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NO PLANS YET FOR SALES OF MAJORITY STAKES IN STRATEGIC COMPANIES

Cabinet prepares new major privatisation law

SLOVAKIA's cabinet is already working on a revision to the law on major privatisation that, if passed, would allow the country to sell majority stakes in its largest companies.
At present, the country is only allowed to sell stakes of up to 49 percent in strategic firms, which include the electricity producer Slovenské elektrárne (SE), the country's three regional electricity distributors, the gas utility SPP, and the oil pipeline operator Transpetrol.
"Finance Minister [Ivan Mikloš] maintains that privatisation proceeds are necessary for keeping reforms running as well as for patching holes in the state budget," Economy Minister Robert Nemcsics told journalists on June 11.

SLOVAKIA's cabinet is already working on a revision to the law on major privatisation that, if passed, would allow the country to sell majority stakes in its largest companies.

At present, the country is only allowed to sell stakes of up to 49 percent in strategic firms, which include the electricity producer Slovenské elektrárne (SE), the country's three regional electricity distributors, the gas utility SPP, and the oil pipeline operator Transpetrol.

"Finance Minister [Ivan Mikloš] maintains that privatisation proceeds are necessary for keeping reforms running as well as for patching holes in the state budget," Economy Minister Robert Nemcsics told journalists on June 11.

"Furthermore, proceeds of the FNM [privatisation agency] are lower than projected," he said, adding that the bill should be in parliament by September.

"I assume that deputies will pass it," Nemcsics said.

Although the FNM has been counting on receiving revenues this year from the sale of a 49 percent stake in SE, the sale has taken longer than expected.

Eight parties have already expressed interest in SE, but none want to buy the electricity producer as a unit.

The government's privatisation advisor on SE recommended the state split the company into two subsidiaries prior to the sale, one dealing with conventional power production, the other running Slovakia's two nuclear plants. However, the government has not yet decided on the question.

While a new privatisation law could allow the state to sell a majority stake in SE, Nemcsics says only 49 percent of the company is available now, and that further stakes would be sold only in future rounds of privatisation.

"Changing terms during the tender would mean that bidders would have to submit modified bids," said Nemcsics.

At a recent coalition council meeting, Prime Minister Mikuláš Dzurinda said that a new privatisation law, if accepted, would not lead to a rapid sell-off, but that each case would be evaluated individually.

"There are a number of reasons why we [want to] remove certain limitations built into the present law," explained Dzurinda.

"It doesn't mean that we are going to automatically privatise everything, but we will decide on completing the privatisation of each firm on a case-by-case basis," he said.

Russian oil company Yukos, which bought a 49 percent stake in Slovak oil pipeline operator Transpetrol and took over management of the company in April 2002, has already said it is interested in increasing its stake.

"If legislation concerning the privatisation of strategic companies changes, we are interested in increasing our stake in Transpetrol. However, we will provide more details only when this situation becomes a reality," said Imre Fazakas, Yukos director for central and eastern European operations.

While the government has not announced any plans for the further privatisation of Transpetrol, Dzurinda said on June 16 that Slovakia would not be selling any more of SPP, after results indicated that the state's 51 percent stake in the gas utility would mean Sk3.9 billion (€94 million) in dividends for the state from 2002.

"We do not want to sell what we can manage ourselves, and this has been shown by the example of SPP," said Dzurinda. A minority stake in SPP was sold to a consortium of Germany's Ruhrgas and Gaz de France in July 2002 for $2.7 billion (€2.3 billion), and an additional $65 million (€55 million) after due diligence had been completed.

"It has been shown that SPP will bring enormous income, and personally, I will oppose the sale of the [state's] 51 percent stake," said Dzurinda.

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