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PRIVATISATION TO BE COMPLETE BY 2005, INTERNATIONAL FIRMS ASKED TO PRESENT BIDS

Power sale unclear

ECONOMY Minister Pavol Rusko announced that the government should complete the sale of the state owned Slovak Electricity works (SE) by the end of 2005, although the government still needs to answer some key questions about the privatisation process.
"I don't think we will be selling only 49 percent. Otherwise, we would not be submitting new legislation [enabling full privatisation] to the parliament," replied Rusko when asked about the share that will be offered at a press conference on October 6.

ECONOMY Minister Pavol Rusko announced that the government should complete the sale of the state owned Slovak Electricity works (SE) by the end of 2005, although the government still needs to answer some key questions about the privatisation process.

"I don't think we will be selling only 49 percent. Otherwise, we would not be submitting new legislation [enabling full privatisation] to the parliament," replied Rusko when asked about the share that will be offered at a press conference on October 6.

An amendment to the existing legislation should enable the government to sell off more than 49 percent of so-called strategic companies, which include energy producers and distributors, as well as telecoms.

Apart from what Rusko says, the law currently allows for only a 49-percent stake to go to private hands, and the submitted offers will need to be limited to that portion.

Rusko was speaking only days before three printed media sources - The Financial Times, Germany's Handelsblatt, and the Slovak daily Hospodárske Noviny - were set to publish an advertisement calling for investors to present their bids.

Some eight firms had already expressed their interest in SE a year ago, when the administration first sought purchasers for SE. Unofficial reports say these include German E.ON, Electricite de France, Italian Enel, Belgian Electrabel, and International Power and British Energy from Great Britain. These firms will be granted time to confirm their interest in the new round.

The government decided to reopen the proposal process in July, after the Czech power producer ĆEZ said it is prepared to take over SE as a whole. All other companies were interested only in individual parts of SE.

It remains to be seen whether SE will be privatised as a whole or whether the company will be divided into two entities - one owning the conventional power plants, and the other running the country's nuclear electricity production plants.

"Investors will be allowed flexibility to place preliminary bids for the entire or the restructured SE," said Rusko.

"There are investors who don't have the permission or will to buy nuclear assets," said Peter Mitka, senior manager with the consulting firm PricewaterhouseCoopers, which has been selected as the government's advisor for the sale, according to the SITA news wire.

Mitka also pointed to another key factor that requires consideration should the state decide to split the company.

"The allocation of SE's debt will also be important," he said.

Rusko has said the government should agree on the final form of the privatisation by the end of October.

The next step in the privatisation process will be the selection of investors and the shortlisting of firms that will be allowed to carry out due diligence in SE. The shortlist should be finalised by the end of this year.

Former deputy speaker of parliament and head of the coalition New Citizen's Alliance (ANO) Rusko stepped in as the new Economy Minister on September 24. Already on September 29 he declared that the administration should look for ways of getting private capital involved in the finalisation of the third and fourth blocks of the nuclear power plant in Mochovce.

The Economy Minister argued that more power will be needed in order to make up for energy from the nuclear power plant in Jaslovské Bohunice, which the state plans to shut down.

"As a result of the growing investment in Slovakia we can expect [an increased] demand for energy. That will grow even more after the economic boom resumes in the territory of the former Yugoslavia, as Slovakia is a traditional exporter of electricity to this region," he said.

That plan is somewhat unexpected, as not too long ago, Rusko himself opposed such measures.

When the weekly Profit asked the ANO boss in October 2002 whether the two blocks of the power plant in Mochovce should be finished, he replied:

"It is very unlikely that it would pay off to invest in the new blocks if they were not able to produce electricity cheaper than we can import it - and I very much doubt that [they would]."

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