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Fico team doubts SPP deal

A GOVERNMENT report says the state was ripped off in the blockbuster sale of 49 percent of its major gas utility, Slovenský Plynárenský Priemysel (SPP), and the deal was not done transparently.

A GOVERNMENT report says the state was ripped off in the blockbuster sale of 49 percent of its major gas utility, Slovenský Plynárenský Priemysel (SPP), and the deal was not done transparently.

The government’s report on the $2.7-billion US (Sk61.9 billion) deal, one of the largest privatisation deals completed during Mikuláš Dzurinda’s time as prime minister, is classified and not available to the public, government officials have said. But a document that is believed to be identical to the report has been posted on the Slovak Parliament website since January 14.

Prime Minister Robert Fico said the SPP sale was the biggest thievery in Slovakia’s history and parliament would pass a resolution on it.

But Ivan Mikloš, former finance minister and deputy chairman of the opposition Slovak Democratic and Christian Union (SDKÚ), said that Fico was spreading lies about the privatisation deal.

The report said the gas utility was sold below the market value of the company, which in 2000 was estimated at $6 billion to $8 billion. The state could have charged from $3 billion to $4 billion for the 49-percent stake in 2002, the government argued.

Rules were violated when the privatisation advisor was chosen, and when the price for the deal was set, the report said. The mandatory contract was at odds with the public procurement law and failed to provide for exchange-rate loss, according to the SITA newswire.

The report also said the SPP privatisation was not transparent and there were serious holes in the documentation. Only a single bid was submitted, which could have had a major impact on the final price.

“The (privatisation) advisor was unlawfully awarded $6.56 million and received a subsequent reward of $4.59 million, which has not been documented,” SITA quoted the report.

The second bidder for the privatisation advisor contract asked for a maximum of $18 million, which was $13.54 million less than the “winning bid,” the report said.

“The privatisation, in fact, produced a loss of Sk7.4 billion, since appropriate measures to hedge against the risks of fluctuating exchange rates of the (Slovak and US) currencies was not implemented,” SITA wrote.

The 49-percent stake was transferred to a company in the Netherlands to evade tax duties in Slovakia, the report said.

According to Mikloš, Fico was using these claims to mask his own problems and the shortcomings of his ruling coalition. He was referring to complications around the Slovak Land Fund and the prime minister’s alleged problems documenting how he acquired his own property, SITA wrote.

Dzurinda’s government sold a 49-percent stake in SPP to a consortium that included the German E.ON Ruhrgas and French Gaz de France in 2002. However, Russia’s gas monopoly, Gazprom, later withdrew from the consortium.

The state now holds a majority 51-percent stake through the National Property Fund, with the Economy Ministry holding the shareholder’s rights.

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