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PRIVATISATION

SPP: The king of Slovak privatisations

THE MAJOR privatisation issue in 2002 will be long awaited sale of the 49 per cent stake in the second largest transporter of the natural gas in the world SPP.
The sale which was supposed to be the major privatisation deal in Europe in 2001, bringing as much as $3 billion to the state coffers has been delayed by several months.
Although the privatisation process has been accompanied by protests from some coalition parties, mainly the SDĽ and SOP, who proposed the sale be cancelled, government officials insist there would be enough political will to sell the most viable Slovak cash cow in the first half of 2002.


SPP gas utility will be Slovakia's largest ever privatisation deal.
photo. Ján Svrček

THE MAJOR privatisation issue in 2002 will be long awaited sale of the 49 per cent stake in the second largest transporter of the natural gas in the world SPP.

The sale which was supposed to be the major privatisation deal in Europe in 2001, bringing as much as $3 billion to the state coffers has been delayed by several months.

Although the privatisation process has been accompanied by protests from some coalition parties, mainly the SDĽ and SOP, who proposed the sale be cancelled, government officials insist there would be enough political will to sell the most viable Slovak cash cow in the first half of 2002.

"The sale is planned and it will take place," said Vladimír Tvaroška, adviser to the Deputy Premier for Economy Ivan Mikloš.

Nine strong players are interested in the stake including the consortium of German Ruhrgas, French Gaz de France and Italian Snam, Russian Gazprom which has expressed intention to join the consortium, German RWE Gas, an American investor and three bidders who are unknown.

The significance of the deal is that one sale will bring approximately as much foreign investment as the total figure for the last two years, but also the revenue will balance the huge Slovak trade deficit and finance the launch of vital pension reform.

The trade deficit stood at around Sk100 billion in 2001, the worst figure since 1993 when the country gained independence. SPP's privatisation revenue would balance the deficit which otherwise would have to be covered from the foreign exchange reserves.

"If the sale does not take place, the coverage of the trade deficit with the foreign exchange reserves would deteriorate the currency," said Róbert Prega, an analyst with Tatra Banka.

Other important privatisations in 2002 will be the sale of 49 per cent stake at the three regional distribution electricity companies Západoslovenské Stredoslovenské and Východoslovenské energetické závody which has already started.

The deals are expected to prepare the ground for the sale of the electricity utility SE which will not be privatised before the elections in September 2002 as it was originally promised.

"To sell the three distribution companies is important for increasing competition and lowering the electricity prices further down the line," Prega said.

As far as green-field investments go, analysts believe that businesses who have not yet made up their mind about investing in Slovakia will wait to see the results of the autumn elections.

"It is natural to do that but those who have already started investing here will obviously not stop. They had considered the issue of elections before they decided to invest in Slovakia anyway," said Ján Tóth, an analyst with ING Barings.

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