been previously suggested as a leading contender by local media.

Perhaps the biggest obstacle claimed by known suitors is SE's project to expand Mochovce. The project has suffered long delays and budget increases, and continues to struggle. Economy Minister Pavol Pavlis only upped the pressure on November 4 when he delivered another blast at Enel over the issue.

Building the two new reactors was initially projected at €2.8bn; but has since been revised up to €3.8bn. However, Bratislava is now locked in talks with Enel regarding yet another rise in the budget, allegedly of some €800mn. Moreover, the completion of the reactors has now been delayed by more than two years because of hold-ups associated with stress tests, needed to meet new safety standards after the March 2011 Fukushima disaster in Japan.

Czech power group CEZ, one of the companies which has expressed interest in buying Enel's stake in SE, has claimed it will not bid for the Slovak utility until the risks associated with Mochovce are clarified. 

Breathing down Italian necks

According to a recent statement made by D'Agnese, the two reactors are now not set to launch until the third quarter of 2016 and 2017 respectively.

However, that will depend on the decisions reached at an extraordinary general shareholders meeting on November 7, when Enel will seek approval for the budget increase. It's far from certain the Slovak state will agree, as Pavlis made clear in his comments. 

"I express my great, great dissatisfaction with how the completion of the current project is going," he thundered after visiting the plant, according to the SITA newswire. "In connection with the completion of the third and fourth units at Mochovce, as of today the economy ministry will breath down the Italians' necks every day. I have the right to say this with regard to what I saw today."

The EGM only increases the state pressure on Enel. In September, Pavlis said Slovakia could seek to use the proceeds from the sale of its 49% stake in telecoms operator Slovak Telekom (ST) to buy a greater stake in SE. However, Finance Minister Peter Kazimir retorted that the funds from the expected ST sale will be used to finance the country's budget deficit.

Apart from CEZ and the Slovak state, Czech Energeticky a Prumyslovy Holding (EPH) - owned by Slovak financial group J&T, which has close ties to the government and bought the country's gas pipelines last year - has also shown interest in SE.

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