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Termination of Gabčíkovo lease may still see money flow to SE

The government recently terminated the lease contract for the hydropower plant Gabčíkovo with the Slovenské Elektrárne (SE) company, but now the Sme daily suggests that this termination may actually be a good thing for SE.

The government recently terminated the lease contract for the hydropower plant Gabčíkovo with the Slovenské Elektrárne (SE) company, but now the Sme daily suggests that this termination may actually be a good thing for SE.

On December 11, Prime Minister Robert Fico maintained that before taking over the plant the Slovak government had notified SE and its Italian owner Enel that they had failed to stick to their contractual obligations.

Fico said that SE had failed to provide relevant data for the Vodohospodárska Výstavba company, necessary for calculating its share of the revenue from the sale of electric power from the Gabčíkovo plant. He also said SE had not prepared any plan for the reconstruction and general overhaul of the plant. The third reason is that Enel is not fulfilling its obligation to pay €5 million annually to Vodohospodárska Výstavba, which manages the whole Gabčíkovo project. According to Fico, Enel is now disputing this payment and even asked the Slovak side to refund the previously paid €43 million.

Slovenské Elektrárne officials rejects all reservations raised by Fico regarding alleged beach of contract on plant’s operation. Spokeswoman Janka Burdová
told SITA that they are still expecting the official delivery of the termination notice and she did not rule out that they would take legal action.

Vodohospodarska Vystavba operating under the Environment Ministry, submitted a report to the cabinet at the end of August this year, according to which SE fails to observe the contract on the lease of the Gabčíkovo power plant. The contract for the operation of Gabčíkovo was signed in March 2006, which is even before the end of privatisation, between the state-owned water
management company Vodohospodárska Výstavba and Slovenské Elektrárne. SE acquired the right to operate Gabčíkovo plant for 30 years. However, the incoming first Fico government had objections toward this agreement. In 2007 it challenged it in court and wanted to cancel it. So far, a total of 12 lawsuits have been filed.

Slovakia terminated the contract that was to be effective until 2036, but Enel can still profit from that, the Sme daily wrote on December 12. It will not have to take care of the Gabčíkovo plant as agreed, but it could still receive dozens of millions of euros each year, just as it gets now, for the operation and maintenance of the plant. SE opined, according to Sme, that the Slovak government based the termination on a point which enables to end the contractual relation anytime; but obliges the state to reimburse the SE’s lost profits.

(Source: SITA, Sme)
Compiled by Zuzana Vilikovská from press reports
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