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DISAPPOINTED BUYER PENTA INVESTMENTS PROMISES TO SEEK SATISFACTION IN COURT

Cabinet nixes sale of airport to TwoOne

WHEN a privatization contract on the sale of Bratislava and Košice airports was signed by the previous Dzurinda government in April, little public attention was paid to the fine print - that the sale had to be approved by the country's antitrust authority by August 15, or the contract would be declared invalid.

WHEN a privatization contract on the sale of Bratislava and Košice airports was signed by the previous Dzurinda government in April, little public attention was paid to the fine print - that the sale had to be approved by the country's antitrust authority by August 15, or the contract would be declared invalid.

But on August 16 that seemingly innocent clause exploded like a mine beneath the feet of the privatization tender winner, the TwoOne consortium of Vienna Airport, Austria's Raiffeisen Zentralbank, and Slovak private equity group Penta Investments.

When the consortium failed to secure the approval of the Protimonopolný úrad (Antitrust Bureau, or PMÚ) in time, the socialist Robert Fico government, which is against the sale of state assets in general and the Bratislava airport in particular, moved with alacrity to scrub the deal inked by its right-wing predecessor.

"The government will recommend to the chairman of the National Property Fund [privatization agency] and Transport Minister Ľubomír Vážny that we withdraw from the contract on the purchase of [66 percent of] shares in the Bratislava airport," said Prime Minister Fico after an August 16 cabinet meeting.

The cabinet's decision was followed hours later by a press conference at the headquarters of Penta Investments, at which Penta partner Jozef Oravkin vowed to take the government all the way to the Supreme Court if it lived up to its intentions to scrap the contract.

Accusing the government of having bullied the PMÚ, an independent body, into a "purely political decision" in rejecting the deal, Oravkin said that "in our opinion, this withdrawal from the contract is invalid.

"This isn't about settling accounts with the government. We have no accounts to settle," he added.

The PMÚ said it was unable to render a decision on the sale - which had aroused concern that Vienna Airport might try to throttle the development of the competing Bratislava facility, a mere 60 kilometres away because Vienna Airport had failed to respond to a request for more detailed information.

The Bureau also said its concerns that the purchase might lead to a regional concentration harming competition had not changed since it sent a letter to the Transport Ministry warning of this possibility before the start of the tender.

But Oravkin said he had recently noticed a change in the Bureau's approach from one of cooperation to stonewalling. "All of a sudden we found ourselves in a situation in which no conditions were acceptable," he said.

"We were told by the Bureau that they had held direct talks with the transport minister," added Marek Ondrejka, the head of investments at Penta.

TwoOne won the airports tender with a combined bid of Sk11.42 billion, ahead of the second-place Abertis consortium of the Spanish Abertis, the British TBI and the Slovak capital group J&T.

According to the terms of the tender, if the winner dropped out of contention for whatever reason, the second-place finisher was to get a crack at the airports.

"We're still interested in the airports," said J&T spokesman Maroš Sýkora as the August 15 deadline passed without PMÚ approval for TwoOne.

But the cabinet put paid to the Aventis consortium's ambitions as well.

"The government today abolished the previous government's resolution that the second interested party would automatically come into play, by which I mean the Spanish company Abertis," Fico said.

The future of both airports remains up in the air. The PMÚ approved the sale of the Košice airport to TwoOne, but the Transport Ministry has not yet given up its right of appeal. Meanwhile, although the Bratislava airport situation looks more definite, the question remains - if TwoOne is not to invest in needed upkeep and development, then who will?

Former Transport Minister Pavol Prokopovič, the man who oversaw the airports privatization, said that a halt to the sales would merely "delay the investment that is so vital to the development of the airports", and warned that it could scare away foreign investors looking at Slovakia as a destination.

But Fico said his government was only acting according to the letter of the sales contract, and doing what it had always promised - to keep assets of strategic importance to the Slovak economy in state hands.

"I hope my stand on the airports doesn't surprise anyone," he said. "It's a stand that is absolutely compatible with what I had been saying for many months before the government took its decision today."

Minister Vážny and FNM President Peter Šimko now have until September 15 to prepare the necessary documents to cancel the sales contract and propose to the Economy Ministry that the privatization decision be overturned. By October 30 the same officials are to draw up a plan for the disposal of the state's share in the airport.

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