New Slovak government reviews utility privatization

The government of Slovakia hopes to recover as much as US$1.57 billion it says it could lose as a result of the previous administration’s privatization sale of utility Slovenske Elektrarne to Italian utility Enel.

Prime Minister Robert Fico, who took power after winning a June election, said November 15 that an initial analysis showed Slovakia could lose as much as 44 billion crowns (US$1.57 billion) between 2008 and 2030 because of �unfavorable� terms under which Slovenske Elektrarne is using the 720-MW Gabcikovo hydroelectric project.

Fico has repeatedly criticized the terms under which the previous government sold 66 percent of Slovenske Elektrarne to Enel for 840 million euros (US$1.1 billion) earlier this year.

Last week, the cabinet approved a move to study the sale to see whether it can change the agreement with Enel, under which the utility will pay no dividends from its profits until 2010. Slovakia still holds the other 34 percent, and would receive a portion of any dividends paid out.

“We have commissioned a legal analysis of the entire contract on Slovenske Elektrarne,” Fico told journalists after a regular government meeting. “We are specifically interested in conditions for the rent at hydropower plant Gabcikovo, where we already see grossly unfavorable conditions (for the state).”

The prime minister said the government was not attacking Enel for accepting the favorable conditions offered by the previous administration.

“We will identify the problems, and we will try to correct every mistake,” he said.

Enel refused to comment on the government’s move to review the deal. Ivan Miklos, who was finance minister when the deal was approved, rejected Fico’s criticism saying profits will stay in the firm and be invested to pay even bigger dividends down the road.

Slovenske Elektrarne, which holds 85 percent of the Slovakia market, owns nuclear, thermal, and hydropower installed capacity of more than 6,880 MW. That includes a mix of conventional and pumped-storage hydropower totaling 2,399 MW.

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