The standoff over energy prices between SPP, the natural gas utility, and the Slovak government continued with a veiled threat by the prime minister to retake control of the company.
Following a request by SPP to the state energy regulator to approve a 19.8% price hike as of November 3, Prime Minister Robert Fico (above) said the company should either withdraw the request or its foreign shareholders should consider selling their stakes back to the state at the price they originally paid for them.
SPP previously requested a 15.9% hike, which was rejected by the regulatory authority.
The company claims that increased world energy prices are forcing it to raise its consumer gas rates; it last raised prices for households in November 2006, and in January 2007 actually cut prices by 4%. SPP also said its owners, the German E.ON Ruhrgas and France’s Gaz de France, are not interested in selling their stakes. Together they paid more than Sk123 billion (€4 billion) for a 49% stake in SPP in 2002.
Fico, a social democrat who heralded a tougher approach to monopolies earlier this year, also said the government is dissatisfied with the way SPP’s shareholders treat the state, given the profit they make in Slovakia. The company earned more than Sk16 billion after taxes last year, while the state received about Sk12 billion (€406.3 million) in dividends and retained profits from previous years.
“SPP might make a profit of somewhere between Sk250 million and Sk280 million on households,” Fico said. “I really want to ask the foreign shareholders whether the Sk16.7 billion in net profit they made is not enough for them, and whether after such a huge profit they still need to squeeze a few more million crowns from households?”
If SPP’s policies do not change, Fico said he might ask MPs for his Smer party to approve a legislative change to allow the state, which is the majority shareholder in SPP, to take a majority of seats on SPP’s board of directors. The privatization contract guarantees majority representation for the foreign shareholders. However, Fico told the public service broadcaster Slovak Radio, that the Commercial Code could be changed to rectify the situation.
Fico earlier threatened foreign energy sectors with expropriation as well. “I would like to remind all the foreign owners of energy monopolies about Article 20 of the Slovak Constitution, which says that expropriation is possible in the public interest,” Fico said in August. “If they proceed with policies that go against the state’s interest, we won’t hesitate to take even extreme measures.”
20. Oct 2008 at 0:00 | Compiled by the Spectator staff from press reports