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PRIVATIZATION ADVISOR SAYS IF BILL NOT PASSED, INVESTOR MIGHT REJECT DEAL FOR SE ENERGY UTILITY

Enel keeps brave face as MPs dawdle over law

AS the privatization process grinds to a halt in Slovakia some three months before elections, the CEO of Italian power producer Enel, Fulvio Conti, said he remains optimistic that the largest privatization sale of the second Dzurinda government - that of power utility Slovenské elektrárne - will still be wrapped up.

AS the privatization process grinds to a halt in Slovakia some three months before elections, the CEO of Italian power producer Enel, Fulvio Conti, said he remains optimistic that the largest privatization sale of the second Dzurinda government - that of power utility Slovenské elektrárne - will still be wrapped up.

While the Act on the National Nuclear Fund, one of the conditions set by the investor for the completion of the sale, has still not been adopted, the bill is still alive after the parliamentary committee for economy, privatization and enterprise recommended on March 7 that the legislature approve the bill.

If passed, the law would guarantee the Italian investor that electricity consumers rather than Slovenské elektrárne itself would pay the at least Sk15 billion (€390 million) deficit in the fund that covers the decommissioning of nuclear facile disposal of spent fuel.

Meanwhile, some members of the ruling coalition have suggested that even if parliament fails to pass the bill, it would not necessarily kill the sale of the 66-percent stake in Slovenské elektrárne by the end of April, 2006, the deadline for the deal.

Christian Democrat (KDH) deputy Alojz Přidal said that the importance of the bill for the completion of the Enel deal had been greatly exaggerated. Přidal said he was confident that the deal would be wrapped up regardless of whether the bill was adopted or not.

Still, the caucus of the KDH, which recently quit the ruling coalition, has said it will support the bill whatever happens, as it concerns a whole generation in Slovakia, not just the current government.

The opposition social democratic Smer party, a staunch opponent of privatization, said it would not support the law, while the Movement for a Democratic Slovakia is not enthusiastic about selling the power utility to the Italians either.

Economy Minister Jirko Malchárek also said that the completion of the Enel deal was not the sole reason the bill had to be adopted. He explained that Slovakia had to find a way to deal with the huge financial shortfall in the nuclear liquidation fund.

"We have to pass the law sooner or later, it's not just a question of the SE privatization," Malchárek told the SITA news wire.

Ján Rusnák, the chairman of the parliamentary economy committee, is also optimistic the deal will get done even if the law is not passed by the end of April.

Enel has refused to say whether it would complete the deal without having the law in place.

But Peter Mitka from the privatization advisor, PricewaterhouseCoopers, said the law remains the most important condition for completing the deal.

"The Act on the National Nuclear Fund at the moment is the most important element for completing the transaction. Certainly, MPs can express their opinions, but the deferral conditions have been clearly defined and agreed on by the seller and the buyer," Mitka told The Slovak Spectator.

"If the law is not adopted, one of the most important conditions set by the buyer will not be met. The automatic consequence will be that the buyer will have to consider whether or not to complete the deal," he added.

The draft stipulates that consumers should pay a maximum of Sk0.05 per kWh into a fund to decommission nuclear facilities and process spent nuclear waste. Total payments from consumers should not exceed Sk850 million (€22.6 million) annually.

The authors of the bill hope that the fund will gradually raise Sk15 billion (€400 million) through the payments. Nuclear facility operators will also contribute to the fund.

The fate of many privatization projects was cast into doubt after Prime Minister Mikuláš Dzurinda announced on February 7 that the cabinet would discuss no privatization projects after that date.

Enel, which has a strong position on the European market and is one of Europe's largest energy companies, undertook to pay €840 million for its 66-percent stake in SE in February 2005.

The company has already paid 20 percent of the purchase price, and will turn over the rest of the money once the transaction is wrapped up.

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