SLOVAKIA’S largest electricity company, Slovenské Elektrárne, had some uninvited guests on July 23 when the Slovak police came to the company’s headquarters as well as other facilities seeking documents pertaining to the privatisation of the company back in 2006. Amid continued talk of a sell off by its Italian majority owner Enel the timing of the raid is powering a wave of questions and speculation.

The police said the raid, which was first reported by the public service Radio and Television Slovakia (RTVS) on the Facebook profile of its news department, was part of an investigation of serious crimes.

“Since June 30 a criminal investigation has been carried out on the suspicion of two offences, a breach of duty regarding the management of property and the misrepresentation of business records,” Police President Tibor Gašpar told the TASR newswire, adding that for assessing the suspicions it was necessary to secure documents and data.

The case is overseen by a prosecutor of the Special Prosecutor’s Office but authorities cited the open investigation as reason for withholding more details. The Economy Ministry has also confirmed the police action, but its spokeswoman insists that it was not a raid.

“We’ve received information from the Police Corps Presidium that it’s not a raid but an operation aimed at securing documentation from the archives pertaining to the years when the utility was subject to privatisation,” spokeswoman of the Economy Ministry Miriam Žiaková told TASR.

Enel acquired the 66-percent stake in SE in 2006 during the government of Mikuláš Dzurinda, paying €840 million for the package. Some assets, however, were excluded from the deal, for example, the first two units of the nuclear power station in Jaslovské Bohunice, which Slovakia promised during EU membership negotiations to close down in 2006 and 2008, respectively, as well as the hydropower station in Gabčíkovo, which was part of a Slovak-Hungarian dispute. The remaining 34-percent stake in SE is in the hands of the National Property Fund, while the rights are carried out by the Economy Ministry.

SE has 5,739 MWe of gross capacity in 34 hydroelectric, two nuclear, two thermoelectric and two photovoltaic plants, according to the company website.

While SE spokeswoman Jana Burdová initially said they did not know the reasons for the police operation, while insisting the company cooperated, on July 24 she told the website vEnergetike.sk that the investigation pertains to the times before the privatisation in April 2006.

There are only two reasons why the police carried out the operation in Slovenské Elektrárne, security analyst Milan Žitný speculated for TASR on July 23: “Either it is linked to the privatisation from the times of ex-PM Mikuláš Dzurinda, which is of low probability, or it is linked to the actual possible change of the owner. All is open.”

According to Žitný, statements by Police President Tibor Gašpar from July 23 imply the investigation is targeted at the managing bodies and owners of SE, TASR reported.

The Sme daily reported that the so-called Gorilla File, a lengthy documentation of a Slovak Information Service (SIS) surveillance operation that dates from the same 2005-2006 period that the privatisation of SE was underway, includes a discussion pertaining to dealings around what was still then a state-run firm.

Sme reported that in order for the Italians to sell their stake in SE, a dispute with the state should be wrapped up on whether any of the parties owes the other any outstanding money within the 2006 privatisation deal.

“If Enel fails to strike an agreement with the state over the issue, it might lower the price of the power utility in the potential buyer,” Sme speculated in its July 24 issue, adding that the core of the dispute is a roughly €200 million reserve fund intended for decommissioning the nuclear power plants and other specific purposes. “Since finally the firm needed less than this, Enel should pay extra money for that now to the state,” Sme continued.

Sme, however, also noted that the state had already promised Enel that it would wrap up the privatisation, and afterwards not ask for extra cash. Prime Minister Robert Fico signed a memorandum with the Italians over the issue in 2008. Nevertheless, the next government of Iveta Radičová ordered an analysis from the firm TPA Horwath, which concluded that the state could request that Enel pay back some €220 million. The audit assessed SE financial statements from April 2006 – the month that Enel became the majority shareholder of SE – according to the SITA newswire, and concluded that Enel may have underpaid for its stake in SE.

After Fico returned to power in 2012, his new government also began asking for Enel to pay back the money as well, according to Sme.

Sale plans

The Italian energy group Enel has confirmed that it is selling its stake in SE. Enel CEO Francesco Starace informed the Board of Directors of Enel about this at their meeting on July 10 in Rome. The sale of its power generating assets in Slovakia and its distribution and sales assets in Romania are part of a programme being implemented to strengthen the group’s financial structure, as provided for in the 2014-2018 Business Plan.

The sale of the holdings in Slovakia and Romania are part of a broader €6-billion programme of asset sales begun in 2013 and aimed at reducing the Enel Group’s debt. To date, some €1.6 billion in sales have been completed. The Slovak and Romanian assets, together with other non-strategic assets, will contribute more than the residual target of €4.4 billion, the group informed in its press release.

Slovakia holds a pre-emption right for Enel’s stake in SE, but former economy minister Tomáš Malatinský perceived this as too expensive for the state. He said shortly before his resignation that if the state would push Enel somewhere, that this would be in a direction that would enable the new owner to complete Mochovce.

Mochovce is cited as a possible complication of the sale. In general, its delayed completion is a sticking point when it comes to the relationship between SE and the Slovak government. The project to complete the two units of the Mochovce nuclear power station is being delayed and its latest official price-tag of €3.8 billion is rising, too. The original €2.8-billion plan was to complete the third unit in 2012 and the fourth in 2013. While the Italian partner explains the delay as well as higher costs mostly by additional changes incurred by the project after the Fukushima accident, for the Slovak side this means allocating additional funds and postponed incomes from the sale of electricity generated by the new reactors.

The Czech energy company ČEZ and Russian Rosatom top the list of companies which may be interested in acquiring the majority stake in SE. The latter option is being linked with concerns of Slovakia’s increasing dependence on Russia. Slovakia already imports from Russia nuclear fuel for its nuclear power stations as well as most of its natural gas.