Enel to spark scramble as it puts Slovak assets up for sale

By bne IntelliNews July 11, 2014

Tim Gosling in Prague -


Enel is set to spark a scramble after it announced on July 10 that it is selling its power generation assets in Slovakia, as well as distribution and sales assets in Romania.

The Italian energy group said in a statement that the divestment of Slovakia's dominant power producer Slovanske Electrarne (SE), as well as five Romanian distributors and services company Enel Romania Srl is part of a broader €6bn programme of asset sales, begun in 2013 and aimed at reducing Enel's debt. To date, the company has raised €1.6bn, and it says it is confident the new sales will contribute more than the residual target of €4.4bn.

While not unexpected - speculation that SE would be sold has been rife in recent weeks - the announcement is likely to set off a race in Slovakia. Next door in the Czech Republic, state utility CEZ and energy holding EPH are likely to be among the leading contenders, but Russia's nuclear state agency Rosatom is also regarded as a potential suitor.

SE's biggest current project is the expansion of the Mochovce nuclear power plant. The project is now seriously over budget and behind schedule, which has seen Bratislava highly critical of Enel. Rosatom is the ultimate supplier of technology and fuel for the plant, and thus is keen to see it completed. 

In early June, SE announced it had sealed a €870m loan from Russian state-owned banking giant Sberbank. Analysts noted that such a size of loan is unusual for a Slovak company without syndication. It's also around the volume of investment needed to finish the expansion of Mochovce. 

The deal has had some suggesting the loan points the way to a Russian purchase of Enel's stake. Rosatom has been sniffing around Slovak nuclear assets for some time, but handing Russia ownership of an EU nuclear facility may be a step too far even for the strong pro-Russian contingent in Bratislava.

Next door in the Czech Republic, CEZ dropped its own nuclear expansion tender in April - a deal the Russians had been chasing hard - and is now looking for a use for its spare cash resources. CEO Daniel Benes said in April that he was keenly watching SE from across the garden fence. “The biggest failure in CEZ’s history was that we didn’t buy Slovenske Elektrarne. So if that asset is up for sale, we will gladly enter into negotiations about it,” he said, according to Bloomberg.

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