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Nafta Gbely shares still lost in confusion

The future of the 45.9% stake in lucrative gas storage firm Nafta Gbely remains as murky as ever. The company which now has the shares on its account, Czech investment bank IPB-All, says it acquired the stake as an intermediary for American energy giant Cinergy. Cinergy officials at the company's base in Cincinnati, Ohio, however, say that they have "neither a formal nor an informal agreement" with IPB-All, but that they are performing due diligence on Nafta Gbely in cooperation with their Czech partner.
Meanwhile, the Slovak government tasked Economy Minister Ľudovít Černák with coming to an out-of-court settlement with "the current owner" of the Nafta shares. Černák is due to deliver a progress report on negotiations at the beginning of August.


Gas storage firm Nafta Gbely, pictured above, is now entangled in a complicated game of hidden ownership.
photo: TASR

The future of the 45.9% stake in lucrative gas storage firm Nafta Gbely remains as murky as ever. The company which now has the shares on its account, Czech investment bank IPB-All, says it acquired the stake as an intermediary for American energy giant Cinergy. Cinergy officials at the company's base in Cincinnati, Ohio, however, say that they have "neither a formal nor an informal agreement" with IPB-All, but that they are performing due diligence on Nafta Gbely in cooperation with their Czech partner.

Meanwhile, the Slovak government tasked Economy Minister Ľudovít Černák with coming to an out-of-court settlement with "the current owner" of the Nafta shares. Černák is due to deliver a progress report on negotiations at the beginning of August.

Thus ended week three in the 'Nafta affair,' as the mysterious sale of Nafta Gbely is now known in Slovakia. The Nafta shares, which the Slovak government had been hoping to acquire for the state-owned gas utility SPP, were sold abruptly on June 22 to IPB-All by Trnava entrepreneur Vladimír Poór.

Poór has now been charged with fraud in connection with his 1996 purchase of the 45.9% Nafta stake from the then-government of Prime Minister Vladimír Mečiar. Two top officials of the FNM privatisation agency, which apparently approved the IPB-All transaction, have been recalled from their positions by the government, pending parliamentary approval next fall. And Černák himself remains under fire from his cabinet colleagues - particularly Deputy Prime Minister Ivan Mikloš and ministers from the former communist SDĽ party - for his handling of the affair

One of the most curious aspects of the Nafta affair remains the fury with which Černák and his superior, Prime Minister Mikuláš Dzurinda, reacted to news of the sale of the Nafta Gbely shares. In the aftermath of the IPB-All sale, Černák in particular has been strident in his refusal to recognise the apparent entry of Cinergy into Nafta Gbely, despite the Slovak government's open-arm embrace of foreign investors in general.

Černák, primary booster of a plan to secure Nafta under the ownership of its main customer, the SPP, told The Slovak Spectator on July 14 that "we don't need to see the billboards of Cinergy, Trans Canada International [the world's second largest pipeline company behind the Russian Gazprom, which had been interested in purchasing Nafta Gbely - ed. note] and [the German] Ruhrgas lighting up all Europe. Maybe in this region we will do such good business that our neighbours will come to know what SPP is."

But legal experts, among them FNM lawyer Ernest Valko, have already expressed doubt that the Slovak government can do anything to recover the Nafta shares from their current owner, begging the question - what can the government do to bring Cinergy into line?

CA IB securities analyst Ivan Chodák said that he expected that Cinergy and the FNM would indeed eventually come to an out-of-court settlement regarding the Nafta shares, as cabinet proposed on July 14. "The best option is to recognise the deal that happened - the purchase of Nafta by IPB-All. Then they [IPB-All and the FNM] should agree on some kind of compensation for the stake that the FNM feels it should have acquired," Chodák said.

Initial statements from Cinergy and IPB-All seem to indicate that both want to come to terms with the Slovak government. Vladimír Prerad, Cinergy's Vice President for Global Resources, said in an open letter for Prime Minister Dzurinda dated July 9 that "Cinergy is trying to cooperate with the government to find a transaction that would conform to the government's position."

IPB-All spokesperson Barbora Tachecí also told The Slovak Spectator on July 12 that while her firm "has confirmation that we can exercise our shareholder rights" in Nafta Gbely, IPB-All wanted to help calm the uproar over the sale of Nafta, and was willing to contribute between $100 and $200 million to satisfy Nafta's creditors.

But CA IB's Chodák said that Cinergy itself was to blame for much of the furore surrounding the Nafta purchase. In particular, he faulted the giant firm for buying its Nafta stake indirectly through IPB-All."For Nafta, investment coming from such a company from Cinergy would be far more beneficial than any investment coming from the SPP or the FNM," he said, referring to a government plan to concentrate Nafta under a joint SPP-FNM joint venture known as SPP-Slovakia. "But the circumstances have to be transparent. I was expecting them to act in this way - they are a huge American company, with an important market position. If they have made a faux pas here, it won't end very well for them."

A source in the Slovak bank sector, speaking on condition on anonymity, agreed that Cinergy could have avoided a great deal of confusion if it had purchased the Nafta shares from Poór directly and announced itself as the new owner. "They could have shown that they were buying the Nafta shares in good will to help the company recover. But once they started to manipulate the shares indirectly, they must have known the risks - that the FNM would lay charges against Poór, and that an uproar would result."

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