State gas utility SPP is on the list of former 'strategic' companies to be sold off by the state in the 'mid-term.'
"The government wants these companies to be privatised so that they can be restructured and released from state control," said Vladimír Zlacký, an advisor to the Deputy Prime Minister for Economy Ivan Mikloš. "There is no fixed time line for the state companies to be sold - we are looking at the mid-term horizon," he added without volunteering further details.
The revision to the law allows stakes in the following utilities and monopolies to be put up for sale: gas distributor Slovensky Plynárensky Priemysel (SPP), power producer Slovenské Elektrárne (SE) and the three national elecricity distribution companies, postal firm Slovenská Pošta, the state railway Železnice Slovenskej Republiky (ŽSR), the water-management company Slovensky Vodohospodársky Podnik, crude oil pipeline operator Transpetrol and forestry firm Štátne Lesy.
The amendment also removes obstacles in the planned sale of telecom monopoly Slovenské Telekomunikácie (ST) as well as state banks Slovenská Sporiteľňa (SLSP) and Všeobecná Úverová Banka (VÚB) and state insurer Slovenská Poisťovňa (SP).
The government has not decided if it will maintain a stake in these firms, designated 'strategic' under a 1995 law preventing their sale, or if it will dispose of them entirely to foreign investors . "It's difficult to say whether or not the government will keep a stake in any given case," said Zlacký. "This is a very sensitive political question, and some parts of the government, mainly the left-wing of the spectrum, might take exception."
The amendment also defines more precisely the separate powers of the FNM state privatisation agency and the Ministry of Privatisation, increasing the authority of the latter. In addition, the law allows FNM privatisation bonds held by citizens to be exchanged for shares in strategic companies. The shares could then be traded on Slovakia's capital markets, adding life to a stock exchange that has been moribund for years.
Cancelling old law
As the privatisation amendment went to the floor of the parliamentary chamber, Prime Minister Mikuláš Dzurinda appealed to deputies to cancel the 1995 Strategic Companies Law which forbade the sale of the state's stake in firms deemed to be crucial to the national economy.
"The Strategic Companies Law was absolutely needless," said Zlacký, adding that it had represented a barrier to Slovakia's accession to the Organisation for Economic Cooperation and Development (OECD). Mikloš, at a June 1 press conference, said that the Strategic Companies Law had been "a senseless law passed for political reasons, to make the [Meciar] government appear to be the protector of Slovak interests."
Martin Barto, head of the strategy division at Slovenská Sporiteľňa, said that cancellation of the strategic companies law was a necessary step if the government was to proceed with its plans to sell stakes in SLSP and VÚB by the end of the year 2000. "Until now, the FNM hasn't been able to take even the most basic step, which is increasing the bank's basic capital," Barto said.
Barto added that the previous law was now outmoded, since many strategic companies were no longer deserving of the name. "Slovenská Sporiteľňa's share of domestic client deposits was substantially larger some time ago than it is now," he said. "With the arrival of other banks, SLSP cannot be considered a strategic company any longer," said Barto.
The government is pushing ahead with its plans to privatise firms like ST and IRB, while Economy Minister Ľudovít Černák told the Reuters news agency in London on June 8 that stakes in power distributors might be offered to investors in the middle of next year (see related story this page).
Analysts, noting that Slovakia had not managed to attract any large foreign investors since parliamentary elections in October 1998, said that the amendment would bring in the FDI that Slovakia so desperately needed.
Ivan Chodák, an analyst at CA IB Securities, said "by the end of the year 2000, we should see the first contracts being signed with investors. However, there is little chance that these crucial foreign investors will be willing to invest into Slovak strategic companies, except IRB and Slovak Telecom, before the end of this year. Investors must know the market well before they dive in, and even then, when the market fulfils their criteria, entry can take around six months."
Chodák said that the formerly 'strategic' companies would attract two different groups of investors, based on their perceived needs - investors who would supply simply know-how, and those who would inject capital.