THE STATE ironed out the final wrinkles plaguing the sale of Slovak power utility Slovenské elektrárne to Italian buyer Enel in what is the country's last big privatization deal in the energy sector.
Slovakia might soon see its nuclear power plant in Mochovce completed, along with the construction of its first wind power plant if power producer Enel makes good on its investment plan promises.
On August 15, Slovakia and Enel agreed on a strategic investment plan for Slovenské elektrárne.
Enel has agreed to invest close to Sk73 billion (€1.8 million) to expand Slovenské elektrárne's power-generating capacity, and at least Sk60 billion (€1.5 million) to complete the Mochovce nuclear power plant.
The company will pour an additional Sk40 million (€1 million) into increasing the output of the 1st and 2nd blocks of Mochovce, and Sk3 billion (€75 million) into boosting the output of V2 block of the Jaslovské Bohunice nuclear power plant. Enel also intends to build a system of small water power plants on the Ipeľ river, which is estimated to cost Sk1.2 billion (€30 million). The construction of the wind power plant could reach Sk5 billion (€125 million).
In early August, it still seemed that the privatization deal might get stuck after Enel submitted an investment plan suggesting that Slovenské elektrárne revise its disadvantageous contracts with several suppliers.
Enel sorely tested the Economy Ministry with this initial investment plan by suggesting that the state compensate the investor for revenue losses resulting from Slovenské elektrárne's long-term contracts with aluminium smelter Slovalco, Oravské Iron-Alloys and Gas-Steam Cycle.
The Economy Ministry refused the draft plan outright, saying that requests for compensation or changing the contracts would be grounds for terminating the deal.
The final investment plan submitted to the Economy Ministry on August 8, however, did not include any reference to reopening the issue of the disadvantageous contracts.
"It has been left out from the investment plan and no further demands will be made in this respect," Economy Minister Pavol Rusko said.
Andrea Brentan, head of Enel's international operations, told The Slovak Spectator, "We are pleased by the appreciation that Economy Minister Pavol Rusko has shown for the investment plan. This plan aims at further strengthening the role of Slovenské elektrárne as a key player in the energy industry in Central and Eastern Europe."
Enel's long-term plan represents approximately €2 billion in investments for the development of both nuclear and renewable energy, wind and hydro sources specifically.
Enel had to submit the investment plan and receive approval before acquiring the 66-percent stake in Slovenské elektrárne.
In 1994, Slovenské elektrárne signed a contract ensuring advantageous energy prices to Slovalco through 2017.
The ruling coalition has promised to address the Slovalco contract, which interferes with Slovakia's commitment to the European Union to liberalize its electricity market by 2006.
The European Bank for Reconstruction and Development and Norwegian company Norsk Hydro holds the majority stake in Slovalco, which is pressing the Slovak government to honour the contract.
Spokesman of the Economy Ministry Maroš Havran told The Slovak Spectator that Enel knew about the contracts from the very beginning.
"The contracts themselves were defined as disadvantageous in the documentation provided to the investor," Havran said.
Enel has committed to paying €840 million for the majority stake in Slovenské elektrárne. Rusko says the investment plan does not put any burden on the state budget or the government. Enel will invest part of the money from its own resources; money will originate from within Slovenské elektrárne itself. Slovenské elektrárne is not expected to pay out dividends to its shareholders until 2012.
The completion of Mochovce nuclear plant was among the priorities of Pavol Rusko from the beginning of the Slovenské elektrárne privatization deal.
"It is now certain that the 3rd and 4th reactor blocks at Mochovce will be completed," said Rusko, adding that he hopes the plant are completed as soon as possible. According to the economy minister, the completion of the reactor blocks should start within a year.
The minister predicts that the process might last four years, with the completed plant creating 800 to 1,000 new jobs.
The news of the planned completion of Mochovce is certainly not a pleasing one for Slovakia's environmentally minded neighbour, Austria.
"It is the sovereign right of the Slovak Republic to pursue her own energy policy and therefore also to come to agreements with Enel, provided that they are compatible with the current EU legislation, particularly on EU state subsidy law and competition rules. Austria upholds, however, her traditional stance of nuclear energy as a potentially dangerous and not sustainable form of energy that entails also risks and high costs for future generations in the areas of decommissioning and waste storage," Marian Wrba, deputy Ambassador of the Austrian Embassy, told The Slovak Spectator.
"In this respect the intentions of the Slovak side to invest also into alternative forms of energy that are environmentally sustainable, such as Wind Energy and the extension of Micro Hydro Power Plants, should be regarded as an important signal and a successful step in the right direction," Wrba added.
According to the deputy ambassador, the Austrian government intends to deepen the Energy Partnership Program with Slovakia in order to cooperate on energy efficiency and the development of environmentally friendly renewable energy sources.
Earlier this year, a Vienna district court ruled that Mochovce presents a threat to the health and lives of Austrians.
The Vienna court judgement upheld a 1989 lawsuit brought against Mochovce by Eva Glawischnig, Austria's Green party spokesperson and MP, who accused the plant of having inadequate safety technology and being a threat to her and others living in Vienna, about 160 kilometres west of the plant.
Slovenské elektrárne said it would challenge the ruling, which orders Slovenské elektrárne to cease operation at Mochovce or modernize its technical equipment.
Slovak legal experts say the Austrian court's verdict is not legally executable in Slovakia.
In any case, the threat is moot. An Austrian higher court rejected te district court's ruling. On July 13, it ruled that Clawischnig was not able to provide sufficient concrete proof that Mochovce presents an imminent threat to her life and well being.
The issue of energy self-sufficiency is becoming urgent for Slovakia. As part of its EU accession agreements, the country is obliged to close down one of the two blocks of the Jaslovské Bohunice V1 plant in 2006, and the second V1 block in 2008. The V2 plant will continue operating. The A1 block broke in 1977 and has not functioned since.
Rusko tried to extend the closure of V1 block so that both could shut down simultaneously in 2008. However, on April 8, European Energy Commissioner Andris Piebalgs said that Slovakia must close down reactors 1 and 2 of the V1 nuclear power plant at Jaslovské Bohunice by 2006 and 2008, respectively, in line with the EU Accession agreement.
22. Aug 2005 at 0:00 | Beata Balogová