Slovnaft is hoping to obtain a 49% stake in Transpetrol, Slovnaft's carrier of crude oil, from the state.
photo: Martin Janoško
Following its own privatisation plan, the government's economic ministers (Economy Minister Ľubomír Harach, Finance Minister Brigita Schmögnerová, and Deputy Prime Minister for Economy Ivan Mikloš) gave the go-ahead for the privatisation of a 49% stake in Transpetrol during their weekly meeting on April 3.
Based on the new law on strategic companies which was approved by parliament in September last year, government ministers decided that a 34% stake in Transpetrol would be offered to a strategic partner, a 15% stake would be sold on domestic or international stock exchanges and the remaining 51% share would be retained by the state.
According to Slovnaft spokesman Ľubomír Žitňan, the company's desire to obtain a 34% stake in Transpetrol is a natural one since the firm has been a 100% carrier of the crude oil Slovnaft uses as the main material in its production process since 1962.
"We are undoubtedly very interested in buying the biggest possible stake in Transpetrol and we will put all our effort into getting this 34% stake," Žitňan said. Transpetrol is the exclusive carrier of Russian crude oil through the east-west Družba pipeline and south-north Adria pipeline, the only two strategic pipelines passing through Slovakia.
Analysts have called Slovnaft's bid an enterprising move for the refinery. Dušan Meszáros, an energy sector analyst at Commerzbank in Prague, said it made sense for Slovnaft to buy a 34% stake in Transpetrol.
"From Slovnaft's point of view, I think that it is natural for them to bid for Transpetrol because they [Slovnaft] are dependant on it," Meszáros said.
Apart from the 34% stake sold to a strategic investor, the government intends to offer an additional 15% stake to institutional investors, not just through the stock exchange. They want to sell the shares directly to a financial institution closely related to the World Bank and European Union such as International Finance Corporation or European Bank for Reconstruction and Development (EBRD).
The EBRD has also been offered a 15% stake in the state-owned telecom monopoly Slovenské Telekomunikácie (Slovak Telecom - ST), which is due to be privatised later this year.
The government's decision not to sell the 15% stake to a strategic partner is a trade off between getting maximum profit from the sale because it had wanted to maximise its profit from the transaction as well as set an optimum control level for any firm entering Transpetrol.
"If they (the government) sell this stake on the inter-bank market they will get more than if they sell it to a strategic partner," Meszáros said. "At the same time, the government is trying to restrict the power of the future strategic partner in Transpetrol."
However, even a 34% stake in Transpetrol could be the launching point for a majority share bid in the future.
Following its March 31 closing of an acquisition agreement with MOL, which saw the Hungarian firm take a 36% stake in the Slovak refinery, both companies made it clear that they were looking to expand their retail network across central Europe.
Transpetrol has recently invested in the development of a series of filling stations, adding to its attractiveness for Slovnaft. Combining Transpetrol's current amount of 13 filling stations in Slovakia, MOL's 12 and Slovnaft's 315, the Bratislava-based refinery would further secure its dominant position on the domestic retail market if it bought a stake in Transpetrol.
However, further expansion by Slovnaft would be monitored by the Anti-Monopoly Office. "If Slovnaft or any other company that could have a dominant position on the market were to become a co-owner in Transpetrol, the Anti-Monopoly Office will control, for example, concentration on the retail market or concentration between the carrier and producer of the crude oil," said Ján Matuský, the Anti-Monopoly Office's first executive department head.
Transpetrol, which made a gross profit of 621 million Slovak crowns ($14.38 million) on total revenues of 2.2 billion crowns ($50.9 million) last year, will be privatised as a whole which means that its daughter companies Transpetrol-Tranzit, Transpetrol-Trading, Transpetrol-Finance Leasing and Transpetrol-Service won't be sold separately. Economic ministers expect Transpetrol to be sold by the end of this year or in the first quarter of 2001 at the latest.
Having recently taken a 35 million DEM (744.44 million Slovak crowns) loan provided by a consortium of banks led by Bank Austria and Credit Lyonnais Slovakia, the company intends to use the extra funds to complete reconstruction of the crude oil pipeline from Russia, to widen storage capacities and to ensure ecological standards are met along the pipeline route. In 2000, Transpetrol expects revenues of 2.296 billion crowns ($52.7 million) with a gross profit of 522 million crowns ($12.09 million).
17. Apr 2000 at 0:00 | Peter Barecz