SE privatisation plods on

Despite receiving initial recommendations from its advisor on the last of Slovakia's major privatisation deals, the government has not yet rolled out its plans for the sale of the Slovenské elektrárne (SE) electricity producer.

After being advised in mid-March by PriceWaterhouceCoopers (PWC) to split SE into two subsidiaries ahead of its sale, the parliamentary committee steering the privatisation forwarded the recommendations to the government, which is expected to decide on the proposal by late April.

Government representatives and the Economy Ministry say they are still looking for consensus before deciding whether to sell a 49 per cent stake in SE as a whole, or 49 per cent stakes in two halves of a divided SE - one representing conventional power production, the other representing the country's two nuclear facilities.

"I am not saying now, I have not said in the past, and I will not say in the near future how the privatisation [of SE] should continue," said Economy Minister Robert Nemcsics after the PWC recommendations had been sent to privatisation committee members.

According to government officials, eight bidders are jostling for the purchase of a minority stake in SE, but are more interested in the conventional power plants than the nuclear facilities, one of which is set to be decommissioned by 2008.

In addition, parliamentary opposition parties and electricity unions are opposing the split of SE before its sale, saying the whole will fetch a higher price than its two component parts.

"Current steps by the Slovak government within the further privatisation of the energy sector and SE privatisation will bring additional losses for Slovakia," said Tibor Mikuš from the opposition Movement for a Democratic Slovakia (HZDS) party. Mikuš is a former director of SE and a vocal opponent of splitting the company.

"I am not against privatisation, but I am against privatisation that doesn't benefit all citizens of this republic. Privatisation under conditions where it is not possible to determine an optimal price is simply damaging," said Mikuš.

Although Mikuš was initially a member of the privatisation commission, he stepped down in early April to assume a different government committee post. He was replaced by Maroš Kondrot from the opposition party Smer, which also opposes splitting SE before its sale and has raised a number of objections to Slovakia's large-scale privatisation practices.

In late March, Smer leader Robert Fico urged the Slovak government to sue Credit Suisse First Boston for its role in advising the government on last year's sale of the SPP gas utility.

According to Fico, Slovakia lost Sk7.7 billion (187 million euro) on the $2.8 billion (2.6 billion euro) deal due to changes in currency valuation because the sale was carried out in US dollars rather than in euro.

The ruling coalition, however, has dismissed the Smer motions in the SPP case, and has promised that the SE privatisation will be conducted in a way that brings the greatest possible benefit to the state.

"We are definitely not going to privatise at any price, and not as long as there is not an evident consensus in society as a whole that the privatisation in this or that form is advantageous for citizens of this state," said Nemcsics.

"We are not going to leave it to the pressures of some timetable drawn up in advance just so we can meet it. That is not the goal of the privatisation," he said.

While the identity of the eight SE bidders has remained confidential, the list is thought to include German utilities E.ON and RWE, as well as France's EdF - the three companies that bought into Slovakia's regional electricity distributors last year. British International Power, British Energy, and Italy's Enel are also believed to be interested.

The government is expected to announce its plans for SE and a shortlist of contenders by late April, after which the approved companies will be able to begin due diligence proceedings. The sale is expected to be completed by the end of 2003.

While neither government representatives nor their advisors on the SE sale have been forthcoming on an estimated price for SE, critics of the deal have suggested that initial bids have been significantly higher than PWC's recommended price for the utility.

In mid-March, former SE head Mikuš charged that some bids were as much as three times higher than PWC's figure, meaning a difference of billions of crowns.

"It is at least curious that the estimate of the privatisation advisor is well below the offers of interested parties," said Mikuš.

Officials from PWC, however, say that it is not unusual for there to be a marked difference in prices being quoted by both sides in such a deal, as potential investors and the privatisation advisor are working from different information resources.

"Members of the privatisation commission should be cautious about information associated with the SE privatisation presented at commission sessions," said PWC representative Peter Mitka in answer to Mikuš's charges.

"One should realise who is the receiver of materials. Those submitted by the investor are different and contain, for example, details of technical conditions of individual SE plants, which are very positive. However, the advisor has also presented information to the commission on potential problems linked with the privatisation," said Mitka.

Slovakia's power utility is projecting total sales and revenues for 2003 at Sk48.14 billion (1.17 billion euro), and costs of Sk48.07 billion (1.17 billion euro). The company reported sales of electricity abroad for 2002 at Sk1.6 billion (39 million euro).

Zdroj: The Slovak Spectator