Legislation lifts sell-off hopes

The government April 19 approved legislation which it said would allow the sell-offs of state utilities, including the lucrative gas giant Slovenský plynárenský priemysel (SPP), to advance more quickly.
Following the cabinet's decision, cadastral, land, agriculture and forest, and environmental offices will all have to give priority to work connected with privatisation projects, specifically the settlement of property transfers for state enterprises.
Cabinet said that the need to settle property matters in many privatisation projects was essential to the sales' completion, especially in the energy sector. According to an official government statement after the approval, power distribution companies alone have property yet to be transferred amounting to 190 million crowns.

The government April 19 approved legislation which it said would allow the sell-offs of state utilities, including the lucrative gas giant Slovenský plynárenský priemysel (SPP), to advance more quickly.

Following the cabinet's decision, cadastral, land, agriculture and forest, and environmental offices will all have to give priority to work connected with privatisation projects, specifically the settlement of property transfers for state enterprises.

Cabinet said that the need to settle property matters in many privatisation projects was essential to the sales' completion, especially in the energy sector. According to an official government statement after the approval, power distribution companies alone have property yet to be transferred amounting to 190 million crowns.

This had come about, Privatisation Minister Mária Machová said, because the firms had so far failed to submit registration documents on some property to cadastral offices, and would now need new documents before the state could fully administer property and prepare the firms for full privatisation.

Power distribution companies VSE, SSE and ZSE are due to be sold this year, and the government has been urged to move forward as quickly as possible with the privatisations. Analysts say the sell-offs will be a litmus test for the privatisation of state power provider Slovenské elektrárne (SE).

They argue that if these sales are quick and successful, the government can show investors that it can push through smooth sales in the sector and make a start on what many see as the much more complicated sale of SE.

Lobby groups in parliament, industry insiders say, are likely to hold up the sale. Analysts say that if the government wants to get the firm's privatisation completed before the end of its term in September next year, thereby ensuring market liberalisation, it must start now.

"Selling SE will be very complicated. There are political influences to take into account and it's likely that some politicians will argue that SE is a strategic company and hold things up. The company is very big in terms of assets and sales anyway and would be hard to sell," said Miloš Božek, analyst at J & T Finance.

"It is theoretically possible the government could try to start the sale now and let the next government finish it, but that is only a theory in Slovakia. They should start now."

An original 1H deadline for the sale of SPP has already been put back to late in the third-quarter of this year and many analysts have questioned whether the sale of the $8 million-valued behemoth can be completed even before the end of the year. State water utility Vodárne a kanalizácie (VaK) is pencilled in for a sale sometime next year.

The government is hopeful that the changes in legislation will help it meet its stated aim of selling 38 firms and 140 billion crowns ($2.9 billion) of state property by the end of its term in September next year. But market dealers following the government's privatisation programme closely have doubted the effect the law will have.

"Investors are more interested in the actual privatisations, and things around laws like this have little effect on them," said Braňo Matušek, a dealer at ING Bank in Bratislava.

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