SPP utility says early 2001 loss no fluke

State gas giant Slovenský plynárenský priemysel (SPP) announced May 9 that it had recorded a 1Q loss of 176.3 million crowns ($3.6 million), a rapid fall-off from a four billion crown profit for 2000.
The company blamed the loss on rising world oil prices, domestic price caps which force it to sell gas at below purchase costs, and a weak crown.
It also warned that unless something was done to alter the price caps fixed by government there were no guarantees results in coming quarters would be different.

State gas giant Slovenský plynárenský priemysel (SPP) announced May 9 that it had recorded a 1Q loss of 176.3 million crowns ($3.6 million), a rapid fall-off from a four billion crown profit for 2000.

The company blamed the loss on rising world oil prices, domestic price caps which force it to sell gas at below purchase costs, and a weak crown.

It also warned that unless something was done to alter the price caps fixed by government there were no guarantees results in coming quarters would be different.

"Nothing can be guaranteed with profits while the situation with regulated prices stays as it is," said SPP spokesperson Helena Polaková.

The government has raised gas prices four times since coming to power in late 1998, the price of gas almost doubling in the last three years. However, SPP has complained that in maintaining a price cap the state has hurt its profits as oil prices have risen. Analysts say this will influence the price any investor is willing to pay for a stake in a firm limited in setting gas tariffs.

The government hopes to sell a 49% stake in SPP for 100 billion crowns ($2 billion) by October this year. So far, Russian gas giant Gazprom, and a consortium of Italy's Snam, Gaz de France and Germany's Ruhrgas have confirmed their interest in SPP.

News of the company's faltering performance comes only a few days after the state's advisors on the privatisation, Credit-Suisse First Boston (CSFB), said it would recommend a sale of the entire 49% share. This came only a week after its suggestion that 15% could be offered on foreign markets.

Analysts have said that selling the stake as a whole to a single investor would assure the state maximum revenues from the sale.

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