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Cabinet rejects unbundling of gas utility SPP

SLOVAK cabinet ministers failed to agree on the future of the major Slovak gas utility Slovenský plynárenský Priemysel (SPP), which is supposed to be divided into three daughter companies in order to comply with EU legislation, the daily SME reported.

The EU legislation demands that the SPP separates the branches of transportation of gas from its distribution in order to liberalize the gas market. The process of unbundling should be completed by July 7, 2007.

The unbundling model proposed by Economy Minister Pavol Rusko assumed the creation of four interconnected companies, one of which would be the parent company itself. The separate companies within the future SPP Holding would manage the transportation and distribution. A separate company would manage the investment property.

The process includes the re-appreciation of the SPP assets. The new accounting value of the SPP assets will be much higher, according to Finance Minister Ivan Mikloš.

This way the unbundling process would in fact generate Sk25 billion (€650 million) as special dividends for the state. The use of the money created major disagreements within the ruling coalition.

Rusko proposed that of this money, Sk16.8 billion paid in 2006, should be used to lower the state debt, to help the pension reform and investment stimuli.

The Christian Democrats (KDH) strongly disagreed with Rusko's proposal suggesting that this model would in future increase gas prices.

Compiled by Beata Balogová from press reports
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