European Commission to monitor privatization

THE privatization of Slovakia's two largest airports has attracted both wanted and unwanted international attention. While Slovakia warmly welcomed the interest of strong players in the aviation market, the scrutiny of the European Commission suggests that the tender has the potential to become problematic.

THE privatization of Slovakia's two largest airports has attracted both wanted and unwanted international attention. While Slovakia warmly welcomed the interest of strong players in the aviation market, the scrutiny of the European Commission suggests that the tender has the potential to become problematic.

The EC will reportedly monitor the privatization of Bratislava and Košice airports as the tender process is uncommon by European Union standards, Oliver Drewes, EC spokesman for business and competition, told the Slovak media.

Vinci Concessions, one of the five favoured consortiums contending to buy Bratislava's M R Štefánik Airport, withdrew from the running on November 13 after the media exposed a financial connection between one of the consortium's principle investors and Raiffeisen Zentralbank.

Austrian A-way, bidding with French company Vinci under the auspices of Vinci Concessions, is keeping the same members on its advisory boards as Raiffeisen Holding, which controls Raiffeisen Zentralbank, according to the Raiffeisen-Landesbanken Holding annual report for 2004, the news wire TASR reported.

Raiffeisen Zentralbank is a principle party within the TwoOne consortium, also bidding for the airports.

Submitting so-called "double bids" is forbidden.

The withdrawal left four short-listed consortiums to vie for a chance to acquire a 66-percent stake in the Bratislava and Košice airports. They are: Spanish Abertis, British TBI, and Slovak J&T Financial Group; Austrian Flughafen Wien (Vienna International Airport), Raiffeisen Zentralbank, and Slovak Penta company; Turkish investor Tepe Akfen Ventures; and Independent Slovak Airport Partners consisting of German Cologne-Bonn Flughafen, Canadian company SNC-Lavalin International, and Austrian firm Airport Consulting.

The winner of the 66-percent stake should be selected by the end of the year.

However, insiders say that the position held by the TwoOne consortium, involving Vienna International Airport, Raiffeisen Zentralbank and Penta, has disintegrated because of the suspicion that Zentralbank knowingly violated the tender conditions.

A privatization watchdog committee appointed by Transport Minister Pavol Prokopovič has been set up to monitor the tender and decide whether TwoOne should be allowed to continue in the bidding process.

"The committee is appointed but we will not publicize the names of the members so that there are no efforts to influence them," said Transportation Ministry spokesman Tomáš Šarluška.

The committee consists of three appointees from the Ministry of Transport, two from the Economy Ministry and two from the National Property Fund, and two seats belong to the Parliamentary Privatization Committee.

"TwoOne sees no reason to quit the competition. On the contrary, we have met all of the necessary conditions and are confident that we are submitting the best bid for the sustainable development of the airports in Bratislava and Košice," TwoOne representatives told The Slovak Spectator.

The TwoOne consortium questions whether the European Commission would have any jurisdiction over the privatization deal, even if the ISAP managed to bend its ear regarding the tender for the Bratislava and Košice airports.

"The law stipulates that the Slovak government will pick the winner by issuing a privatization decision," the TwoOne reps said.

"If TwoOne is selected and issues of economic competition arise, then the Slovak Antitrust Office and not the European Commission would be entitled to decide on the matter."

Meanwhile, Irish low-cost air carrier Ryanair sent a letter to Slovak PM Mikuláš Dzurinda and Minister Prokopovič asking them to exclude Vienna International Airport from the ongoing tender.

According to Ryanair, the Vienna Airport operator is competing for the Bratislava airport only to eliminate possible competition, which the Bratislava airport now provides.

"Bratislava airport has already managed to entice a considerable number of passengers from Vienna and in the future it may serve as a cheaper alternative to the expensive Vienna airport," wrote Ryanair.

The consortium Independent Slovak Airport Partners (ISAP) had already indicated that they would ask the European Commission to examine the privatization tender if the TwoOne consortium wins.

Corrine Namblared-Bouverot, the director general of the infrastructural fund GalaxyS, an ISAP member, told the news wire SITA that TwoOne's investment would not benefit the region.

ISAP's other members are Airport Consulting Vienna, Canadian engineering company SNS-Lavalin International, and German airport company Koln-Bonn Airport.

ISAP is aware that by asking the European Commission to examine the deal, the privatization process could be delayed for several years.

Namblared-Bouverot explained that during any EC examination, no investments could flow into the airports. The result, she said, would be the waste of a unique chance for development.

However TwoOne claims that attacks against the consortium that appear in the media are only a "game of other bidders".

Some people voiced concern that if the Vienna International Airport becomes the majority owner of the Bratislava airport, it would transform the airport into a cargo transportation hub and redirect all passenger traffic to Vienna.

Hans Mayer, the spokesman for the Vienna International Airport, told The Slovak Spectator in September that these concerns were "not justified at all".

"Our consortium has submitted comprehensive plans to develop Bratislava airport towards a high standard international airport. Both airports [Bratislava and Košice] would offer up-to-date passenger services. Cargo would only be a very small portion to serve Bratislava's needs exclusively," he said, adding that 90 percent of the cargo at Vienna International is transported via passenger planes.

The deadline for submitting final bids for the 66-percent equity stake in the Bratislava and Košice airports has been shifted from November 21 to early December.

The Transport Ministry said that some bidders did not manage to submit all the requested documents by the November deadline, which would have caused complications in forming the wording of the transaction documents and the privatization contract.

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